National Fuel Gas Company · NYSE:NFG
National Fuel Gas — Howard Weil Energy Conference 2010
60 slides from National Fuel Gas's conference presentation, Mar 22, 2010
Slide 1: Howard Weil Energy Conference March 23, 2010
Howard Weil Energy Conference March 23, 2010
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 Holding Company NYSE symbol - NFG Reporting Segments Corporate Subsidiaries
Slide 4: Capital Expenditures from Continuing Operations
National Fuel Gas Company Capital Expenditures(1) from Continuing Operations (CHART) A reconciliation to Capital Expenditures as presented on the Consolidated Statement of Cash Flows is included at the end of this presentation.
Slide 5: Capital Expenditures - An Appalachian Focus
National Fuel Gas Company Capital Expenditures - An Appalachian Focus (CHART) (1) (2) Defined as spending related to efforts to drill for, gather, or transport Appalachian sources of natural gas Any other maintenance spending in the Appalachian region, plus spending in areas outside of the Appalachi
Slide 6: Sources and Uses of Cash
(CHART) Sources and Uses of Cash National Fuel Gas Company 2010 Forecast $ Millions 2011 Forecast $597 NFG Consolidated sources of cash includes cash from operations for all of the Company's segments. $597 $1,096 $1,096 (1) (1)
Slide 7: Capital Structure
National Fuel Gas Company Capital Structure (CHART) $2.884 Billion(1) at December 31, 2009 (CHART) Longer- Term Target Capital Structure At December 31, 2009, Comprehensive Shareholders' Equity, Long-Term Debt and the Current Portion of Long-Term Debt totaled $2.884 Billion as presented on the Compa
Slide 8: Pipeline & Storage / Midstream Expansion Initiatives
WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION GALBRAITH STORAGE EAST BRANCH STORAGE 8 WEST TO EAST EXPANSION HORIZONTAL DRILLING ACTIVITY VERTICAL DRILLING ACTIVITY PIPELINE & STORAGE / MIDSTREAM EXPA
Slide 9: Exploration & Production Seneca Resources Corporation
Exploration & Production Seneca Resources Corporation
Slide 10: Exploration & Production Overview by Region
Exploration & Production Marcellus Shale Accelerate development; convert resource potential to reserves Appalachian Region - Upper Devonian Drill 50-150 wells per year Proved Reserves California Continue to operate as a low-cost producer Gulf of Mexico No exploration; Develop and produce existing re
Slide 11: E&P Capital Expenditures by Region
Exploration & Production Capital Expenditures by Region (CHART) 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.
Slide 12: E&P Annual Production by Region
Exploration & Production Annual Production by Region Marcellus Gulf of Mexico Upper Devonian West Production (Bcfe) 75 55?70 60 44 - 51 20?29 45 40.8 42.5 5.0?7.0 39.3 14.1 13.7 11.0?13.5 30 14.7 8?10 7.9 8.7 8.5?9.5 8?10 6.3 15 18.3 18.8 20.1 19.5?21.0 19?21 0 Fiscal 2007 Fiscal 2008 Fiscal 2009 Fi
Slide 13: Exploration & Production California
Exploration & Production California
Slide 14: Seneca's California Properties
Seneca's California Properties South Lost Hills 2,100 BOEPD Monterey Shale Primary 221 Active Wells Sespe 900 BOEPD Sespe Formation Primary 192 Active Wells North Lost Hills 1,200 BOEPD Tulare & Etchegoin Formation Primary & Steamflood 202 Active Wells North Midway Sunset 4,300 BOEPD Potter & Tulare
Slide 15: California Average Daily Production
California Average Daily Production 2009 Average Daily Production Up ~ 550 BOEPD vs. 2008: Marvic drilling @ MWSS Sespe property exchange Improved steaming efficiency Ivanhoe Acquisition Strategy: Modest Capital spending to maintain production Pursue additional bolt-on acquisitions (CHART) Ivanhoe A
Slide 16: Ivanhoe Acquisition
West Division Ivanhoe Acquisition Acquisition(July 2009) Current(Jan. 2010) Oil Price $58 $72 PV10 (Proved) $42.1MM $70.3MM LOE $17.56/BOE $10.97/BOE Completed 14 well development program First well went into production on February 10, 2010 South Midway Sunset Production: 600 BOE/d 900 BOE/d by Mid-
Slide 17: Antelope Sands Net Pay Isochores
? ? ? ? ? ? 50' 100' 50' 100' Sand shaled- out ? ? Antelope "A" Sand Antelope Sands - Net Pay Isochores Seneca Western Minerals 252F-20 Midway Sunset South Ivanhoe Acquisition Seneca Western Minerals 282J Drilled Jan 2010 - 1st Well in SE Pool Seneca Western Minerals 252F Drilled Jan 2010 - Oil Disc
Slide 18: Gulf of Mexico Exploration & Production
Gulf of Mexico Exploration & Production
Slide 19: Gulf of Mexico Average Daily Production
Gulf of Mexico Average Daily Production Minimal Capital spending in 2010 Production Holding steady (CHART)
Slide 20: Marcellus Shale Exploration & Production
Marcellus Shale Exploration & Production
Slide 21: Marcellus Shale Seneca Acreage Position
Marcellus Shale Seneca Acreage Position Seneca Seneca Cabot Chesapeake Seneca/EOG Range Resources SRC Fee/Lease 21 Howard Weil Energy Conference -- March 23, 2010
Slide 22: EOG Joint Venture Overview & Results
Marcellus Shale EOG Joint Venture Overview & Results Approx. Outline of JV Acreage 200,000 Gross Acres Seneca 50% W.I. (Avg. 58% NRI) EOG 50% W.I. (40% NRI) EOG Acreage Contributed ~120,000 Gross Acres Seneca 50% W.I. (40% NRI) EOG Operated 16 Horizontals Drilled; 6 frac'd IP: 1-4 MMCFD EURs: 2-3 BC
Slide 23: Seneca Drilling Program Results
Marcellus Shale Seneca Drilling Program Results Seneca Operated 9 Horizontals Drilled 6 frac'd IP: 5-10+ MMCFD EURs: 4-6 BCF Net Production: ~20 MMCFD Seneca Operated 2 Horizontals Drilled 1 frac'd IP: 3.9 MMCFD EUR: 3 BCF EOG
Slide 24: Horizontal Drilling Results
Marcellus Shale Horizontal Drilling Results EOG Total 32 Horizontals Drilled 18 Frac'd and Completed 10 Gross Wells Producing Net Production: 25-30 MMCFD
Slide 25: Covington Area Structure Map
IP: 5.7, 4.8 MMCFPD IP: 9.5 MMCFPD Last 30 Days: 11.0 MMCFD IP: 9.3, 7.5 MMCFPD IP: 7.8 MMCFD off map to south Marcellus Shale Covington Area Structure Map Currently drilling
Slide 26: Marcellus Net Production
Marcellus Shale Marcellus Net Production MMBtu/d 30,000 25,000 20,000 15,000 10,000 5,000 EOG Operated JV Wells Seneca Op. #1 Seneca Op. #2 Seneca Op. #3 Seneca Op. #4 Seneca Op. #5 26 Howard Weil Energy Conference -- March 23, 2010
Slide 27: Fiscal 2010 Marcellus Shale Drilling Plan
Fiscal 2010 Marcellus Shale Drilling Plan Marcellus Shale Develop JV focus area (EOG Operated) 20-30 wells September 2010 net production 10-20 MMcfd Develop Tioga focus area (Seneca Operated) 20-25 wells Current net production ~20 MMcfd September 2010 net production 30-50 MMcfd De-risk and prioritiz
Slide 28: Marcellus Shale Wells Drilled per Year
(CHART) Marcellus Shale Wells Drilled per Year
Slide 29: Western Development Area Pre-Tax IRR
Marcellus Shale Western Development Area Pre-Tax IRR: 3.0 BCF EUR; $4.0 MM Well Cost (CHART) JV Wells on Seneca Mineral Fee 100% Wells on Seneca Mineral Fee Typical 15% Royalty Rate
Slide 30: Seneca Full-Cycle Economics Superior to Most Competitors
Seneca Full-Cycle Economics Superior to Most Competitors Marcellus Shale Minimal Acreage Cost Mostly Fee (Seneca owns minerals) Average cost < $100/acre Low Royalty Mostly Fee (0% royalty) Acres contributed to EOG JV have 50% WI/ 58% NRI Rode the Learning Curve at minimal cost Early EOG JV wells at
Slide 31: Seneca Resources Summary
Seneca Resources Summary Use excess cash flow from California to develop Marcellus Maintain production Low-cost producer Produce-out Gulf of Mexico Minimal Capex Expect fairly robust production in fiscal 2010 Focus on the Marcellus 7-day IPs averaging 7.0 MMCFD on first three Seneca operated wells P
Slide 32: Appendix
APPENDIX
Slide 33: Corporate & Financial Highlights
National Fuel Gas Company Corporate & Financial Highlights
Slide 34: Net Plant by Segment
Net Plant by Segment (CHART) National Fuel Gas Company
Slide 35: Net Income from Continuing Operations Excluding Items
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. (CHART) (CHART) $210.7 Million 12 Months Ended At December 31, 2009 E&P $103.1 MM 48.9%
Slide 36: 2010 EPS Guidance & Sensitivity
National Fuel Gas Company 2010 EPS Guidance & Sensitivity NFG & Subsidiaries The earnings guidance and sensitivity table are current as of February 5, 2010. The sensitivity table only considers revenue from the Exploration and Production segment's crude oil and natural gas sales. The sensitivities w
Slide 37: Dividend Growth
National Fuel Gas Company Dividend Growth (CHART) $1.34 $0.19 Compound Annual Growth Rate 5.2% National Fuel has had 107 uninterrupted years of dividend payments and has increased its dividend for 39 consecutive years
Slide 38: Ranked 4th Best Energy Company in 2009
Ranked the 4th best energy company in 2009 Report Based on the 4-year averages of: Profit Margin Dividend Yield FCF, ROE, ROA Sustainable Growth Consistently in the Top 10 best energy companies (2006-2009 Reports) "National Fuel Gas ... strongly positioned in gas markets from the well to the burner
Slide 39: Peer Group Comparisons
National Fuel Gas Company Peer Group Comparisons Peer Group Total Return E&P Peers 119% National Fuel 70% Diversified Peers 60% Utility Peers 28% 1-Year Total Return Peer Group Total Return National Fuel 30% E&P Peers 4% Utility Peers 3% Diversified Peers -7% 3-Year Total Return Peer Group Total Ret
Slide 40: Debt Maturity Schedule
National Fuel Gas Company Debt Maturity Schedule (CHART) Fiscal Year Total Long-Term Debt Outstanding At December 31, 2009: $1.249 B
Slide 41: Capital Resources & Credit Ratings
National Fuel Gas Company Capital Resources & Credit Ratings Capital Resources(1) $300.0 MM Commercial Paper Program and Uncommitted Credit Facilities - Aggregate of $720.0 MM $300.0 MM Committed Credit Facility through September 2010 - backs Commercial Paper Program RATING AGENCY RATING FITCH A- MO
Slide 42: Exploration & Production Seneca Resources Corporation
Exploration & Production Seneca Resources Corporation
Slide 43: Exploration & Production Proved Reserves
Exploration & Production Proved Reserves (CHART) Proved Reserves @ 9/30 491 Bcfe 503 Bcfe 528 Bcfe West - California Reserves: 342 Bcfe (64%) (57 Mmboe) FY '09 Production: 20.1 Bcfe (47%) Gulf of Mexico Reserves: 35 Bcfe (7%) FY '09 Production: 13.7 Bcfe (32%) East - Appalachia Reserves: 151 Bcfe (2
Slide 44: Marcellus Shale Acreage per Share Comparison
Marcellus Shale Company Net Acres Shares Outstanding (MM) Acres/1K Shares Seneca Resources 738,000 80.5 9.17 Range Resources 1,400,000 157.4 8.89 Atlas Energy Resources LLC 519,000 78.1 6.65 Carrizo Oil & Gas 108,000 31.1 3.47 EQT Corp. 445,000 130.9 3.40 Chesapeake Energy 1,520,000 644.5 2.36 Cabot
Slide 45: Western Development Area Decline Curve
Marcellus Shale Western Development Area Decline Curve - 3.0 BCF Estimated Ultimate Recovery (EUR) (CHART) Category Type Curve Parameters Initial Rate 3,550 MCF/D Average first year decline 68% Final decline 6% Hyperbolic Coefficient 1.6 Abandonment rate 10 MCF/D Average first month rate 3,090 MCF/D
Slide 46: Upper Devonian Development Drilling
Upper Devonian Development Drilling (CHART)
Slide 47: Pipeline & Storage
National Fuel Gas Supply Corporation Empire Pipeline, Inc. Pipeline & Storage
Slide 48: Covington Gathering System - Phase I
PIPELINE & STORAGE / MIDSTREAM EXPANSION INITIATIVES 48 WEST TO EAST EXPANSION HORIZONTAL DRILLING ACTIVITY VERTICAL DRILLING ACTIVITY WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION GALBRAITH STORAGE E
Slide 49: Lamont Compressor Station
49 WEST TO EAST EXPANSION HORIZONTAL DRILLING ACTIVITY VERTICAL DRILLING ACTIVITY WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXP
Slide 50: Line N Expansion
50 WEST TO EAST EXPANSION HORIZONTAL DRILLING ACTIVITY VERTICAL DRILLING ACTIVITY WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXP
Slide 51: Tioga County Extension
51 WEST TO EAST EXPANSION HORIZONTAL DRILLING ACTIVITY VERTICAL DRILLING ACTIVITY WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXP
Slide 52: West to East - Phases I & II
52 WEST TO EAST EXPANSION HORIZONTAL DRILLING ACTIVITY VERTICAL DRILLING ACTIVITY WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXP
Slide 53: East Branch & Galbraith Storage Expansion
53 WEST TO EAST EXPANSION HORIZONTAL DRILLING ACTIVITY VERTICAL DRILLING ACTIVITY WEST TO EAST PHASE 1 & PHASE 2 APPALACHIAN LATERAL LAMONT COMPRESSOR STATION COVINGTON GATHERING SYSTEM TIOGA COUNTY EXTENSION LINE "N" EXPANSION GALBRAITH STORAGE EAST BRANCH STORAGE PIPELINE & STORAGE / MIDSTREAM EXP
Slide 54: Utility Segment National Fuel Gas Distribution Corporation
54 Utility Segment National Fuel Gas Distribution Corporation Howard Weil Energy Conference - March 23, 2010
Slide 55: Distribution Corporation Service Territory
55 National Fuel Gas Distribution Corporation Service Territory Howard Weil Energy Conference - March 23, 2010
Slide 56: Utility Rate Mechanisms
56 New York Revenue Decoupling Conservation Incentive Program Merchant Function Charge Low Income Rates 90/10 Sharing (Revenue Decoupling for Industrial Load) Weather Normalization Pennsylvania Low Income Rates Pending: Revenue Decoupling Choice Program Rate Mechanisms Utility Howard Weil Energy Con
Slide 57: Utility Average Use per Residential Customer
57 Utility Average Use per Residential Customer Fiscal Year TME Howard Weil Energy Conference - March 23, 2010
Slide 58: Accounts Receivable - Customer
58 Howard Weil Energy Conference - March 23, 2010 Accounts Receivable - Customer (1) (1) All values include Purchase of Receivables ("POR") Program Utility
Slide 59: Utility Low Income Assistance Program
59 Howard Weil Energy Conference - March 23, 2010 As of February 19, 2010 Program year opens in November HEAP/LIHEAP (1) (2) Utility
Slide 60: Comparable GAAP Financial Measure Slides and Reconciliations
60 Howard Weil Energy Conference - March 23, 2010 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 G
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