National Fuel Gas Company · NYSE:NFG
National Fuel Gas — AGA Financial Forum 2011
64 slides from National Fuel Gas's conference presentation, May 13, 2011
Slide 1: AGA Financial Forum May 15-17, 2011
AGA Financial Forum May 15-17, 2011 Exhibit 99
Slide 2: Safe Harbor For Forward Looking Statements
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, anticipated capital expenditures and co
Slide 3: National Fuel Gas Company Business Segment Reporting
National Fuel Gas Company Business Segment Reporting Publicly Traded Holding Company NYSE symbol - NFG Reporting Segments Operating Subsidiaries
Slide 4: Our Businesses
Our Businesses Utility Pipeline & Storage Exploration & Production Appalachia, California, Gulf of Mexico Energy Marketing Midstream Sawmills Landfill Gas Gas-Fired Generation National Fuel Gas Company
Slide 5: AGA Financial Forum - May 15-17, 2011
5 AGA Financial Forum - May 15-17, 2011
Slide 6: AGA Financial Forum - May 15-17, 2011
6 AGA Financial Forum - May 15-17, 2011
Slide 7: AGA Financial Forum - May 15-17, 2011
7 AGA Financial Forum - May 15-17, 2011
Slide 8: Net Income from Continuing Operations Excluding Items Impacting Comparability
Net Income from Continuing Operations Excluding Items Impacting Comparability (1) National Fuel Gas Company A reconciliation to GAAP Net Income is included at the end of this presentation. $217.8 Million Twelve Months Ended March 31, 2011 E&P $116.0 MM 53.3%
Slide 9: Capital Expenditures from Continuing Operations
National Fuel Gas Company Capital Expenditures(1) from Continuing Operations A reconciliation to Capital Expenditures as presented on the Consolidated Statement of Cash Flows is included at the end of this presentation.
Slide 10: Capital Expenditures - An Appalachian Focus
National Fuel Gas Company A reconciliation to Capital Expenditures as presented on the Consolidated Statement of Cash Flows is included at the end of this presentation. Defined as spending related to efforts to drill for, gather, or transport Appalachian sources of natural gas. Any other maintenance
Slide 11: Capital Structure
National Fuel Gas Company Capital Structure $2.866 Billion(1) at March 31, 2011 Forecasted Capital Structure(2) at September 30, 2011 At March 31, 2011, Comprehensive Shareholders' Equity, Long-Term Debt and the Current Portion of Long-Term Debt totaled $2.866 Billion as presented on the Company's B
Slide 12: Dividend Growth
National Fuel Gas Company Dividend Growth $1.38 $0.19 Compound Annual Growth Rate 5.1% National Fuel has had 108 uninterrupted years of dividend payments and has increased its dividend for 40 consecutive years
Slide 13: Natural Gas Industry - 5-Year Total Return
National Fuel Gas Company Natural Gas Industry - 5-Year Total Return Source: Edward Jones - Natural Gas Industry Summary: Quarterly Financial and Common Stock Information for the Quarter Ended March 31, 2011 National Fuel Gas Company has consistently generated long- term total returns that outperfor
Slide 14: Peer Group Comparisons
National Fuel Gas Company Peer Group Comparisons National Fuel's diversified business model continues to generate long-term outperformance versus its peer groups by limiting downside risk through economically challenging times and capturing upside growth in an expanding market 1-Year Total Return Pe
Slide 15: Utility Segment
Utility Segment National Fuel Gas Distribution Corporation
Slide 16: Utility Keys to Continued Success
Utility Keys to Continued Success
Slide 17: Capital Spending ($ Millions)
Capital Spending ($ Millions) $60 $45 $30 $15 $0 Capital Spending CNY PA $575 san $580 $36.1 $39.2 $37.8 $40.0 2010 rscal Year Ce
Slide 18: Utility O&M Expense
Utility O&M Expense $250 ONY PA > $204.3 $203.0 $202.7 19112 2 s200 ats $181.3 = @ $150 Pr < 5 & $100 = $140.5 $140.6 3 $139.2 $130.5 $125.0 $50 $0 2006 2007 2008 aa extn
Slide 19: Utility Excellent Customer Service
Utility Excellent Customer Service Customer Service Performance NY Goal NY Actual(1) PA Actual(1) Telephone Response (within 30 seconds) 74.0% 90.0% 89.0% Customer Satisfaction: Residential Commercial 85.1% 86.0% 92.2% 91.4% 88.5% PSC Complaints (per 100,000 Customers) 2.1 0.02 N/A Estimated Meter R
Slide 20: Rate Mechanisms
Rate Mechanisms Utility New York Revenue Decoupling Conservation Incentive Program Merchant Function Charge Low Income Rates 90/10 Sharing Weather Normalization Choice Program Pennsylvania Low Income Rates Choice Program/POR Merchant Function Charge Pending: Distribution System Improvement Charge (D
Slide 21: Utility Return on Equity
(1) Calculated using Average Total Comprehensive Shareholder Equity. Utility Return on Equity (1)
Slide 22: Utility Diluted Earnings per Share
Utility (1) Excludes out-of-period adjustment to symmetrical sharing of $0.03; Including this adjustment, GAAP earnings would be $0.58. Diluted Earnings per Share (Before Items Impacting Comparability)
Slide 23: Provide Stable Earnings, Excellent Customer Service, Safe System, Strong Regulatory Strategy
Provide Stable Earnings National Fuel Excellent Customer Service Operate Safe System Strong Regulatory Strategy
Slide 24: Pipeline & Storage / Midstream
National Fuel Gas Supply Corporation Empire Pipeline, Inc. National Fuel Gas Midstream Corporation Pipeline & Storage / Midstream
Slide 25: Pipeline & Storage / Midstream Expansion Initiatives
LAMONT COMPRESSOR STATION PHASE I & II COVINGTON GATHERING SYSTEM TROUT RUN GATHERING SYSTEM WEST TO EAST OVERBECK TO LEIDY LAMONT COMPRESSOR STATION PHASE I & II TIOGA COUNTY EXTENSION LINE "N" EXPANSION PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES NORTHERN ACCESS EXPANSION Seneca Drilling
Slide 26: Exploration & Production
Exploration & Production Seneca Resources Corporation
Slide 27: Fiscal Year End Proved Reserves
Exploration & Production Fiscal Year End Proved Reserves(1) West - California Reserves: 333 Bcfe (47%) (55.5 MMBoe) Gulf of Mexico Reserves: 34 Bcfe (5%) East - Appalachia Reserves: 333 Bcfe (48%) At September 30, 2010 Total Proved Reserves: 700 Bcfe
Slide 28: Historical Daily Production
Exploration & Production Historical Daily Production
Slide 29: Capital Expenditures by Region
Exploration & Production Capital Expenditures by Region Does not include the $34.9MM acquisition of Ivanhoe's US-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. (1)
Slide 30: Annual Production by Region
Exploration & Production Annual Production by Region 38% 34% Marcellus production in Fiscal 2012 could equal the entire company production in Fiscal 2011
Slide 31: Exploration & Production California
Exploration & Production California
Slide 32: Seneca's California Properties
Seneca's California Properties South Lost Hills ~1,830 BOEPD Monterey Shale Primary 216 Active Wells Sespe ~990 BOEPD Sespe Formation Primary 193 Active Wells North Lost Hills ~1,235 BOEPD Tulare & Etchegoin Formation Primary & Steamflood 181 Active Wells North Midway Sunset ~4,050 BOEPD Potter & Tu
Slide 33: California Average Daily Production
California Average Daily Production Modest capital spending to maintain production Pursue additional bolt-on acquisitions 2011 Plans: CapEx - $40 MM 50 Development wells Two 5-acre in-fill wells at Sespe
Slide 34: Fiscal Year 2011 Sespe Field Development Plans
California Fiscal Year 2011 Sespe Field Development Plans First drilling for Seneca at Sespe since 1991 Will drill six wells during this fiscal year Wells to be drilled at 10-acre spacing: 4 wells Test wells to be drilled at 5-acre spacing: 2 wells If successful, 5-acre down-spacing could add substa
Slide 35: East Division Exploration & Production
East Division Exploration & Production
Slide 36: East Division Average Daily Production
East Division Average Daily Production Rapid growth in the East Division as Marcellus is ramping up
Slide 37: Marcellus Shale Seneca's Pennsylvania Acreage
Marcellus Shale Seneca's Pennsylvania Acreage Seneca Resource Acreage Position 745,000 Net Acres in the heart of the PA Marcellus fairway Risked Resource Potential: 8-15 TCFE 80% Fee - Seneca owns the minerals No lease expiration 94% Average NRI SRC Fee Acreage
Slide 38: Marcellus Shale Seneca's Development Areas
Marcellus Shale Seneca's Development Areas SRC Fee Acreage Eastern Development Area (Mostly Leased) Western Development Area (Mostly Fee and HBP)
Slide 39: Marcellus Shale Eastern Development Area
Marcellus Shale Eastern Development Area Covington Area - Full Development 43 Wells Drilled; 24 Producing (3 Shut-In) Gross Prod: (As of 5/10/11): 90 MMCFD DCNR Block 100 1st Well IP: 15.8 MMCFD 2011: 6 Wells Planned First Production: Fall 2011 SRC Fee Acreage DCNR Block 595 - Full Development 4 Wel
Slide 40: Longer Lateral EDA Wells Outpacing Bcf Typecurve
Marcellus Shale Longer Lateral EDA Wells Outpacing 6 Bcf Typecurve Chart data represents horizontal well production from wells with lateral lengths greater than 3,500 feet (1)
Slide 41: Marcellus Shale Western Development Area - Activity
Marcellus Shale Western Development Area - Activity EOG Contributed JV Acreage SRC Contributed JV Acreage Seneca Operated EOG Operated Punxy Area - Full Development EOG Operated 39 Wells Drilled; 25 Producing Gross Production (As of 5/10/11): 45 MMCFD 2011: 30+ Wells Planned Owl's Nest Area Seneca O
Slide 42: Marcellus Shale Target Zone Example
87 Marcellus Shale Target Zone Example Gamma Ray Pay/Res Resistivity Density/Neutron Phi/Sw/TOC Mineralogy Brittleness Ko Optimal Target Zone Marcellus Interval Important to Find Ideal Target Must account for the variable rock quality and geomechanical profile Major factor in quality of Fracture Sti
Slide 43: Marcellus Net Production
Marcellus Shale Marcellus Net Production Seneca Operated EOG JV
Slide 44: Marcellus Shale Centralized Water System
Marcellus Shale Centralized Water System Recovering water discharged from an abandoned coal mine which was adversely impacting a local trout stream Authorized by SRBC to withdraw approximately 500,000 gallons per day of mine discharge Water pipeline system supplies frac water for Seneca in Tioga Cou
Slide 45: Utica Shale
Utica Shale Source rock maturation status based on combined CAI to Ro regression equation. (Trenton-Black River Research Consortium, 2006) Seneca Acreage
Slide 46: Seneca Resources Evaluation of JV Opportunities
Seneca Resources Evaluation of JV Opportunities Seneca's Marcellus joint venture goals: Ramp up development faster than current growth plans Bring forward the earnings stream, where a minority-interest partner pays a significant portion of the early drilling costs, enhancing shareholder value Contin
Slide 47: Key Takeaways
National Fuel Gas Company Key Takeaways High-Quality Marcellus Acreage Position 745,000 net acres with a resource potential of 8-15 Tcfe Fee ownership results in superior economics Rapid Growth: 0 - 120 MMCFD in 18 months Balanced Business Model Regulated segments support dividend and are not sensit
Slide 48: National Fuel
National Fuel
Slide 49: Appendix
Appendix
Slide 50: Corporate & Financial Highlights
Corporate & Financial Highlights National Fuel Gas Company
Slide 51: Fiscal Year 2011 Earnings Guidance - Key Drivers
National Fuel Gas Company Fiscal Year 2011 Earnings Guidance - Key Drivers(1) FY 2011 GAAP EPS $2.83 to $2.98 Utility Operating Expense: ? 3% to 5% PA Normal Weather Pipeline & Storage Operating Expense: ? 3% to 5% Transportation Revenue: ? $7.5 Million Project Development Costs (O&M): $7 Million Ex
Slide 52: Seneca Oil and Gas Hedge Positions
National Fuel Gas Company Seneca Oil and Gas Hedge Positions For fiscal year 2011, Seneca has hedged 58% of its remaining forecasted production NYMEX Strip Prices (at 05/11/11) Natural Gas Oil Fiscal 2011(1) $4.11 $92.97 Fiscal 2012 $4.72 $99.15 Fiscal 2013 $5.16 $96.79 Fiscal 2014 $5.52 $94.93 The
Slide 53: Pipeline & Storage / Midstream
National Fuel Gas Supply Corporation Empire Pipeline, Inc. National Fuel Gas Midstream Corporation Pipeline & Storage / Midstream
Slide 54: Pipeline & Storage / Midstream Expansion Initiatives
LAMONT COMPRESSOR STATION PHASE I & II COVINGTON GATHERING SYSTEM TROUT RUN GATHERING SYSTEM WEST TO EAST OVERBECK TO LEIDY LAMONT COMPRESSOR STATION PHASE I & II TIOGA COUNTY EXTENSION LINE "N" EXPANSION PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES NORTHERN ACCESS EXPANSION Seneca Drilling
Slide 55: Pipeline & Storage/Midstream Expansion Initiatives
Pipeline & Storage/Midstream Expansion Initiatives Project Name Capacity (Dth/D) Est. CapEx In-Service Date Market Status Covington Gathering System 145,000 $16 MM 11/17/09 Fully Subscribed Completed - Flowing into TGP 300 Line Lamont Compressor Station 40,000 $6 MM 6/15/10 Fully Subscribed Complete
Slide 56: Pipeline & Storage Challenges & Opportunities
Pipeline & Storage Challenges & Opportunities NFGSC Contract Turnbacks Supply has received capacity turnbacks on expiring contracts, decreasing future revenue by: FY11: ~$7.5 Million FY12: ~$4-6 Million Empire Unsold Capacity ~100,000 Dth/d of capacity remains unsold after the construction of the Em
Slide 57: Trout Run Gathering System - Lycoming County
Midstream Corporation Trout Run Gathering System - Lycoming County Capacity: 300,000 Dth/d Will Interconnect with Transco Pipelines in Lycoming County Seneca Resources will be the anchor shipper Estimated In-Service: Fall 2011 Interstate Pipeline Gathering System Transco
Slide 58: Exploration & Production Seneca Resources Corporation
Exploration & Production Seneca Resources Corporation
Slide 59: Marcellus Shale Pennsylvania Acreage Holdings
Marcellus Shale Pennsylvania Acreage Holdings EOG Contributed JV Acreage SRC Contributed JV Acreage
Slide 60: Marcellus Shale Decline Curve - 6.0 BCF EUR
Marcellus Shale Decline Curve - 6.0 BCF Estimated Ultimate Recovery (EUR) Category Type Curve Parameters Initial Rate 7,250 MCF/D Average first year decline 72% Final decline 6% Hyperbolic Coefficient 1.4 Abandonment rate 60 MCF/D Average first month rate 6,670 MCF/D Average first year rate 3,560 MC
Slide 61: Marcellus Shale Pre-Tax IRR Comparison
Marcellus Shale Pre-Tax IRR Comparison at NYMEX of $4.00/MMBtu Description EUR Net Working Interest Net Revenue Interest Well Costs ($ Millions) Well Costs ($ Millions) Description EUR Net Working Interest Net Revenue Interest $6.0 $6.4 Seneca - EDA Well 8 Bcf 100% 85% 73% 63% Seneca - EDA Well 6 Bc
Slide 62: Marcellus Gross Horizontal Wells Drilled per Year
Marcellus Shale Gross Horizontal Wells Drilled per Year Marcellus Horizontal Rig Count Current Rig Count: Seneca : 4 Rigs EOG : 2 Rigs Additional Seneca Rigs Scheduled: 5th Rig: Summer 2011 6th Rig: Fall 2011
Slide 63: Marcellus Shale Transportation Capacity
Marcellus Shale Transportation Capacity Eastern Development Area Covington Gathering System: 150,000 Dth/d into TGP 300 Provides capacity for DCNR Tract 595 and Covington in Tioga county Firm sales of 100,000 Dth/d thru October 31, 2011 Trout Run Gathering System: 200,000 - 250,000 Dth/d into Transc
Slide 64: 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