National Fuel Gas Co. Investor update

Please go ahead. Thank you, and good morning.

We appreciate you joining us on today's conference call for a discussion of National Fuel's announcement of its plan to separate the company's integrated upstream and gathering business. With us on the call from National Fuel Gas Company are Dave Bauer, President and Chief Executive Officer, Tim Silverstein, Treasurer and Chief Financial Officer, and Justin Loweth, President of Seneca Resources and National Fuel Gas Midstream. At the end of today's prepared remarks, we will open the discussion to questions. We have also posted a presentation to the investor relations section of our website to accompany today's discussion, which we may refer to during today's call. Before we begin, we would like to remind you that today's teleconference will contain forward-looking statements. 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.

These statements speak only as of the date on which they are made, and you may refer to this morning's press release for a listing of certain specific risk factors. With that, I will turn it over to Dave Bauer.

Thank you, Ryan. Good morning, everyone. Today is an important milestone in National Fuel's history. Earlier this morning, we announced our board of directors approval of a plan to separate the company's integrated upstream and gathering business, or IUG, into a standalone public company through a tax-free spinoff to National Fuel shareholders. This transaction will create two high-quality, scaled, financially strong companies that each have a clear pathway to long-term value creation. We expect to complete the separation in the second half of calendar 2027. Following the separation, National Fuel will be a 100% rate-regulated enterprise with approximately $5 billion of rate base. Our utility operations will serve approximately 1.1 million customers across Ohio, New York, and Pennsylvania, all of which have constructive regulatory frameworks that support ongoing investments.

Our FERC-regulated pipeline and storage business will provide nearly 5 Bcf per day of natural gas transmission services and 77 Bcf of fully contracted storage capacity. Moving to IUG, this new public company will be a premier Appalachian natural gas business with integrated upstream and gathering assets focused primarily in the highly productive Northeast Pennsylvania region. IUG currently has 1.1 Bcf per day of net natural gas production and 5 Tcfe of proved reserves across its 1.2 million total net acres in Pennsylvania. With more than 25 years of prospective Marcellus and Utica development inventory at very low breakeven prices, IUG will be well-positioned to grow production, grow its capital efficiency improvement trend, and generate long-term value through disciplined capital allocation.

In addition, the vast majority of IUG production will flow through its wholly owned gathering assets, which will remain a key driver in maintaining IUG's low-cost structure and attractive cash margins. As Tim will discuss later, we expect both companies to be positioned from day one with strong balance sheets and no incremental equity financing needs over the next five years, which is unique among National Fuel's regulated peers. More importantly, both companies will have the financial flexibility to deliver continued growth and return capital to shareholders. For many years, our integrated model provided us with significant financial and operating synergies, along with an element of scale on a consolidated basis. These financial synergies, especially our low cost of capital, were particularly beneficial as Seneca was growing its business.

As we sit here today, however, with Seneca's success in Tioga County, IUG now has the scale and free cash flow generation to stand on its own, making the financial synergies of our current business model less relevant than they once were. Combined with the recent closing of our Ohio gas utility acquisition, both National Fuel and IUG now have significant scale and financial strength, such that each will be better positioned to capitalize on their long-term growth opportunities as independent companies. Importantly, each company will retain the key operational benefits of our integrated business models. The synergies we've created through the years are almost exclusively between the utility and pipeline businesses, and separately between Seneca and NFG Midstream. There's very little operational overlap between the regulated and non-regulated sides of the company.

Post-separation, the significant operating synergies across our regulated companies, as well as the cost structure benefits of an integrated upstream and gathering platform, will continue. Further, the backdrop for the natural gas industry is as strong as it's ever been. Natural gas demand is expected to increase from LNG exports, power generation growth, and data center demand, with National Fuel's and IUG's assets well-positioned to support growth in our region. For all these reasons, I believe now is the right time to pursue a separation. Looking ahead, each company will be well-positioned to deliver long-term success. National Fuel expects long-term rate base growth of 5%-7% based on our current capital spending plans, which are underpinned by our contracted FERC expansion projects and the longstanding system modernization programs across our jurisdictions. In addition, future FERC pipeline expansion opportunities driven by rising regional demand should create incremental pathways to growth.

I'll emphasize, thanks to the strong cash flows of the pipeline and storage business, we can achieve this growth without the need to issue equity. IUG's premier acreage position in Tioga County offers a compelling value proposition. Its inventory life in the basin, which is more than 25 years at NYMEX prices of $2.25 or less, and its low operating cost structure supports substantial, consistent free cash flow generation. Capital efficiency has improved by more than 25% since 2023, a trend we expect will continue in the coming years. While a diverse and growing portfolio of firm transportation capacity provides access to premium markets. Together, these strengths position IUG for long-term success as a standalone company. IUG will be led by its current management team, including Justin Loweth, who will become Chief Executive Officer of the new company.

The combination of a more focused business model, an experienced management team, and a high-quality resource base positions IUG to succeed from day one as a standalone company. To bring it all together, we believe now is the right time to separate IUG from National Fuel and better position both standalone companies to unlock their long-term value creation potential. The benefits of diversification served us well for many years, but as we look forward, we think the best path to generating value for shareholders is as two independent companies. This will allow each business to focus on their distinct strategic priorities, optimize their capital allocation, and better attract investors. With that, I'll turn the call over to Justin to walk through the integrated upstream and gathering business.

Thanks, Dave, and good morning, everyone. This is an exciting time for Seneca Resources and NFG Midstream, which comprise our integrated upstream and gathering business. Over the past 20 years, National Fuel has built IUG into a premier Appalachian natural gas company with a collection of high-quality integrated assets across Pennsylvania. Within IUG's footprint, we have more than 300,000 acres across our Eastern Development Area, or EDA, concentrated in Tioga and Lycoming counties, an area that we believe represents one of the best remaining development opportunities in the Appalachian Basin, and has become a key driver of IUG's improving capital efficiency, inventory depth, and long-term free cash flow generation. Additionally, we have over 900,000 acres in our Western Development Area, or WDA. This is mostly owned in fee, meaning we don't pay a royalty and have no requirements to drill to hold this acreage.

Furthermore, across our operating footprint, IUG owns and operates significant natural gas gathering infrastructure, which transports the vast majority of our production. This allows IUG to develop our deep inventory as an integrated enterprise and supports our highly competitive operating cost structure and continued capital efficiency improvements, both of which we expect to sustain over the long term. These attributes, combined with a strong expected financial profile, position IUG to deliver growth and drive long-term value creation for shareholders. Diving deeper into our assets, IUG has peer-leading inventory depth, with decades of remaining undeveloped well locations. At our current drilling pace, we have more than 25 years of inventory at break-even prices below $2.25 NYMEX.

In a basin where high-quality inventory is becoming increasingly scarce, Seneca's inventory depth represents a strategic advantage that provides long-term development flexibility, supports sustainable free cash flow generation, and allows us to pace development to changing market conditions. In addition, Seneca's integrated approach to developing our assets and relentless focus on operational excellence has translated into our top-tier capital efficiency trends and operating cost structure. Ultimately, these two factors are Seneca's North Star. How can we deploy the least amount of capital to grow production to the greatest extent, and how can we develop our resource base with the lowest cost structure in the basin? As we look ahead, our focus and execution in both of these areas positions Seneca to deliver long-term success, growing free cash flow, and sustained shareholder value creation.