National Fuel Gas Inside the Corner Suite: 10 Key Takeaways from JPM’s Fireside Chat with NFG Senior Management

Research evidence excerpt

National Fuel Gas Inside the Corner Suite: 10 Key Takeaways from JPM’s Fireside Chat with NFG Senior Management

months rather than years, creating market risk and opportunity that the

company can capitalize on through its marketing and hedging programs.

• (3) Capital efficiency improvements pave the way for disciplined growth... NFG

highlighted significant improvements in capital efficiency, allowing the company to

reduce capital by 15% over the last few years while growing production by a similar

amount. Management noted that total capex spend between its Seneca and gathering

segments, which was in the high-$600 MM range in 2023, is now down to the

upper-$500 MM range, with further opportunity to drive efficiency gains across the

program. Looking ahead, NFG sees the potential for annual upstream and gathering

capex to be in the $525–$600 MM range in a given year, with variability depending

on the timing of gathering projects or planned activity. On volumes, NFG noted that

while production growth may vary year to year given volatility in the gas macro, it

expects growth to be in the mid-single-digit range over a three-year horizon at capex

levels similar to today’s, if not lower given the quality of its rock.

• (4) … supported by top-tier EDA development. Management cited its Eastern

Development Area (EDA) as a key driver behind the company’s improving capital

efficiency. On our call, management noted EDA Lower Utica economics are “as

good as anything anyone has,” noting wells are rate-restricted at 25 – 30+ MMcf/d

and can be held flat for many months, with leading-edge wells held flat for over a

year. The company noted that well productivity in the EDA Utica is ~2x that of the

Western Development Area (WDA) Utica wells before royalty adjustment (though