NATIONAL FUEL GAS COMPANY Investor Presentation
Fiscal 2024 - 2nd Quarter Update
May 1, 2024
National Fuel Gas Company
- Company Overview (3)
- Why National Fuel? (7)
- Business Updates (12)
- Supplemental Information
- Segment Information (19)
- Rate Case Overview (43)
- Guidance & Other Financial Information (45)
History of National Fuel
Industry Pioneer Born From Rockefeller's Standard Oil Company
May 2024 Update
3
NFG Today: A Diversified, Integrated Natural Gas Company
Developing our large, high-quality acreage | Adjusted EBITDA(1) | |||
Upstream | position in Marcellus & Utica shales | |||
Exploration & | ~1.2 Million | ~1.1 Bcf/day | 51% | |
Production | Net acres in | Net total production(2) | ||
Appalachia | ||||
Expanding and modernizing pipeline | ||||
infrastructure to provide outlets for | ||||
Midstream | Appalachian natural gas production | |||
Gathering | 4.5 MMDth | 37% | ||
$2.7 Billion | ||||
Pipeline & Storage | Investments | Daily interstate | ||
since 2010 | pipeline capacity | |||
under contract | ||||
Providing safe, reliable and affordable service to customers in WNY and NW PA
Downstream | 754,000 | ~$900 Million | 12% | |
Utility | ||||
Utility | Investments in safety | |||
customers | since 2010 |
Note: This presentation includes forward-looking statements. Please review the safe harbor for forward looking statements at the end of this presentation. | |||||
(1) | Twelve months ended March 31, 2024. A reconciliation of Adjusted EBITDA to Net Income as presented on the Consolidated Statement of Income and Earnings Reinvested in the Business is included at the end of this presentation. | 4 | |||
(2) | Average net production for the three months ended March 31, 2024. | May 2024 Update |
Non-Regulated Business Overview
Exploration & Production Segment (Upstream)
- Seneca Resources Company
- Total Net Acres (Pennsylvania): ~1.2 million
- Total Proved Reserves: 4.5 Tcfe (as of 9/30/2023)
- Current Net Production: ~1.1 Bcf/d
- Firm Transportation Capacity: ~1 Bcf/d to premium markets
- Decades of Marcellus and Utica development inventory
Gathering Segment (Midstream)
- National Fuel Gas Midstream Company
- Total Throughput: 1.4 Bcf/d (including third party)
- Greater than 2 Bcf/d of gathering capacity
- ~400 miles of gathering pipeline
- 24 compressor stations
- Interconnections with 7 major pipelines
Western Development Area - 915,000 Acres
Eastern Development Area -
309,000 Acres
May 2024 Update
5
Regulated Business Overview
Pipeline & Storage Segment (Midstream)
- Regulated by Federal Energy Regulatory Commission (FERC)
- Total Rate Base: $1.6 Billion(2)
- ~2,600 miles of pipeline/ 29 storage fields
- National Fuel Gas Supply Corporation:
- Firm Contracted Storage Capacity: 71 Bcf
- Firm Contracted Transportation Capacity: 3.4 Bcf/day(1)
- Empire Pipeline, Inc.:
- Firm Contracted Transportation Capacity: ~1.0 Bcf/ day(1)
- Interconnections with 8 major interstate pipelines
Utility Segment (Downstream)
- New York Jurisdiction
- 540,000 customers
- Regulated by the New York Public Service Commission (NYPSC)
- Pennsylvania Jurisdiction
- 214,000 customers
- Regulated by the Pennsylvania Public Utilities Commission (PaPUC)
- Total Rate Base: $1.2 Billion(2)
- Fiscal 2023 Total Throughput: ~134 Bcf
- Provides more than 90% of the space heating load in operating footprint
(1) | Contracted capacity disclosed annually as of September 30, 2023. | May 2024 Update |
(2) | Represents the latest available information in regulatory filings. Supply and Empire rate base amounts are as of 12/31/2023. NY is as of 8/31/2023 and PA is as of 12/31/2023. | |
6
Why National Fuel?
Strong Integrated
Returns
- Optimized capital allocation
- Lower cost of capital
- Operational synergies
- Improved profitability
Visibility on Long-Term
EPS & FCF Growth
- Targeting significant rate base growth from system modernization and expansion
- High-gradedupstream development increases capital efficiencies
Long-Standing History of Shareholder Returns
- Over 120 years of dividend payments
- 53 years of dividend increases
- New share repurchase program
Responsibly Reducing
Emissions
- Continued progress toward emissions reduction targets
- Enhanced GHG disclosures on sustainability initiatives
May 2024 Update
7
Integrated Model Enhances Returns
NFG's ROCE outperforms peers and broader market, on average, over a multi-year period
Visibility on Long-Term
20%
10%
Return on Capital Employed(1)
NFG vs. S&P 500 and Industry Peers
S&P O&G
Index
NFG
Integrated Business Model Benefits…
Operations: Lower cost structure |
Financial: Lower cost of capital |
EPS & FCF
Growth
Long History
of Shareholder
Returns
Responsibly
Reducing
Emissions
0%
-10%
-20%
S&P 500
UTY
Decrease driven by non-cash impairments
FY17 | FY18 | FY19 | FY20 | FY21 | FY22 | FY23 |
Strategic: Optimized capital allocation |
Commercial: Greater revenue/ margin |
…Drive Strong Performance Since 2017
- NFG vs. S&P 500: +2%
- NFG vs. E&P Peers: +8%
- NFG vs. Utility Peers: + 6%
(1) Source: Bloomberg for the TTM ending September 30th. | May 2024 Update |
8
Robust Earnings & Free Cash Flow Growth Outlook
Strong
Integrated
Returns
on
FCF
Long History
of Shareholder
Returns
Responsibly
Reducing
Emissions
Projected Free Cash Flow ($ Millions)(1)
Significant Growth in Future FCF
~$150
~$120 ~$130
$2.00 $2.40 $2.75 $3.25
FY2024FY2025
NYMEX Price
($/MMBtu - Remainder of FY)
Non-Regulated Business
Growth Drivers
- Increasing well productivity from prolific EDA
- Moderate production growth combined with lower capital
- Targeting production growth of 0% to 5% per year
- Strong natural gas price outlook
Regulated Business
Growth Drivers
- Robust near-term outlook driven by rate making activity
- Long-termrate base growth driven by pipeline modernization and potential expansion opportunities
Predictable Cash Flow Generation
with Commodity Upside
- Hedging protects near-term earnings and cash flows
- Significant opportunity to capture higher natural gas prices
- Predictable cash flows from the regulated businesses
- The Company defines free cash flow as net cash provided by operating activities, less net cash used in investing activities, adjusted for acquisitions and divestitures. See non-GAAP financial measures information at the end of this presentation.
Assumes current hedges. Assumes no pricing-related curtailments.
9
Long-Standing History of Returning Capital to Shareholders
$1.5 Billion Returned to Shareholders Over Last 10 Years
Strong
Integrated
Returns
Visibility on Long-Term
EPS & FCF
Growth
of
Responsibly
Reducing
Emissions
Dividend | Share |
Yield (1) | Buyback Yield (2) |
~4% | ~2% |
Stable, Growing Dividend … | $1.98 |
per share |
53 Years
Consecutive Dividend Increases
121 Years
Consecutive Payments
$0.19
per share
Total Return of
Capital
~6%
…Plus New Share Buyback
- $200M Share Repurchase Program approved in March 2024
- Target completion date by end of fiscal 2025(3)
1970 | 1980 | 1990 | 2000 | 2010 | 2020 |
- As of April 30th, 2024.
- FY24 buyback yield assumes $74 MM of stock is purchased beginning in March.
- Completion subject to a number of factors, including but not limited to stock price, market conditions, applicable securities laws, including SEC Rule 10b-18, corporate and regulatory requirements, and capital and liquidity needs. May 2024 Update
10
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Disclaimer
National Fuel Gas Co. published this content on 01 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 11:52:35 UTC.
