National Fuel Gas Company · NYSE:NFG
National Fuel Gas — BMO Capital Markets Unconventional Resource Conference 2011
56 slides from National Fuel Gas's conference presentation, Jan 10, 2011
Slide 1: BMO Capital Markets Unconventional Resource Conference
BMO Capital Markets Unconventional Resource Conference January 11, 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: Business Segment Reporting
National Fuel Gas Company Business Segment Reporting Publicly Traded National Fuel Gas Company y Holding Company NYSE symbol NFG i Exploration & Production Pipeline & Storage Utility Energy Marketing Reporting Segments Seneca Resources Corporation National Fuel Gas Supply Corporation National Fuel G
Slide 4: Net Income from Continuing Operations Excluding Items Impacting Comparability
National Fuel Gas Company Net Income from Continuing Operations Excluding Items Impacting Comparability (1) 266 3 $300 $ 192.2 $266.3 $210.5 $200 P&S $36.7 MM 16.7% $74.9 $146.6 $98.0 $ Millions) Utility $62.5 MM 28 5% E&P $112.5 MM 51.4% $50 9 $61.5 $58 7 $49.7 $54.1 $47.4 $100 ($ 28.5% 50.9 58.7 $
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5 BMO Unconventional Resource Conference - January 11, 2011
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6 BMO Unconventional Resource Conference - January 11, 2011
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7 BMO Unconventional Resource Conference - January 11, 2011
Slide 8: Exploration & Production: Seneca Resources Corporation
Exploration & Production Seneca Resources Corporation
Slide 9: E&P Fiscal Year End Proved Reserves
Exploration & Production 600 cf) Natural Gas Fiscal Year End Proved Reserves(1) East Appalachia R B f 226 249 428 200 400 ved Reserves (B Reserves: 333 Bcfe (48%) 2008 2009 2010 Prov At September 30 46.2 46.6 45.2 40 60 es (MMbbl) Oil West California R 333 B f (47%) 0 20 Proved Reserve Reserves: Bcf
Slide 10: E&P Fiscal 2010 Annual Production
Exploration & Production 30 3 40 cf) Natural Gas Fiscal 2010 Annual Production East Appalachia P d i 16 5 B f 22.3 22.3 30.3 10 20 30 s Production (Bc Production: 16.5 Bcfe (33%) 0 2008 2009 2010 Gas Fiscal Year 3,070 3,373 3,220 3,000 4,000 ion (Mbbl) Oil West California P d i 19 8 B f (40%) 0 1,00
Slide 11: E&P Fiscal 2010 Oil/Gas Mix
Exploration & Production Fiscal 2010 Oil/Gas Mix Annual Production Proved Reserves Revenue Oil G 39% Oil Gas Oil Gas 39% Gas 61% 57% 43% 61% 700 Bcfe(1) 49.7 Bcfe $425.6 Million 11 BMO Unconventional Resource Conference January 11, 2011 (1) At September 30, 2010
Slide 12: Seneca Fiscal 2010 Highlights
Exploration & Production Seneca Fiscal 2010 Highlights Production Increased annual production by 17% to 49.7 BCFE Reserve Replacement Replaced 445% of production Finding & Development Cost F&D Cost decreased to approximately $1.78 per Mcfe Marcellus Exit Rate Marcellus net production at fiscal year
Slide 13: Finding & Development Cost
Exploration & Production $8.00 NFG/Seneca All E&P Companies Finding & Development Cost (1) $5.98 $4 95 $6.00 MidSized Independents (2) 4.95 $4.27 $3.10 $4.00 $/Mcfe $2.00 $1.78(3) $0.00 2006 2007 2008 2009 2010 13 BMO Unconventional Resource Conference January 11, 2011 Fiscal Year (1) 2006 2009 Find
Slide 14: Capital Expenditures by Region
Exploration & Production Capital Expenditures by Region $600 Marcellus Gulf of Mexico Upper Devonian West $ 398 $485560 $500 Millions) $440485 $300 $400 nditures ($ M $66 $64 $71 $332 $147 $192 $188 $100 $200 Capital Expen $41 $63 $31(1) $28 $3545 $39 $61 $68 $23 $15 $0 Fiscal 2007 Fiscal 2008 Fisca
Slide 15: Annual Production by Region
Exploration & Production Annual Production by Region 75 Marcellus Gulf of Mexico Upper Devonian West 6575 49.7 3035 60 fe) 40% 17% 14 7 14.1 13.7 13.4 9 11 7.2 45 39.3 40.8 42.5 duction (Bcf 6.3 7.9 8.7 9.3 79 14.7 915 30 Prod 18.3 18.8 20.1 19.8 1920 0 Fiscal 2007 Fiscal 2008 Fiscal 2009 Fiscal 201
Slide 16: Exploration & Production: California
Exploration & Production California
Slide 17: Seneca's California Properties
Seneca's California Properties South Lost Hills 1,900 BOEPD Monterey Shale Primary 216 Active Wells Sespe 1,000 BOEPD Sespe Formation Primary 182 Active Wells North Lost Hills 1,200 BOEPD Tulare & Etchegoin Formation Primary & Steamflood 221 Active Wells North Midway Sunset 4,100 BOEPD Potter & Tula
Slide 18: California Average Daily Production
California Average Daily Production 10,000 ?? Modest capital spending to maintain production ?? Pursue additional bolton 9,500 0,000 acquisitions ?? 2011 Plans: ?? CapEx $ 40 MM 8,500 9,000 OE/Day p ?? 50 Development wells ?? Two 5acre infill wells at 7,500 Sespe 8,000 B ?? Participate in first well
Slide 19: California 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 20: Gulf of Mexico Exploration & Production
Gulf of Mexico Exploration & Production
Slide 21: Gulf of Mexico Average Daily Production
Gulf of Mexico Average Daily Production 60 ?? Mi i 40 l i l di 50 Minimal capital spending ?? Expect production decline 30 MMcfe/Day in 2011 10 20 M 0 21 BMO Unconventional Resource Conference - January 11, 2011 (1) Production for the months of October 2010 and November 2010 are estimates Oct-08 Jan
Slide 22: East Division Exploration & Production
East Division Exploration & Production
Slide 23: East Division Average Daily Production
East Division Average Daily Production 100 80 Mcfe/Day) Upper Devonian Marcellus ?? Rapid growth in the East Division as Marcellus is 40 60 roduction (MM ramping up ?? Expect production 20 erage Daily Pr significant increase in Q1 0 Ave 23 BMO Unconventional Resource Conference - January 11, 2011 (1
Slide 24: 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 Lease Acreage SRC Fee Acreage
Slide 25: Marcellus Shale: Seneca's Development Areas
Marcellus Shale Seneca's Development Areas SRC Lease Acreage SRC Fee Acreage Eastern Development Area (Mostly Leased) Western Development Area (Mostly Fee and HBP)
Slide 26: Marcellus Shale Eastern Development Area
Marcellus Shale Eastern Development Area Covington Area - Full Development 24 Wells Drilled; 17 Producing Current Production: 65 MMcf/d 2011: 16 Wells Planned DCNR Block 100 1st Well IP: 15.8 MMCFD 2011: 6 Wells Planned First Production: Fall 2011 Initial Test Wells Drilling / Fracing SRC Lease Acre
Slide 27: Acquisition of EOG's Tioga County Interests
Exploration & Production Acquisition of EOG's Tioga County Interests Seneca has acquired EOG's interest in Tioga County, Pa. Seneca has always been the operator on all joint-interest wells in Tioga County, Pa. Acquisition Price: $23 million Proved Reserves at 10/1/10: 42 Bcfe PDP: 14 Bcfe PUD: 28 Bc
Slide 28: Tioga County Decline Curves
Tioga County Decline Curves Longer Lateral Wells Outpacing Original Decline Curve Chart data represents horizontal well production from wells with lateral lengths greater than 3,000 feet Avg. Tioga Production per Well(1) 6.3 Bcf Typecurve 0 25 50 75 100 125 150 175 200 225 250 Days
Slide 29: Marcellus Shale Western Development Area - Activity
Marcellus Shale Western Development Area - Activity SRC Fee Acreage EOG Contributed JV Acreage SRC Contributed JV Acreage Seneca Operated EOG Operated Punxy Area - Full Development EOG Operated 30 Wells Drilled; 15 Producing Current Gross Production: 32 MMCFD 2011: 30+ Wells Planned Owl's Nest Area
Slide 30: Pennsylvania Average Daily Gas Production per Horizontal Well
Marcellus Shale Pennsylvania Average Daily Gas Production per Horizontal Well (Companies with at least 5 horizontal wells producing) 5.0 4.0 n per Well d) 2.0 3.0 Gas Production (Avg. MMcfd 0 0 1.0 Daily G 0.0 30 BMO Unconventional Resource Conference - January 11, 2011 Source: All data represents M
Slide 31: Marcellus Net Production
Marcellus Shale 90 100 Marcellus Net Production Marcellus net production at 70 80 Mcfe) December 31, 2010 was: 90 MMcfe per day 50 60 Production (MM Seneca Operated 20 30 40 Daily Net - - 10 EOG JV 31 BMO Unconventional Resource Conference - January 11, 2011 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10
Slide 32: 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 33: Marcellus Wells Drilled per Year
Marcellus Shale 100-130 125 Seneca Horizontal Wells Seneca Vertical Wells EOG JV Wells Wells Drilled per Year 100 60-80 65 75 ells Drilled 7 5 29 24 25 50 We 11 29 35-45 10 4 6 0 Fiscal 2007 Fiscal 2008 Fiscal 2009 Fiscal 2010 Fiscal 2011 33 BMO Unconventional Resource Conference - January 11, 2011
Slide 34: Marcellus Shale Pre-Tax IRR Comparison
Marcellus Shale Pre-Tax IRR Comparison Description EUR Well Cost ($ MM) Net Working Interest Net Revenue Interest Pre-Tax IRR (NYMEX - $/MMBtu) Pre-Tax IRR (NYMEX - $/MMBtu) Pre-Tax IRR (NYMEX - $/MMBtu) Description EUR Well Cost ($ MM) Net Working Interest Net Revenue Interest $4.00 $5.00 $6.00 Sen
Slide 35: Seneca Resources Evaluation of JV Opportunities
Seneca Resources Evaluation of JV Opportunities Seneca has engaged Jefferies & Company to explore joint-venture opportunities across a broad portion of its acreage, with the following goals: Ramp up development faster than current aggressive growth plans Bring forward the earnings stream, where a mi
Slide 36: 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 Recent well results validate the quality of our acreage Fee ownership results in superior economics Balanced Business Model Regulated segments support dividend and
Slide 37: Appendix
37 BMO Unconventional Resource Conference - January 11, 2011 Appendix
Slide 38: Utility Segment: National Fuel Gas Distribution Corporation
Utility Segment National Fuel Gas Distribution Corporation
Slide 39: Utility Rate Mechanisms
New York Revenue Decoupling Customer Choice / POR Merchant Function Charge 90/10 Sharing (large volume users) Weather Normalization Low Income Rates Pennsylvania Low Income Rates Customer Choice / POR Merchant Function Charge Under Consideration: Revenue Decoupling Rate Mechanisms Utility
Slide 40: Utility Return on Equity
Utility 20.0 NY PA Return on Equity (1) 14.0 13.2 15.0 14.7 uity (%) 10.3 9.1 10.9 9.8 10.6 11.8 10.0 urn on Equ 6.3 5.0 Retu 0.0 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 40 BMO Unconventional Resource Conference - January 11, 2011 (1) Calculated using Average Total Comprehensive Shareholder Equity.
Slide 41: Pipeline & Storage / Midstream
National Fuel Gas Supply Corporation Empire Pipeline, Inc. National Fuel Gas Midstream Corporation Pipeline & Storage / Midstream
Slide 42: Pipeline & Storage / Midstream Expansion Initiatives
LAMONT COMPRESSOR STATION PHASE I & II LINE "N" EXPANSION PHASE I & II NORTHERN ACCESS COVINGTON GATHERING SYSTEM TROUT RUN GATHERING SYSTEM WEST TO EAST OVERBECK TO LEIDY LAMONT COMPRESSOR STATION PHASE I & II TIOGA COUNTY EXTENSION PHASE I & II LINE "N" EXPANSION PHASE I & II PIPELINE & STORAGE /
Slide 43: Pipeline & Storage/Midstream Expansion Initiatives
Pipeline & Storage/Midstream Expansion Initiatives Project Name Capacity (Dth/D) Est. CapEx In-Service Date Status Covington Gathering System 145,000 $16 MM 11/17/09 Completed - Flowing into TGP 300 Line Lamont Compressor Station 40,000 $6 MM 6/15/10 Completed - Flowing into TGP 300 Line Lamont Phas
Slide 44: Pipeline & Storage Challenges & Opportunities
Pipeline & Storage Challenges & Opportunities NFGSC Contract Turnbacks Supply has received capacity turnbacks on expiring contracts, decreasing future revenue by: FY11: ~$4.5 Million FY12: ~$6.0 Million Empire Unsold Capacity ~100,000 Dth/d of capacity remains unsold after the construction of the Em
Slide 45: Trout Run Gathering System - Lycoming County
Midstream Corporation Trout Run Gathering System - Lycoming County Capacity: 250,000 Dth/d Will Interconnect with Transco Pipeline in Lycoming County Seneca Resources will be the primary shipper Estimated In-Service: Fall 2011 Interstate Pipeline Gathering System Transco
Slide 46: Exploration & Production: Seneca Resources Corporation
Exploration & Production Seneca Resources Corporation
Slide 47: E&P Reserves and Resource Potential by Region
Exploration & Production Marcellus Shale Accelerate development; Convert resource potential to reserves Appalachian Region - Upper Devonian Drill 25-50 wells per year Proved Reserves at 9/30/10 California Continue to operate as a low-cost producer Gulf of Mexico No exploration; Develop and produce e
Slide 48: Seneca Oil and Gas Hedge Positions
National Fuel Gas Company Seneca Oil and Gas Hedge Positions Natural Gas Swaps Volume (Bcf) Average Hedge Price Fiscal 2011 23.0 $6.30 / Mcf Oil Swaps Volume (MMBbl) Average Hedge Price Fiscal 2011 1.7 $70.80 / Bbl Fiscal 2012 16.1 $6.63 / Mcf Fiscal 2013 8.0 $5.97 / Mcf Fiscal 2012 1.1 $70.55 / Bbl
Slide 49: Marcellus Shale Recent Activity
Marcellus Shale Recent Activity EOG Contributed JV Acreage SRC Contributed JV Acreage
Slide 50: Corporate & Financial Highlights
Corporate & Financial Highlights National Fuel Gas Company
Slide 51: Peer Group Comparisons
National Fuel Gas Company Peer Group Comparisons 1-Year Total Return Peer Group Total Return National Fuel 64% Utility Peers 29% E&P Peers -8% Diversified Peers -17% 3-Year Total Return Peer Group Total Return National Fuel 149% Utility Peers 49% E&P Peers 31% Diversified Peers 23% 5-Year Total Retu
Slide 52: Capital Expenditures from Continuing Operations
National Fuel Gas Company Capital Expenditures(1) from Continuing Operations $1,000 All Other Utility Pipeline & Storage Exploration & Production $55 60 $750 $665-800 Millions) $38 $100- 150 57 457 57.973 55-$501 $500 ditures ($ M $417 $192 $188 $398 $485-560 $43 $166 54.414 54.185 $53 57.457 56.178
Slide 53: Dividend Growth
National Fuel Gas Company Dividend Growth National Fuel has had 108 uninterrupted $1.38 years of dividend payments and has increased its dividend for 40 consecutive years Compound Annual Growth Rate 5.1% $0.19 % 53 BMO Unconventional Resource Conference - January 11, 2011 Annual Rate at Fiscal Year
Slide 54: Comparable GAAP Financial Measure Slides and Reconciliations
National Fuel Gas Company Comparable GAAP Financial Measure Slides and Reconciliations This presentation contains certain non-GAAP financial measures. For pages that contain non-GAAP financial measures, pages containing the most directly comparable GAAP financial measures and reconciliations are pro
Slide 55: Reconciliation of GAAP Net Income to Income From Continuing Operations
Reconciliation of GAAP Net Income to Income From Continuing Operations Excluding Items Impacting Comparability ($ Thousands($ Thousands) FY 2007 FY 2008 FY 2009 FY 2010 GAAP Net Income E&P Segment GAAP Net Income $ 2 10,669 $ 146,612 $ (10,238) $ 112,531 P&S Segment GAAP Net Income 56,386 54,148 47,
Slide 56: Reconciliation of Segment Capital Expenditures to Consolidated
Reconciliation of Segment Capital Expenditures to Consolidated Capital Expenditures ($ Thousands) FY20FY 2011 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Forecast Capital Expenditures from Continuing Operations Exploration & Production Capital Expenditures $ 166,535 $ 146,687 $ 192,187 $ 188,290 $ 398,1
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