EX-99 2 l25612aexv99.htm EX-99 EX-99
 

Exhibit 99
Safe Harbor NOTE: This presentation contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning plans, objectives, goals, projections, strategies and future events or performance, other statements that are not statements of historical fact, and statements identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "may," "should," "will" or words of similar meaning. While National Fuel's expectations, beliefs and projections are made in good faith and are believed to have a reasonable basis, actual results may differ materially. Refer to National Fuel's most recent Form 10-Q for a listing of important risk factors you should consider. In addition, 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 provided at the end of this presentation.

 

Grow shareholder value through timely investment in the energy industry. National Fuel Gas Company Corporate Objective

 

National Fuel Gas Company Net Plant by Segment $2.9 Billion At December 31, 2006 P&S Utility All Other E&P Net plant 0.67 1.088 0.1166 1.021

 

$190.8 Million 12 Months Ended December 31, 2006 P&S Utility Timber Energy Mkt. Corp. & Other E&P NI 51.6 45.2 4.4 5.3 2.5 81.7 National Fuel Gas Company Net Income from Continuing Operations* * Excludes oil and gas impairment of $68.6 million, income tax adjustments of $11.2 million, and discontinuance of hedge accounting of $1.9 million.

 

$2.5 Billion At December 31, 2005 Long-Term Debt Short-Term Debt Shareholder Equity Off B/S Financing Capitalization 1126.3 74.8 1321.3 49.8 National Fuel Gas Company Capitalization Long-Term Debt Short-Term Debt Shareholder Equity Capitalization 1095.6 71.6 1454.8 Short-Term Debt 2.7% Shareholder Equity 55.5% Long-Term* Debt 41.8% $2.6 Billion At December 31, 2006 Includes Current Portion of Long-Term Debt

 

6

 

Fiscal Year 2002 2003 2004 2005 2006 2007 1Q Earnings 0.62 0.7 0.56 0.46 0.58 0.2 Fiscal Year Utility Diluted Earnings per Share

 

2002 2003 2004 2005 2006 1Q 2007 Utility 169 179 191 211 204 50.7 Utility O & M Expense * Excludes SFAS 88 settlement loss of -$3.4 million Fiscal Year $ Millions *

 

Utility Rate Case Activity 11/30/06: The Pennsylvania PUC Approved the Settlement Agreement Reached in the Delivery Service Charge Rate Case Effective Date: 1/1/07 Revenue Increase: $14.3 MM Revenue Decoupling: Initially Proposed by The Utility in This Case. Will Instead be Pursued Via Active Participation in The Statewide Generic Proceeding Announced by The Pennsylvania PUC on September 28, 2006 Pennsylvania 01/29/07: Utility Submitted a Request to Re-Design and Raise its Delivery Service Charges in 2008 Proposed Revenue Increase: $52 MM, or 6.4% Revenue Decoupling: The Utility's Proposed Conservation Incentive Program Would Allocate $12 MM to the Promotion of Energy Conservation and Provide Customer Conservation Incentives The delivery rate would be adjusted, based upon throughput, to enable the Utility to recover its operating margin New York Case Concluded Case Initiated

 

Utility Rate Case Settlements * Represents the approximate range of rate base filed for in this case. ** Black-box settlement in both states. Previous Settlements Previous Settlements Current Case New York Pennsylvania New York Approximate Rate Base $640-$650 MM $280-$290 MM* $711 MM Approximate Base Rate Revenue Increase $21 MM $14.3 MM $52 MM Effective Date 8/1/2005 1/1/2007 Late '07/Early '08 Approximate Utility Capital Structure**: Approximate Utility Capital Structure**: Long-term Debt Cost Component Short-term Debt Cost Component Equity Component Return on Equity 45.0% 6.65% 5.0% 5.0 - 6.0% 50.0% 10.0 - 11.0% 39.4% 6.57% 9.5% 5.3% 51.1% 11.65%

 

New York Merchant Function Charge Varies with Cost of Gas Rates Include Allowance Attributable to Uncollectible Expense Residential Non-Residential 2.742% .304% Multiplied by Gas Supply Cost Rate Utility Bad Debt Tracking

 

At 12/31/04 At 9/30/05 At 12/31/05* At 09/30/06 At 12/31/06 30-59 days 11.9 9 16.7 9.2 11.9 60-89 days 5.5 6.5 6.4 7.1 6.02 90-119 days 3.7 6.3 4 6.8 4.36 120 days & over 46.2 54.5 52.6 66.7 64.32 Reserve for Bad Debt 15.1 25.1 31.5 29.7 34.18 Utility Accounts Receivable - Customer $ Millions * Includes receivables purchased pursuant to implementation of the Utility's New York rate case settlement.

 

13

 

2,966 Miles of System Pipeline 15 Compressor Stations Totaling 39,886 Horsepower Transportation Volume for Fiscal 2006: 375.0 Bcf $123.4 MM in Revenues for Fiscal 2006 Pipeline & Storage Pipeline Operating Statistics

 

32 Underground Natural Gas Storage Fields (4 Co-owned with Nonaffiliated Companies) 15 Compressor Stations Totaling 35,475 Horsepower 73.4 Bcf of Working Storage Capacity $66.8 MM in Revenues for Fiscal 2006 Pipeline & Storage Storage Operating Statistics

 

Fiscal Year Pipeline & Storage Diluted Earnings per Share Fiscal Year 2002 2003 2004 2005 2006 2007 1Q Earnings 0.37 0.56 0.58 0.71 0.65 0.16

 

Pipeline & Storage FERC Proceeding 2/9/07: The FERC approved the uncontested Stipulation & Agreement filed as an offer of settlement in the FERC Proceeding brought by NYPSC, PaPUC and Pennsylvania OCA (FERC Docket No. RP06-298- 000). The economically effective date of the settlement is December 1, 2006. Supply Corp.'s gas retention allowance will decrease from 2% to 1.4%, reducing annual excess "efficiency gas" volumes by ?1.5 Bcf After a 5-year general rate case moratorium, Supply Corp. will make a rate case filing to be effective December 1, 2011 Supply Corp.'s annual depreciation rates will decrease to 2.9% for transmission plant and 2.23% for storage plant, decreasing its annual depreciation expense by ?$5.63 million Rate allowance for post-retirement medical expenses will increase from ?$4.7 MM per year to $11 MM per year, including a 5-year amortization of ?$12.43 MM for a related regulatory asset Supply Corp. will amend its tariff provisions on discounting gas retention allowances to be consistent with FERC's current policy limiting "fuel discounts"

 

18

 

Empire Connector FERC Approved the Empire Connector Project by Order issued 12/21/06 Initial Capacity 250,000 Dth/day - KeySpan 150,750 Dth/day Target In-Service Date Fall 2008 78 Miles of 24" Pipe - 1,440 psig 20,620 HP of Compression Receipts from TransCanada Pipeline @ Chippawa, Ontario; Deliveries to Millennium @ Corning, New York Capital Cost Approximately $177 Million

 

Leidy Hub Our Prime Location 20

 

Energy Marketing Customers & Marketing Area Customers at FYE Customers at FYE Customers at FYE Residential Commerical/Industrial 2006 14,963 4,605 2005 14,902 4,265 2004 15,983 4,345 Only Natural Gas Service Territory Is Shown

 

Energy Marketing Diluted Earnings per Share Fiscal Year 2002 2003 2004 2005 2006 2007 1Q Earnings 0.11 0.07 0.07 0.06 0.07 0.01 Fiscal Year

 

Canada - 7% 43.3 BCFE NY PA Gulf Coast - 8% 49.3 BCFE CA - 72% 405.1 BCFE Total: 580.7 BCFE / 96.8 MMBOE Oil: 60% Gas: 40% Reserves by Region (at 09/30/06) East - 13% 83.0 BCFE

 

E&P First Quarter Results Expenses/Mcfe FY 07 1Q FY 06 1Q DD&A $1.83 $1.93 LOE $1.21 $1.32 G&A $0.46 $0.56 Quarter Over Quarter Change DD&A -0.0518 LOE -0.0833 G&A -0.1786 Reduced Expenses

 

E&P First Quarter Results FY 07 1Q FY 06 1Q Production 12.0 BCFE 11.2 BCFE Operating Revenue $88.7 MM $82.1 MM Net Income $20.7 MM $17.4 MM Net Income Per Share $0.24 $0.20 Quarter Over Quarter Change Production 0.076455 Operating Revenue 0.080389768 Net Income 0.189655 Net Income Per Share 0.2 Improved Results

 

Fiscal Year 2002 2003 2004 2005 2006 20071Q Earnings 0.33 0.46 0.61 0.6 0.91 0.24 a b a Excludes oil & gas impairment, loss on sale and cum. effect of change in acctg of - $0.85 b Excludes SFAS 88 settlement loss of -$0.01 and Adjustment of loss on sale of oil and gas assets of +$0.06 c Excludes oil & gas impairment of -$0.80 and income tax adjustments of +$0.13 Fiscal Year Exploration & Production Diluted Earnings per Share c

 

Fiscal Year Exploration & Production NFG Average Total Sale Price of Natural Gas* 2002 2003 2004 2005 2006 NFG Avg Appalachian 3.74 5.1 5.72 7.01 8.9 NFG Avg Total US 3.58 4.52 5.13 6.26 7.02 Per Mcf * After Hedging

 

Fiscal Year Exploration & Production NFG Average Total Sale Price of Oil* 2002 2003 2004 2005 2006 NFG Avg Appalachian 23.76 28.77 31.3 48.28 65.28 NFG Avg Total US 21.01 25.11 26.06 26.59 40.26 Per Barrel * After Hedging

 

$US Millions Exploration & Production Estimated Capital Expenditures 2007 Gulf West East Canada Exploration Drlg. 64.5 4 5.6 23.4 G&G 4.3 0 0.5 2.7 Development New 0 0 23 1.9 Development Proved 5.6 28.1 0.4 0 Facilities 17.6 8.6 3.5 2.3 Leasehold Acquisition 5.4 0 1.8 2.7 Other 2.3 1.8 0.3 1.4 $99.7 $42.5 $35.1 $34.4

 

2002 2003 2004 2005 2006 2007E 1Q 2007 East 8.4 9.4 9.5 12.5 27 35.5 4.4 West 34.4 11.4 17.4 29.6 36 42.5 11.8 Canada 27 30.8 31.4 38.5 42 34.5 9.3 Gulf 44.8 24.2 19.4 41.8 103 99.5 21.1 $114.6 $75.8 $77.7 $122.4 $208.0 Fiscal Year $US Millions Exploration & Production Capital Expenditures by Division $210-$214 $46.6 Includes $8.4 MM to Develop Proved Undeveloped Reserves

 

Seneca's Working Interest: 20% Sukunka b-60-E Production Commenced on December 13, 2004 Current Sales Rate up to 60 MMcf/d * Sukunka d-93-D Well Successfully Completed Production Tests at Rates up to 33 MMcf/d * Sukunka 69-C Currently Evaluating Expected Completion during 2nd Quarter FY 2007. Exploration & Production Sukunka Wells * Third Party Processing Facilities Limit Production to 65 MMcf/d

 

0 15 miles (2nd Well) (3rd Well) (5th Well) (4th Well) AREA OF MUTUAL INTEREST Gas Wells Drilling Wells Working interest lands Lands to be earned by drilling 66-E 79-J 50-C 93-D (1st Well) 60-E Sukunka Area Land Map Monkman P & A'd (6th Well) 77-D (7th Well) 69-C

 

939,000 Total Net Acres 788,000 in PA 151,000 in NY National Fuel Mineral Interests

 

Devonian Shale Play Northern Appalachian Basin Devonian Shale Play national fuel January 2007 67

 

E&P East Division Stratigraphic Column Devonian Shales Depth: 4,500' - 8,000' (PA) Bass Island, Lockport, Medina, Whirlpool Depth: 2,000' - 6,000' (NY / PA) Upper Devonian Sandstones Depth: 800' - 4,500' (PA) Onondaga Limestone Depth: 2,500' - 6,000' (Southern NY / PA) Trenton, Black River Depth: 1,800' - 2,500' (Central NY) 8,000' - 15,000' (Southern NY / PA) Theresa Depth: 5,000' - 7,000' (Southern NY) national fuel January 2007 69

 

JV with EOG Resources Required Initial Activities 1Q07 - 2Q07 3Q07 - 1Q08 2Q08 - 1Q09 Acquire Data Evaluate/ Determine Initial Drilling Locations Drill 5 Exploratory Wells Acquire/ Evaluate Additional Data Design/Test Completion Technique & Well Flow Produce Wells if Possible Determine Additional Drilling Locations Drill 5 Additional Wells Acquire/ Evaluate Additional Data Design/Test Completion Technique & Well Flow Produce Wells if Possible Evaluate Results to Date Determine Strategy for Additional Exploration or Development, as Appropriate Fiscal Quarters

 

2002 2003 2004 2005 2006 East 30 61 41 48 144.46 West 47.99 30.97 49 116.97 92.98 Canada 33.9 22.16 63.35 24.64 15.1 Gulf 1.58 3.35 0.65 1.53 3.72 Fiscal Year Drilling Activity by Division Productive Net Wells 113 117 154 256 191 Net Wells Completed

 

Fiscal Year 2002 2003 2004 2005 2006 2007 1Q Earnings 0.12 0.12 0.07 0.06 0.07 0.003 a Excludes gain from timber sale of +$1.26 b Excludes adj. of gain on timber sale of -$0.01 a b Fiscal Year Timber Diluted Earnings per Share

 

National Fuel Gas Company Share Buyback Date Authorized: December 8, 2005 Authorized Amount: Up to 8 Million Shares As of 12/31/06: 3,710,478 Shares Repurchased

 

70 0.19 71 0.2 72 0.205 73 0.215 74 0.225 75 0.235 76 0.245 77 0.255 78 0.27 79 0.2875 80 0.3075 81 0.33 82 0.36 83 0.39 84 0.47 85 0.52 86 0.57 87 0.6 88 0.63 89 0.67 90 0.71 91 0.73 92 0.75 93 0.77 94 0.79 95 0.81 96 0.84 97 0.87 98 0.9 99 0.93 '00 0.96 '01 1.01 '02 1.04 '03 1.08 '04 1.12 '05 1.16 '06 1.2 National Fuel Gas Company Dividend Growth $0.19 $1.20 Annual Rate At Fiscal Year End

 

APPENDIX

 

National Fuel Gas Company New York Stock Exchange NFG Shares Outstanding (Approx.) (As of 12/31/06) 82.6 Million Average Daily Trading Volume (12 Months Ended 3/30/07) 536,630 Market Capitalization (Approx.) (As of 03/30/07) $3.6 Billion $1.20 Annual Dividend Rate September Fiscal Year End

 

National Fuel Gas Company Energy Mktg. Timber E&P P&S Utility National Fuel Gas Distribution Corporation National Fuel Gas Supply Corporation and Empire State Pipeline Seneca Resources Corporation Highland Forest Resources, Inc. and NE Div. Of Seneca Resources Corporation National Fuel Resources, Inc. National Fuel Gas Company Major Business Segments

 

1/1/1970 2/1/1970 3/1/1970 4/1/1970 5/1/1970 6/1/1970 7/1/1970 8/1/1970 9/1/1970 10/1/1970 11/1/1970 12/1/1970 1/1/1971 2/1/1971 3/1/1971 4/1/1971 5/1/1971 6/1/1971 7/1/1971 8/1/1971 9/1/1971 10/1/1971 11/1/1971 12/1/1971 1/1/1972 2/1/1972 3/1/1972 4/1/1972 5/1/1972 6/1/1972 7/1/1972 8/1/1972 9/1/1972 10/1/1972 11/1/1972 12/1/1972 1/1/1973 2/1/1973 3/1/1973 4/1/1973 5/1/1973 6/1 /1973 7/1/1973 8/1/1973 9/1/1973 10/1/1973 11/1/1973 12/1/1973 1/1/1974 2/1/1974 3/1/1974 4/1/1974 5/1/1974 6/1/1974 7/1/1974 8/1/1974 9/1/1974 10/1/1974 11/1/1974 12/1/1974 1/1/1975 2/1/1975 3/1/1975 4/1/1975 5/1/1975 6/1/1975 7/1/1975 8/1/1975 9/1/1975 10/1/1975 11/1/1975 12/1/1975 1/1/1976 2/1/1976 3/1/1976 4/1/1976 5/1/1976 6/1/1976 7/1/1976 8/1/1976 9/1/1976 10/1/1976 11/1/1976 12/1/1976 1/1/1977 2/1/1977 3/1/1977 4/1/1977 5/1/1977 6/1/1977 7/1/1977 8/1/1977 9/1/1977 10/1/1977 11/1/1977 12/1/1977 1/1/1978 2/1/1978 3/1/1978 2.727279545 2.798297727 2.840918182 2.698881818 2.514225 2.372140909 2.428984091 2.642038636 2.5284 2.500002273 2.599418182 2.5284 2.784075 2.911936364 2.684659091 2.982954545 2.840918182 2.784075 2.7699 2.840918182 2.713056818 2.755677273 2.741454545 2.840918182 3.03975 3.03975 2.982954545 2.897713636 2.883538636 2.840918182 2.798297727 2.869315909 2.982954545 3.025575 3.153388636 3.139213636 3.181834091 3.210231818 3.139213636 2.897713636 2.713056818 2.727279545 2.613640909 2.627863636 2.883538636 2.7699 2.500002273 2.400586364 2.670436364 2.698881818 2.514225 2.386363636 2.159086364 1.974429545 2.173309091 1.974429545 2.045447727 2.144863636 2.088068182 2.088068182 2.343743182 2.301122727 2.457381818 2.357965909 2.500002273 2.556797727 2.428984091 2.400586364 2.357965909 2.400586364 2.4147613 64 2.428984091 2.713056818 2.500002273 2.500002273 2.5284 2.514225 2.5284 2.741454545 2.826695455 2.840918182 2.869315909 2.869315909 3.181834091 3.238629545 3.011352273 2.954556818 3.053972727 3.025575 3.238629545 3.110815909 2.897713636 2.997177273 3.025575 2.997177273 3.03975 2.840918182 2.840918182 2.883538636 National Fuel Gas Company Stock Price (Jan 1970 - Mar 30, 2007) 03/30/2007 $43.26

 

2001 2002 2003 2004 2005 2006 2007E 1Q 2007 Utility 42.4 51.5 49.9 55.5 50.1 54.4 58 12.9 P & S 26 30.3 199.4 23.2 21.1 26 65 4.9 E & P 296.4 114.6 75.8 77.7 121.2 208.3 212 46.6 Energy Mkt. 0.116 0.1 0.2 0.0102 0 $- 0 0 Timber 3.7 25.6 3.5 2.8 18.9 2.3 2 0.8 Corp & Others 0.937 6.6 50.1 5.7 1.1 3.2 2 1.8 International 15.6 4.2 2.5 7.5 5.9 0 0 $ Millions $232.9 $381.4 $172.3 $218.3 Fiscal Year National Fuel Gas Company Expenditures for Long-Lived Assets $294.2 Approx. $337-$341 $67.0

 

2002 2003 2004 2005 2006 4.29 4 5.27 3.73 5.48 Fiscal Year National Fuel Gas Company Net Cash Provided by Operating Activities per Diluted Share

 

EPS Guidance & Sensitivity Natural Gas ($/MMBtu) Oil ($/Bbl) At 09/21/06 $65.35 $7.471 Average $66.67 $7.476 Sept-07 $66.49 $7.391 Aug-07 $66.25 $7.311 Jul-07 $65.96 $7.221 Jun-07 $65.61 $7.126 May-07 $65.18 $7.166 Apr-07 $64.65 $7.746 Mar-07 $64.03 $7.921 Feb-07 $63.32 $7.881 Jan-07 * Please refer to Safe Harbor for Forward-Looking Statements on pp. 33-35 of National Fuel Gas's 2/6/07 Form 10-Q. The sensitivity table is current as of February 1, 2007 and only considers revenue from the Exploration and Production segment's crude oil and natural gas sales. The sensitivities will become obsolete with the passage of time, changes in Seneca's production forecast, changes in basis differentials, as additional hedging contracts are entered into, and with the settling of NYMEX hedge contracts at their maturity. -$0.07 +$0.07 -$0.11 +$0.11 Decrease Decrease Increase $5 change per Bbl Oil $1 change per MMBtu Gas Diluted Earnings Per Share Guidance* Range $2.15 - $2.35 Consolidated Earnings Earnings per Share Sensitivity to Changes From 9/21/06 NYMEX Prices* Increase Fiscal 2007 NFG & Subsidiaries NYMEX Settlement Prices

 

2002 2003 2004 2005 2006 1Q 2007 61.3 60.7 65.1 65.4 66.3 14.8 * Excludes SFAS 88 settlement loss of -$3.0 million * Pipeline & Storage O & M Expense $ Millions Fiscal Year

 

Swaps Volume Average Hedge Price Oil 0.5 MMBBL $37.86 / BBL Gas 4.5 BCF $ 7.32 / MCF No-cost Collars Volume Lowest Floor Price Highest Ceiling Price Oil 0.1 MMBBL $70.00 / BBL $77.00 / BBL Gas 4.1 BCF $ 7.42 / MCF $18.52 / MCF Nine Months Remaining Fiscal 2007 Exploration & Production Hedging Summary at 12/31/06 Fiscal 2008 Swaps Volume Average Hedge Price Oil 0.2 MMBBL $51.80 / BBL Gas 5.1 BCF $ 8.31 / MCF No-cost Collars Volume Lowest Floor Price Highest Ceiling Price Gas 1.4 BCF $ 8.83 / MCF $16.45 / MCF

 

E&P's Forecast Data for Fiscal 2007 Production: 47 - 52 BCFE Number of Wells to be Drilled: 255 - 298 Expenses/Mcfe Estimated Range DD&A $1.90 LOE $1.10 - $1.30 Other Taxes (% of Revenue) $0.10 - $0.14 Other Operating Expenses $8.5 MM - $10.5 MM General and Administrative $ 24 MM - $26 MM

 

Standard & Poor's Moody's Fitch, Inc. Long-Term Debt BBB+ Baa1 A- Outlook Stable Stable Stable Commercial Paper A-2 P-2 F2 NFG Debt Ratings at March 30, 2007

 

Commercial Paper Program And Bilateral Credit Facilities - Aggregate Of $635 MM $71.6 MM borrowed at December 31, 2006 $300.0 MM Committed Credit Facility Through September 2010 $0 borrowed at December 31, 2006 Universal Shelf Registration on File - Additional $550 MM Can Be Issued As Debt Or Equity Securities Any offer and sale of such securities will be made only by means of a prospectus meeting requirements of securities laws National Fuel Gas Company Capital Resources

 

Comparable GAAP Financial Measure Slides And Reconciliations

 

2001 2002 2003 2004 2005 2006 1Q 2007 387.9 205.8 104.8 163.2 103.3 297.4 65.1 Fiscal Year National Fuel Gas Company Consolidated Net Cash Used in Investing Activities $ Millions

 

P&S Utility Timber Energy Mkt. Corp. & Other E&P NI 53.5 45.2 4.4 5.3 2.5 24.3 National Fuel Gas Company Net Income from Continuing Operations* $135.2 Million 12 Months Ended December 31, 2006

 

1999 2000 2001 2002 2003 2004 2005 2006 1Q 2007 Utility 0.51 0.4 0.76 0.62 0.7 0.56 0.46 0.58 0.2 All Other Segments 0.96 1.21 0.06 0.84 1.5 1.45 1.77 1.03 0.44 $1.46 $2.20 $2.01 $2.23 Fiscal Year Utility vs. Consolidated NFG Diluted Earnings per Share $1.61 $0.64

 

2002 2003 2004 2005 2006 1Q 2007 Utility 169 179 194 211 204 51 All Other Segments 225 207 220 193 210 48 Fiscal Year $ Millions Utility vs. Consolidated NFG O & M Expense $394 $386 $414 $404 $414 $99

 

1999 2000 2001 2002 2003 2004 2005 2006 1Q 2007 Pipeline & Storage 0.51 0.4 0.5 0.37 0.56 0.58 0.71 0.65 0.16 All Other Segments 0.96 1.21 0.32 1.09 1.64 1.43 1.52 0.96 0.48 $1.46 $2.20 $2.01 $2.23 Fiscal Year Pipeline & Storage vs. Consolidated NFG Diluted Earnings per Share $1.61 $0.64

 

2002 2003 2004 2005 2006 1Q 2007 Pipeline & Storage 61 61 68 65 66 15 All Other Segments 333 325 346 339 348 84 Fiscal Year $ Millions Pipeline & Storage vs. Consolidated NFG O & M Expense $394 $386 $414 $404 $414 $99

 

2001 2002 2003 2004 2005 2006 1Q 2007 Energy Marketing -0.04 0.11 0.07 0.07 0.06 0.07 0.01 All Other Segments 0.86 1.35 2.13 1.94 2.17 1.54 0.63 Fiscal Year Energy Marketing vs. Consolidated NFG Diluted Earnings per Share $1.46 $2.20 $2.01 $2.23 $1.61 $0.64

 

1999 2000 2001 2002 2003 2004 2005 2006 1Q 2007 Exploration & Production 0.09 0.44 -0.4 0.33 -0.39 0.66 0.6 0.24 0.24 All Other Segments 1.38 1.17 1.22 1.13 2.59 1.35 1.63 1.37 0.4 $1.46 $2.20 $2.01 $2.23 Fiscal Year Exploration & Production vs. Consolidated NFG Diluted Earnings per Share $1.61 $0.64

 

1999 2000 2001 2002 2003 2004 2005 2006 1Q 2007 Timber 0.06 0.08 0.1 0.12 1.38 0.06 0.06 0.07 0.003 All Other Segments 1.41 1.53 0.72 1.34 0.82 1.95 2.17 1.54 0.637 $1.46 $2.20 $2.01 $2.23 Fiscal Year Timber vs. Consolidated NFG Diluted Earnings per Share $1.61 $0.64

 

NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
RECONCILIATION TO REPORTED EARNINGS
                                                 
    Fiscal Year   Fiscal Year   Fiscal Year   Fiscal Year   Fiscal Year   Fiscal Year 2007
    Ended   Ended   Ended   Ended   Ended   Q1 - 3 Mos Ended
(Diluted Earnings Per Share)   September 30, 2002   September 30, 2003   September 30, 2004   September 30, 2005   September 30, 2006   December 31, 2006
     
Utility
                                                
Reported earnings
   $ 0.62     $ 0.70     $ 0.56     $ 0.46     $ 0.58     $ 0.20  
Out-of-period adjustment to symmetical sharing
     —       —       —       —       (0.03 )     —  
Pension settlement loss
     —       —       0.03       —       —       —  
     
Earnings before non-recurring items
     0.62       0.70       0.59       0.46       0.55       0.20  
     
 
                                                
Pipeline and Storage
                                                
Reported earnings
     0.37       0.56       0.58       0.71       0.65       0.16  
Discontinuance of hedge accounting
                                             (0.02 )
Impairment of Independence Pipeline
     0.12       —       —       —       —       —  
Pension settlement loss
     —       —       0.02       —       —       —  
Gain associated with insurance proceeds
     —       —       —       (0.05 )     —       —  
Base gas sale
                             (0.03 )     —       —  
     
Earnings before non-recurring items
     0.49       0.56       0.60       0.63       0.65       0.14  
     
 
                                                
Exploration and Production
                                                
Reported earnings
     0.33       (0.39 )     0.66       0.60       0.24       0.24  
Income tax adjustments
     —       —       —       —       -0.13       —  
Loss on sale of oil and gas assets
     —       0.48       —       —                  
Impairment of oil and gas producing properties
     —       0.36       —       —       0.80       —  
Cumulative Effect of Change in Accounting
     —       0.01       —       —                  
Adjustment of loss on sale of oil and gas assets
     —       —       (0.06 )     —                  
Pension settlement loss
     —       —       0.01       —                  
     
Earnings before non-recurring items
     0.33       0.46       0.61       0.60       0.91       0.24  
     
 
                                                
International
                                                
Reported earnings
     (0.06 )     (0.12 )     0.07                          
Cumulative Effect of Change in Accounting
     —       0.10       —     see                
Pension settlement loss
     —       —       —     “Discontinued                
Tax rate change
     —       —       (0.06 )   Operations”                
Repatriation tax
                           below                
                             
Earnings before non-recurring items
     (0.06 )     (0.02 )     0.01                          
                             
 
                                                
Energy Marketing
                                                
Reported earnings
     0.11       0.07       0.07       0.06       0.07       0.01  
Pension settlement loss
     —       —       —       —       —       —  
     
Earnings before non-recurring items
     0.11       0.07       0.07       0.06       0.07       0.01  
     
 
                                                
Timber
                                                
Reported earnings
     0.12       1.38       0.06       0.06       0.07       —  
Gain on sale of timber assets
     —       (1.26 )     —       —       —       —  
Pension settlement loss
     —       —       —       —       —       —  
Adjustment of gain on sale of timber properties
     —       —       0.01       —       —       —  
     
Earnings before non-recurring items
     0.12       0.12       0.07       0.06       0.07       —  
     
 
                                                
Corporate and All Other
                                                
Reported earnings
     (0.03 )     —       0.01       (0.08 )     —       0.03  
Pension settlement loss
     —       —       0.02       —       —       —  
     
Earnings before non-recurring items
     (0.03 )     —       0.03       (0.08 )     —       0.03  
     
 
                                                
Consolidated
                                                
Reported earnings
     1.46       2.20       2.01                          
Total non-recurring items from above
     0.12       (0.31 )     (0.03 )                        
                             
Earnings before non-recurring items
   $ 1.58     $ 1.89     $ 1.98                          
                             
 
                                                
Consolidated Earnings from Continuing Operations
                                                
Reported earnings from continuing operations
                             1.81       1.61       0.64  
Total non-recurring items from above
                             (0.08 )     0.64       (0.02 )
                                 
Earnings from continuing operations before non-recurring items
                           $ 1.73     $ 2.25     $ 0.62  
                                 
 
                                                
Discontinued Operations
                                                
Reported earnings from discontinued operations
                             0.42                  
                                               
 
                                                
Consolidated
                                                
Reported earnings
                           $ 2.23     $ 1.61     $ 0.64  
                                 

 

 

Reconciliation of Segment Net Income from Continuing Operations to
  Consolidated Net Income from Continuing Operations
(‘000)
                 
    12 Mos Ended 12/31/06  
Utility
           $ 45,235  
 
                
Pipeline & Storage
   $ 51,570          
Plus: Discontinuance of hedge accounting
     1,900       53,470  
 
              
 
                
Exploration & Production
   $ 81,705          
Plus: Impairment of O&G Prod. Prop.
     (68,646 )        
Income Tax Adjustments
     11,202       24,261  
 
              
 
                
Energy Marketing
             5,303  
 
                
Timber
             4,456  
 
                
Corporate & Other
             2,467  
 
              
 
                
Consolidated Net Income from Continuing Operations
           $ 135,192  
 
              
Reconciliation of Utility Segment O&M Expense to
  Consolidated O&M Expense (From Continuing Operations)
($000s)
                                                 
    2002   2003   2004   2005   2006   1Q FY 007
     
Utility Segment
   $ 168,633     $ 179,052     $ 190,669     $ 211,019     $ 204,330     $ 50,767  
SFAS 88 Pension Settlement
   $ —     $ —     $ 3,374     $ —     $ —     $ —  
All Other Segments
     225,524       207,218     $ 219,550     $ 193,498     $ 209,396     $ 48,607  
               
Total Corporation
   $ 394,157     $ 386,270     $ 413,593     $ 404,517     $ 413,726     $ 99,374  
               
Reconciliation of Utility Segment Aged Accounts Receivable to
  Consolidated Accounts Receivable — Net
($Millions)
                                         
    at12/31/04   at9/30/05   at12/31/05   at9/30/06   at12/31/06
             
Utility Aged Accounts Receivable
   $ 67.3     $ 76.3     $ 79.7     $ 89.7     $ 86.6  
Utility Current/Other Accounts Receivable
   $ 78.7     $ 16.4     $ 143.1     $ 11.8     $ 62.2  
POR Program
   $ —     $ —     $ (8.0 )   $ —     $ —  
             
Utility Gross Accounts Receivable
   $ 146.0     $ 92.7     $ 214.8     $ 101.5     $ 148.8  
Utility Reserve for Bad Debt
   $ (15.1 )   $ (25.1 )   $ (31.5 )   $ (29.7 )   $ (34.2 )
             
Utility Net Accounts Receivable
   $ 130.9     $ 67.6     $ 183.3     $ 71.8     $ 114.6  
             
All Other Segments Gross Accounts Receivable
   $ 71.5     $ 89.3     $ 107.7     $ 74.2     $ 79.5  
All Other Segments Reserve for Bad Debts
   $ (4.7 )   $ (1.8 )   $ (1.8 )   $ (1.7 )   $ (1.5 )
             
All Other Segments Net Accounts Receivable
   $ 66.8     $ 87.5     $ 105.9     $ 72.5     $ 78.0  
             
Total Corporation Accounts Receivable — Net
   $ 197.7     $ 155.1     $ 289.2     $ 144.3     $ 192.6  
             
Reconciliation of Pipeline & Storage Operating Revenues to
  Consolidated Operating Revenues Fiscal 2006
($Millions)
         
Pipeline Revenues
   $ 123.4  
Storage Revenues
   $ 66.8  
Other Revenues
   $ 24.2  
 
      
Total Pipeline & Storage Revenues
   $ 214.4  
All Other Segments
   $ 2,097.3  
 
      
Total Corporation
   $ 2,311.7  
 
      

 

 

Reconciliation of Exploration & Production Operating Revenue to
  Consolidated Operating Revenue
($000s)
                 
    1Q FY 2007     1Q FY2006  
Exploration & Production
   $ 88,709     $ 82,087  
All Other Segments
     415,531       628,669  
 
            
Consolidated Operating Revenue
   $ 504,240     $ 710,756  
 
            
Reconciliation of Exploration & Production Net Income to
  Consolidated Net Income
($000s)
                 
    1Q FY 2007     1Q FY2006  
Exploration & Production
   $ 20,723     $ 17,435  
All Other Segments
     33,797       39,984  
 
            
Consolidated Net Income
   $ 54,520     $ 57,419  
 
            
Reconciliation of Exploration & Production Depreciation, Depletion and Amortization to
  Consolidated Depreciation, Depletion and Amortization (DD&A)
($000s)
                 
    1Q FY 2007     1Q FY2006  
Exploration & Production DD&A *
   $ 22,008     $ 21,540  
All Other Segments DD&A
     20,817       21,506  
 
            
Consolidated DD&A
   $ 42,825     $ 43,046  
 
            
 
*   DD&A and Total LOE cost per Mcf equivalent equals Exploration & Production DD&A and Total LOE costs, respectively, for the referenced fiscal period, divided by the Total Gas & Oil Production (Mmcfe) in that same fiscal period.
Reconciliation of Exploration & Production Lease Operating Expense (LOE) to
  Consolidated O&M
($000s)
                 
    1Q FY 2007     1Q FY2006  
Exploration & Production LOE
   $ 13,456     $ 13,539  
Exploration & Production Property, Franchise and Other Taxes
     1,150       1,208  
 
            
Exploration & Production Total LOE *
   $ 14,606     $ 14,747  
 
            
 
                
Exploration & Production LOE
   $ 13,456     $ 13,539  
Exploration & Production Other O&M
     8,212       8,272  
 
            
Exploration & Production Total O&M
   $ 21,668     $ 21,811  
All Other Segments O&M
     77,706       81,817  
 
            
Total Consolidated O&M
   $ 99,374     $ 103,628  
 
            
 
                
Exploration & Production Property, Franchise and Other Taxes
   $ 1,150     $ 1,208  
All Other Segments Property, Franchise and Other Taxes
     15,962       15,973  
 
            
Total Consolidated Property Franchise and Other Taxes
   $ 17,112     $ 17,181  
 
            

 

 

Reconciliation of Exploration & Production General & Administrative Costs to
  Consolidated O&M
($000s)
                 
    1Q FY 2007     1Q FY 2006  
Exploration & Production General & Administrative *
   $ 5,571     $ 6,300  
Exploration & Production All Other O&M
     16,097       15,511  
 
            
Exporation & Production Total O&M
   $ 21,668     $ 21,811  
All Other Segments O&M
     77,706       81,817  
 
            
Total Consolidated O&M
   $ 99,374     $ 103,628  
 
            
 
*   General and Administrative cost per Mcf equivalent equals Exploration & Production General and Administrative cost, for the referenced fiscal period, divided by the Total Gas & Oil Production (Mmcfe) in that same fiscal period.
Reconciliation of Exploration & Production Segment Capital Expenditures to
  Consolidated Capital Expenditures
($000s)
                                                         
    2002   2003   2004   2005   2006   2007E     1Q FY 007  
       
Exploration & Production Capital Expenditures
   $ 114,602     $ 75,837     $ 77,654     $ 121,200     $ 207,000     $ 210,000-$214,000     $ 46,589  
Other
     —       —       —       1,250       —       —       —  
       
Total Exploration & Production Capital Expenditures
   $ 114,602     $ 75,837     $ 77,654     $ 122,450     $ 207,000     $ 210,000-$214,000     $ 46,589  
All Other
     117,766       76,414       94,687       97,080       95,500       127,000       18,713  
       
Total Corporation
   $ 232,368     $ 152,251     $ 172,341     $ 219,530     $ 302,500     $ 337,000-$341,000     $ 65,302  
       

 

 

Reconciliation of National Fuel Gas Expenditures for Long-lived Assets to
  Consolidated Net Cash Used in Investing Activities
(‘000)
                                                         
    2001   2002   2003   2004   2005   2006   1Q FY 007
     
Capital Expenditures
   $ (292,706 )   $ (232,368 )   $ (152,251 )   $ (172,341 )   $ (219,530 )   $ (294,159 )   $ (65,302 )
Investment in Subsidiaries, Net of Cash
   $ (90,567 )   $ —     $ (228,814 )   $ —     $ —     $ —     $ —  
Investment in Partnerships
   $ (1,830 )   $ (536 )   $ (375 )   $ —     $ —     $ —     $ (1,650 )
                 
Expenditures for Long Lived Assets
   $ (385,103 )   $ (232,904 )   $ (381,440 )   $ (172,341 )   $ (219,530 )   $ (294,159 )   $ (66,952 )
 
                                                        
Expenditures for Long Lived Assets
   $ (385,103 )   $ (232,904 )   $ (381,440 )   $ (172,341 )   $ (219,530 )   $ (294,159 )   $ (66,952 )
Net Proceeds from Sale of Foreign Subsidiary
   $ —     $ —     $ —     $ —     $ 111,619     $ —     $ —  
Net Proceeds from Sale of Timber Properties
   $ —     $ —     $ 186,014     $ —     $ —     $ —     $ —  
Net Proceeds from Sale of Oil and Gas Producing Properties
   $ 2,069     $ 22,068     $ 78,531     $ 7,162     $ 1,349     $ 13     $ 2,141  
Other
   $ (4,892 )   $ 5,012     $ 12,065     $ 1,974     $ 3,238     $ (3,230 )   $ (316 )
             
Net Cash Used in Investing Activities
   $ (387,926 )   $ (205,824 )   $ (104,830 )   $ (163,205 )   $ (103,324 )   $ (297,376 )   $ (65,127 )
                 
Reconciliation of Pipeline & Storage O&M Expense to
  Consolidated O&M Expense (From Continuing Operations)
($000s)
                                               
    2002     2003     2004     2005     2006     1Q FY 007
     
Pipeline & Storage
   $ 61,339     $ 61,286     $ 65,071     $ 65,397     $ 66,340     $ 14,903
SFAS 88 Pension Settlement
   $ —     $ —     $ 3,026     $ —     $ —     $ —
All Other Segments
     332,818       324,984     $ 345,496       339,120       347,386       84,471
     
Total Corporation
   $ 394,157     $ 386,270     $ 413,593     $ 404,517     $ 413,726     $ 99,374