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Table of Contents
Alphabetical by Company El Paso Corporation........................................................ 4 Energen Corporation ...................................................... 5 EQT Corporation ............................................................ 6 MDU Resources Group, Inc. .......................................... 7 National Fuel Gas Company ......................................... 8 Questar Corporation....................................................... 9 Williams.......................................................................... 10 Company Statistics 2010 E&P Snapshot/E&P CAPEX Stand-Alone E&P Valuation ..................................... 12 Trading Valuations / Free Cash Flow .......................... 13 Hedging Detail ............................................................... 14 Recent Shale Positions .................................................. 15 Performance Summary................................................. 16 Market Stats / Valuation ............................................... 17 Basic Definitions ............................................................ 18
2011 ENERGY CONFERENCE
E&P BREAKDOWN
E&P Stats
2008A 2,326 -18.5% 74.9% 25.1% 271.6 -5.2% 87.5% 12.5% 8.6 2009A 2,549 9.6% 68.5% 31.5% 252.6 -7.0% 87.4% 12.6% 10.1 2010A 3,171 24.4% 61.7% 38.3% 262.8 4.0% 87.0% 13.0% 12.1 273.4 4.0% 84.8% 15.2% 13.5 2011E 3,700 16.7%
El Paso Corporation
www.elpaso.com
Reserves (bcfe) % change % PDP % PUD Production volumes (bcfe) % change Natural gas % Oil/liquids % R/P ratio Costs Detail ($/mcfe) LOE Production taxes G&A F&D ($/mcfe)
Tick er Price ($/sh, as of 3/23/11) 52-week high ($/sh) 52-week low ($/sh) Market Cap ($mm) Enterprise Value ($mm) Shares Out (mm) Net debt ($mm) Debt-to-cap Yield
Management Douglas L. Foshee, Chairman & CEO John R. Sult, CFO Inv est or Relat ions C ont act Bruce Connery
713-420-5855
RESERVES BY REGION
2010 Proved Reserves
Brazil 3% Central U.S. 42%
2010A EB IT b y Segmen t
2011E EB IT by Segment
COMPANY PROFILE
El Paso Corp. operates natural gas pipeline and storage facilities, transports natural gas, and imports liquefied natural gas. The Company has interests in approximately 43k miles of interstate pipeline which is considered North America's largest interstate natural gas pipeline system. El Paso also operates in the exploration and production business, housing over 3 Tcfe of oil and gas reserves. El Paso is a top 25 U.S. natural gas producer in terms of production volume.
Nat ural G as Transmission El Paso's pipeline system handles ~30% of the daily throughput (19 Bcf/d) of natural gas from North America's major producing basins. The Company is the majority interest owner in eight major pipeline systems and partially owns two systems. El Paso plans to complete $8b of backlog projects by the end of 2011, including Ruby Pipeline. El Paso's MLP, El Paso Pipeline Partners, owns a 100% stake in both WIC and Elba Express, along with a 58% stake in CIG and an 82% stake in SNG. El Paso owns the 2% general partnership interest and +45% of the outstanding limited partnership units. Explorat ion and Product ion El Paso's E&P company finds, develops, and produces natural gas, oil, and NGLs in the U.S., Brazil and Egypt. During 2010, El Paso continued to focus on its more unconventional resources through its four core programs: the Haynesville Shale in northwest Louisiana and east Texas, the Eagle Ford Shale in south Texas, the Altamont field in Utah and the Wolfcamp Shale oil play in the Permian Basin of West Texas.
E&P BREAKDOWN
E& P Stats
2008A 1,584 -9.7% 83.9% 16.1% 102.4 3.8% 66.0% 34.0% 15.5 2009A 1,547 -2.4% 83.4% 16.6% 111.2 8.7% 65.0% 35.0% 13.9 2010A 1,818 17.5% 76.5% 23.5% 113.0 1.6% 62.8% 37.2% 16.1 122.5 8.4% 58.5% 41.5% 15.7 2011E 1,918 5.5%
Energen Corporation
www.energen.com
Reserves (bcfe) % change % PDP % PUD Production volumes (bcfe) % change Natural gas % Oil/liquids % R/P ratio Costs Detail ($/mcfe) LOE Production taxes G&A F&D ($/mcfe)
Tick er Price ($/sh, as of 3/23/11) 52-week high ($/sh) 52-week low ($/sh) Market Cap ($mm) Enterprise Value ($mm) Shares Out (mm) Net debt ($mm) Debt-to-cap Yield
% Change Trading m e trics P/E P/CF EV/EBITDA Standa lo ne E& P busine ss EV/Mcfe (proved)
Management James T. McManus, II, Chairman & CEO Charles W. Porter, Jr., CFO Inv est or Relat ions C ont act Julie S. Ryland
205-326-2634
RESERVES BY REGION
2010 Proved Reserves
North LA / East TX 2% Black Warrior Basin 9% San Juan Basin 45%
COMPANY PROFILE
Energen Corporation, a diversified energy holding company, engages in the acquisition, development, exploration, and production of oil, natural gas, and NGLs in the continental United States. Energen also purchases, distributes, and sells natural gas to residential, commercial, and industrial customers in central and north Alabama. The Company's two principal subsidiaries are Energen Resources Corporation and Alabama Gas Corporation (Alagasco).
Oil and Gas Operat ions Energen Resources' proved oil and gas reserves at the end of 2010 totaled 1.8 Tcfe. Nearly all of these reserves are located in either the San Juan Basin in New Mexico and Colorado, the Permian Basin in west Texas, or the Black Warrior Basin in Alabama. Of the Company's year end reserves, natural gas represents approximately 53%, oil represents 34% and NGLs make up the balance. Energen completed four Permian Basin acquisitions in 2010, totaling $550mm, and plans to allocate more than 80% of 2011 drilling capital toward oil development in the Permian. Nat ural G as Dist ribut ion Alagasco is the largest natural gas distribution utility in the state of Alabama, serving approximately 445,000 homes, businesses and industries in north and central Alabama.
E&P BREAKDOWN
E&P Stats
2008A 3,110 15.9% 60.9% 39.1% 84.0 9.0% 92.3% 7.7% 37.0 2009A 4,068 30.8% 51.0% 49.0% 100.1 19.2% 90.9% 9.1% 40.6 2010A 5,220 28.3% 48.6% 51.4% 134.6 34.5% 91.7% 8.3% 38.8 173.9 29.2% 92.6% 7.4% 35.6 2011E 6,188 18.5%
EQT Corporation
www.eqt.com
Reserves (bcfe) % change % PDP % PUD Production volumes (bcfe) % change Natural gas % Oil/liquids % R/P ratio Costs Detail ($/mcfe) LOE Production taxes G&A F&D ($/mcfe)
Tick er Price ($/sh, as of 3/23/11) 52-week high ($/sh) 52-week low ($/sh) Market Cap ($mm) Enterprise Value ($mm) Shares Out (mm) Net debt ($mm) Debt-to-cap Yield Management David L. Porges, President & CEO Philip P. Conti, CFO Inv est or Relat ions C ont act Patrick J. Kane, CFA
412-553-7833
RESERVES BY REGION
2010 Proved Reserves
Coalbed Methane 3%
Other Distribution 16% 3% Production 45% Distribution 14% Other 5% Production 43%
Huron/Berea 42%
Midstream 36%
Midstream 38%
Marcellus 55%
COMPANY PROFILE
EQT Corporation operates as an integrated energy company with emphasis on Appalachian area natural gas supply, transmission, and distribution. EQT breaks down into three segments: EQT Production, EQT Midstream and EQT Distribution. The Company is nearly 100% natural gas, with a focus on shale, tight sands and coal bed methane.
EQT Product ion As one of the largest operators in the Appalachian Basin, EQT controls 3.5 million acres across three major plays: Marcellus Shale, Huron Shale and CBM. As of December 31, 2010, EQT's proven reserves of 5.2 Tcfe grew ~30% for the second consecutive year. EQT Midst ream EQT Midstream provides gathering, transmission and storage services for the Company's produced gas as well as to other independent Appalachian third parties. EQT Midstream has +11,400 miles of gathering and transmission lines and also owns 63 Bcf of underground storage capacity. In February 2011, EQT sold its gas processing facility in Langley, Kentucky, as well as the associated NGL pipeline for $230mm. EQT Dist ribut ion Equitable Gas Company distributes and sells natural gas to ~277k customers (93% are residential customers and the remaining are commercial and industrial customers) in southwestern Pennsylvania, West Virginia and eastern Kentucky.
E&P BREAKDOWN
E&P Stats
2008A 810 14.6% 73.1% 26.9% 82.3 6.9% 79.5% 20.5% 9.8 2009A 654 -19.3% 73.8% 26.2% 75.3 -8.5% 75.2% 24.8% 8.7 2010A 646 -1.2% 76.6% 23.4% 70.0 -7.1% 72.0% 28.0% 9.2 68.4 -2.2% 69.2% 30.8% 9.6 2011E 653 1.2%
Reserves (bcfe) % change % PDP % PUD Production volumes (bcfe) % change Natural gas % Oil/liquids % R/P ratio
Tick er Price ($/sh, as of 3/23/11) 52-week high ($/sh) 52-week low ($/sh) Market Cap ($mm) Enterprise Value ($mm) Shares Out (mm) Net debt ($mm) Debt-to-cap Yield Management Terry D. Hildestad, President & CEO Doran N. Schwartz, CFO Inv est or Relat ions C ont act Phyllis A. Rittenbach
701-530-1057
RESERVES BY REGION
2010 Proved Reserves
Electric 1 1 %
Natural Gas 1 7%
E&P 30%
Electric 1 1 %
Natural Gas 1 7%
Construction Services 8%
Construction Services 9%
Rockies 74%
COMPANY PROFILE
MDU Resources Group, Inc. operates as an integrated energy company, comprised of both regulated and unregulated business. The Company consists of six operating segments: Exploration & Production, Gas & Electric Utilities, Pipeline and Energy Services, Construction Materials and Construction Services.
Nat ural G as & Oil Product ion MDU's E&P company, Fidelity Exploration & Production, develops natural gas and oil reserves in the U.S. Fidelity operates in the Rocky Mountains and the Mid-Continent/Gulf States. As of year-end 2010, MDU had ~645 Bcfe of proven reserves (69% nat gas/ 31% oil). During 2010, MDU acquired undeveloped acreage in the Niobrara play (65k net acres) in WY and expanded its acreage position in the ND Bakken play (66k net acres). Pipeline & Energy S erv ices MDU provides natural gas transportation, underground storage and gathering services through regulated and nonregulated pipeline systems primarily in the Rockies and the northern Great Plains region of the U.S. C onst ruct ion Mat erials & S ervices MDU's Construction Materials business, Knife River Corporation, is a top 10 U.S. aggregate producer with total reserves of 1.1b tons. Product lines include crushed stone, sand and gravel, asphalt, ready-mix concrete, building materials, and liquid asphalt production. MDU's Construction Services Group provides various construction activities, such as constructing and maintaining electric and communication lines, fire protection systems, and external lighting and traffic signalization equipment. This group expanded into new markets during 2010, including solar and wastewater work as well as utility excavation services. G as & Elect ric Ut ilit ies MDU's gas & electric distribution segment provides generation, transmission, and distribution of energy across eight states through four companies: Montana-Dakota Utilities Co., Great Plains Natural Gas Co., Cascade Natural Gas Co. and Intermountain Gas Corporation. MDU serves 960k gas and electric customers across eight states.
E&P BREAKDOWN
E& P Stats
2008A 503 2.5% 86.6% 13.4% 40.8 3.7% 54.8% 45.2% 12.3 2009A 528 5.0% 83.5% 16.5% 42.5 4.3% 52.4% 47.6% 12.4 2010A 700 32.4% 74.6% 25.4% 49.7 16.8% 61.1% 38.9% 14.1 69.9 40.8% 72.8% 27.2% 12.9 2011E 902 28.9%
N FG V aluation Snap sh ot
2010A EPSE $2.65 1.4% $5.56 -26.4% 26.8x 12.8x 10.8x $6.32 % Change CFPSE
NF G $70.92 $73.66 $42.83 $5,916 $6,906 83 $990 37.9% 1.9%
Reserves (bcfe) % change % PDP % PUD Production volumes (bcfe) % change Natural gas % Oil/liquids % R/P ratio Costs Detail ($/mcfe) LOE & Prod. Taxes G&A F&D ($/mcfe)
Tick er Price ($/sh, as of 3/23/11) 52-week high ($/sh) 52-week low ($/sh) Market Cap ($mm) Enterprise Value ($mm) Shares Out (mm) Net debt ($mm) Debt-to-cap Yield Management David F. Smith, Chairman & CEO Ronald J. Tanski, President & COO Inv est or Relat ions C ont act Timothy Silverstein
716-857-6987
RESERVES BY REGION
2010 Proved Reserves
Gulf 5%
Appalachia 47%
E&P 54%
COMPANY PROFILE
National Fuel Gas Company operates as a diversified energy company in several segments of the natural gas industry, including utility, pipeline and storage, exploration and production, and marketing operations. Both its regulated and unregulated businesses have a Northeast focus.
Explorat ion & Product ion Seneca Resources Corporation explores, develops, and purchases natural gas and oil reserves in the Appalachian region and California. The Company recently announced the sale of its shallow water Gulf of Mexico producing assets for $70mm, officially exiting the GOM. Seneca ended 2010 with 700 Bcfe of proved reserves (a +30% y/y increase). Pipeline & S t orage National Fuel Gas Supply Corp. and Empire Pipeline, Inc. provide natural gas transportation and storage services to companies through an integrated system of ~3,000 miles of pipeline and 31 natural gas storage fields. The Company has several new pipeline projects in various stages that will help bring Appalachian gas to market. These projects include: Tioga County Extension Project, Line N Expansion Project, Northern Access Project and West to East Overbeck to Leidy Project. Ut ilit y National Fuel's utility segment, National Fuel Gas Distribution Corporation, sells and transports natural gas to nearly 732k customers in western New York and northwestern Pennsylvania.
E&P BREAKDOWN
STR V aluati on Sn ap sh ot
2010A 2011E $1.13 -0.3% $2.30 16.8% 15.3x 7.5x 8.3x 2012E $1.20 6.1% $2.43 5.5% 14.5x 7.1x 7.9x 2013E $1.27 6.0% $2.56 5.5% 13.6x 6.7x 7.3x EPSE % Change CFPSE % Change Tra ding m e trics P/E P/CF EV/EBITDA 15.3x 8.8x 8.6x $1.13 10.3% $1.97 -18.9%
Wexp ro Stats
Reserves (bcfe) % change % PDP % PUD Production volumes (bcfe) % change R/P ratio Investment Base ($mm) % change Return on Investment Capital Expenditures ($mm) 2008A 674 5.0% 72.7% 27.3% 48.5 29.7% 13.9 $411 36.7% 18.0% $144 2009A 676 0.4% 73.3% 26.7% 50.6 4.3% 13.4 $432 5.2% 18.7% $116 2010A 768 13.5% 62.9% 37.1% 52.6 4.0% 14.6 $457 5.7% 19.3% $91
Questar Corporation
www.questar.com
Tick er Price ($/sh, as of 3/23/11) 52-week high ($/sh) 52-week low ($/sh) Market Cap ($mm) Enterprise Value ($mm) Shares Out (mm) Net debt ($mm) Debt-to-cap Yield Management Ronald W. Jibson, President & CEO Kevin W. Hadlock, CFO
RESERVES BY REGION
2010 Proved Reserves
Utah 11% Other 1%
Wexpro 38%
Wexpro 38%
Colorado 20%
Wyoming 68%
COMPANY PROFILE
Questar Corporatiom is an integrated energy company with three lines of business including retail gas distribution, interstate gas transportation and storage and gas development and production. Questar spun off its unregulated E&P and Midstream businesses last year, leaving the regulated assets at Questar Corp. Wexpro As Questar's "crown jewel", Wexpro develops and produces gas reserves and provides cost of service gas to Questar's utility, Questar Gas. Wexpro is allowed a guaranteed after-tax rate of return of 19-20% on its investment base. Wexpro produced 50 bcf of gas during 2010 and finished the year with an investment base of $457mm. Wexpro has over 900 risked locations yet to drill, equating to $1.4b of potential future investment. Quest ar Pipeline Questar Pipeline provides natural gas transportation and underground storage services in the Rocky Mountain Region. Questar Pipeline, along with its subsidiaries, owns 2,568 miles of interstate pipeline with total firm capacity commitments of 4,744 Mdth per day. Quest ar G as Questar's utility company, Questar Gas, distributes natural gas in Utah, southwestern Wyoming, and a small portion of southeastern Idaho. In 2010, Questar Gas generated ~25% of Questar's operating income and currently serves nearly 910k sales and transportation customers.
E&P BREAKDOWN
E& P Stats
2008A 4,339 4.7% 56.6% 43.4% 418.7 19.2% 10.4 2009A 4,255 -1.9% 56.1% 43.9% 451.2 7.8% 9.4 2010A 4,272 0.4% 58.5% 41.5% 432.6 -4.1% 9.9 466.2 7.8% 9.7 2011E 4,507 5.5%
Williams
www.williams.com
Reserves (bcfe) % change % PDP % PUD Production volumes (bcfe) % change R/P ratio Costs Detail ($/mcfe) LOE Production taxes G&A F&D, ex acquisition ($/mcfe)
Tick er Price ($/sh, as of 3/23/11) 52-week high ($/sh) 52-week low ($/sh) Market Cap ($mm) Enterprise Value ($mm) Shares Out (mm) Net debt ($mm) Debt-to-cap Yield Management Alan S. Armstrong, President & CEO Don R. Chappel, CFO Inv est or Relat ions C ont act Travis Campbell
% Change Tra ding m e trics P/E P/CF EV/EBITDA Sta nda lo ne E& P busine ss EV/Mcfe
918-573-2944
RESERVES BY REGION
2010 Proved Reserves
Appalachia 1% Williston 3%
E&P 15%
Other 2%
Powder River 8%
WPZ 80% WPZ 83%
Piceance 68%
COMPANY PROFILE
Williams (WMB) engages in the exploration & production, gathering & processing, and transportation of natural gas. Williams operates through the following business segments: its MLP, Williams Partners (WPZ), Exploration and Production, and Other. In February 2011, WMB announced its plan to separate the E&P business into a standalone, publicly traded company via an IPO of up to 20% of Williams' interest in 3Q'11. The IPO will be followed by a tax-free spin of the remaining ownership in 2012. Williams will ultimately own its GP and LP interest in WPZ, a domestic olefins business and a Canadian midstream business.
Explorat ion & Product ion Williams E&P business includes natural gas and oil development, production and gas marketing activities primarily in the Rocky Mountain, Northeast and Mid-Continent regions of the U.S. The Company ended 2010 with 4.3 Tcfe of proved reserves, of which 97% were natural gas. Williams remains a top 10 U.S. natural gas producer. Williams Part ners L. P. (WPZ) Gas Pipeline: Williams operates approximately 13,900 miles of interstate natural gas pipelines, with design capacity of more than 13 MMdt per day. The Company operates three natural gas pipelines (Transco, Northwest Pipeline and Gulfstream) that deliver approximately 12% of the natural gas consumed in the U.S. WPZ owns 24.5% interest in Gulfstream pipeline, and a 25.5% interest is retained by WMB. Midstream: Primary businesses include natural gas gathering, treating and processing, NGL fractionation, storage and transportation, and oil transportation. WMB's midstream assets are concentrated in several major producing basins including CO, NM, WY, the GOM and the Marcellus Shale in PA.
* 2010 includes $409mm of acquisition capital (Permian Basin) and $368 of development capital ** 2010 includes ~$100mm for Green River Basin acquisition Source: Howard Weil & Companies
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Trading Valuations
Historical Valuations
(assum ing last 8 -y rs of trading ) C om panies EP EGN EQT MDU NFG STR WMB Group Avg P/E 14.8 x 12.3 x 19.2 x 14.1 x 15.9 x 15.5 x 19.7 x 1 5 .9 x P/C F 4.1 x 6.7 x 10.8 x 6.8 x 7.4 x 7.3 x 6.5 x 7 .1 x EV/EBITDA 6.9 x 5.9 x 9.5 x 6.3 x 7.2 x 7.3 x 7.0 x 7 .1 x
Current Valuations
(on 2 0 1 2 estim ates) P/E 13.6 x 16.8 x 21.7 x 16.0 x 24.2 x 14.5 x 19.7 x 1 8 .0 x P/C F 5.2 x 6.2 x 8.2 x 6.1 x 8.9 x 7.1 x 5.6 x 6 .8 x EV/EBITDA 7.2 x 6.6 x 8.7 x 6.4 x 8.7 x 7.9 x 6.4 x 7 .4 x
C urrent N e t Debt C ash 84% $347 25% $23 39% $0 36% $222 38% $80 56% $22 58% $77 48% $110
Hedging Detail
Natural Gas Hybrids -- Hedging Detail
C om panies Tick ers El Paso C orp EP Gas Oil Energen EGN Gas Oil Equitable Resources EQT Gas Oil M DU Resources MDU Gas Oil N ational F uel Gas NFG Gas Oil W illiam s WMB Gas Oil Group Average Gas Position Group Average Oil Position
*Using an average of the last 4 years Source: Howard Weil
2011 % Price 71% 76% 73% 69% 42% $5.95 $86.06 $6.20 $78.10 $5.02
2012 % Price 41% 57% 55% 48% 20% $6.01 $91.31 $5.02 $82.34 $5.50
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EQT MDU
Bakken Niobrara Heath Marcellus Barnett Marcellus 745,000 Bakken 29,482 99,301
NFG WMB
*EQT includes the Lower Huron, Cleveland, Berea sandstone and other Devonian shales,
Performance Summary
Companies Natural Gas Hybrids El Paso Corp Energen Corp EQT Corp. MDU Resources National Fuel Gas Questar Corp Williams Group Average Indices SPX XNG E&P PIPES OSX UTY XOI AMZ Spot HHub Gas ($/Mcf) Spot WTI Crude ($/Bbl) Tick ers EP EGN EQT MDU NFG STR WMB 12/31/10 $13.76 $48.26 $44.84 $20.27 $65.62 $17.41 $24.72 Stock Price 3/18/11 3/23/11 $17.27 $61.17 $46.87 $21.90 $69.40 $17.04 $29.69 $17.63 $61.53 $47.50 $22.38 $70.92 $17.28 $30.46 Y TD 28.1% 27.5% 5.9% 10.4% 8.1% -0.7% 23.2% 14.6% % Change M TD WTD -5.2% 0.7% -3.7% 4.2% -2.7% -3.3% 0.3% -1.4% 2.1% 0.6% 1.3% 2.2% 2.2% 1.4% 2.6% 1.8% Today -0.6% -0.7% -0.3% -0.5% -0.6% -0.6% -0.1% -0.5% 52-Week Performance High Low $18.77 $63.52 $49.76 $22.90 $73.66 $18.30 $31.00 $10.17 $40.25 $32.23 $17.11 $42.83 $13.56 $17.53 Relative Perform ance YTD (bps) vs Group vs UTY vs XNG vs. S&P 1,348 1,285 (871) (424) (657) (1,539) 858 2,877 2,814 657 1,105 872 (10) 2,386 1,529 1,600 1,537 (620) (172) (405) (1,287) 1,109 252 2,495 2,432 276 724 490 (392) 2,005 1,147
1,257.6 605.5 597.4 75.6 245.1 421.8 1,213.2 363.6 $4.23 $91.38
1,279.2 662.4 656.8 82.5 278.0 413.3 1,310.5 366.1 $4.00 $101.07
1,297.5 678.9 678.0 84.3 287.8 419.1 1,349.3 373.1 $4.18 $105.20
3.2% 12.1% 13.5% 11.5% 17.4% -0.6% 11.2% 2.6% -1.2% 15.1%
-2.2% 0.0% -0.1% -0.7% -0.7% -2.2% -1.2% -2.4% 6.6% 8.5%
1.4% 2.5% 3.2% 2.2% 3.5% 1.4% 3.0% 1.9% 4.5% 4.1%
0.3% 0.0% -0.2% -0.4% 0.1% 0.0% 0.4% -0.3% 3.2% 1.2%
15
Market Stats
Companies El Paso Corp Energen EQT Corp. MDU Resources National Fuel Gas Questar Corp* Williams Group Average Ticker EP EGN EQT MDU NFG STR WMB Action MO MO MO MP MO MO MO Target Price $21 $66 $53 $24 $78 $20 $41 % Upside to Target 19% 7% 12% 7% 10% 13% 35% 14.7% Avg Vol (000's) 10,894 971 2,097 1,437 618 3,341 9,788 4,164 Shares Out (mm) 706.0 72.1 149.2 188.4 83.4 178.8 594.2 MC (mm) $12,447 $4,435 $7,085 $4,216 $5,916 $3,090 $18,098 $7,898 EV (mm) $26,106 $5,128 $9,088 $5,536 $6,906 $4,390 $26,411 $11,938 Debt-toCap % 84.2% 24.9% 39.4% 36.2% 37.9% 56.1% 58.9% 48.2% Net Debt $13,659 $693 $2,003 $1,320 $990 $1,301 $8,313 Dividend $0.04 $0.54 $0.88 $0.65 $1.38 $0.61 $0.50 Yield 0.2% 0.9% 1.9% 2.9% 1.9% 3.5% 1.6% 1.9%
Valuation
C om panies El Paso Corp Energen Equitable Resources MDU Resources National Fuel Gas Questar Williams Group Average Tick er EP EGN EQT MDU NFG STR WMB HW EPS Estim ates 2011E 2012E 2013E $1.03 $1.30 $1.49 $3.53 $3.67 $4.97 $1.80 $2.19 $2.92 $1.33 $1.40 $1.52 $2.69 $2.93 $3.38 $1.13 $1.20 $1.27 $1.50 $1.55 na C onsensus Estim ates 2011 2012 2013 $1.03 $1.20 $1.32 $3.74 $3.96 $4.86 $1.82 $2.32 $2.81 $1.33 $1.47 $1.56 $2.63 $2.98 $3.35 $1.12 $1.19 $1.28 $1.33 $1.60 $2.04 P/E based on HW Estim ates HW C F Estim ates P/C F based on HW Estim ates 2011 2012 2013 20 1 1 E 2012E 2013E 2011 2012 2013 17.2x 13.6x 11.8x $2.84 $3.41 $3.70 6.2x 5.2x 4.8x 17.4x 16.8x 12.4x $9.32 $9.97 $12.02 6.6x 6.2x 5.1x 26.4x 21.7x 16.3x $4.92 $5.76 $6.92 9.7x 8.2x 6.9x 16.9x 16.0x 14.7x $3.52 $3.66 $3.93 6.4x 6.1x 5.7x 26.4x 24.2x 21.0x $7.02 $7.94 $9.14 10.1x 8.9x 7.8x 15.3x 14.5x 13.6x $2.30 $2.43 $2.56 7.5x 7.1x 6.7x 20.3x 19.7x na $4.99 $5.42 na 6.1x 5.6x na 2 0 .0 x 1 8 .0 x 1 5 .0 x 7 .5 x 6 .8 x 6 .2 x
C om panies El Paso Corp Energen Equitable Resources MDU Resources National Fuel Gas Questar Williams Group Average
EV/EBITDA 2011E 2012E 8.0x 7.2x 7.1x 6.6x 10.6x 8.7x 6.8x 6.4x 10.1x 8.7x 8.3x 7.9x 6.9x 6.4x 8 .3 x 7 .4 x
ROC E E& P Valuation 2011E 2012E EBITDA M cfe 8.6% 9.3% 3.3x $1.31 9.2% 8.7% 6.3x $2.21 7.2% 8.5% 9.0x $1.10 7.2% 7.5% 3.6x $1.65 9.4% 10.0% 9.2x $6.32 11.3% 12.1% na na 10.2% 10.1% 6.6x $2.16 9 .0 % 9 .5 % 6 .3 x $ 2 .4 6
Basic Definitions
E&P Terminology: Basis - The difference between the futures price for a commodity and the corresponding cash spot price. This commonly is related to factors such as product quality, location and contract pricing. Basin-Specific - The difference between the futures price for a commodity and the corresponding cash spot price. This commonly is related to factors such as product quality, location and contract pricing. Behind Pipe Reserves - Oil or gas reserves located above or below the currently producing zone(s) that cannot be extracted until a recompletion or pay-add occurs. BTU Short for British thermal unit, its the amount of energy required to heat one pound of water one degree Fahrenheit. There are approximately 1,030 BTUs in a cubic foot of natural gas. Cash Flow Hedge - The designation of a derivative instrument to reduce exposure to variability in cash flows from the forecasted sale of oil, gas or natural gas liquids production whereby the gains (losses) on the derivative transaction are anticipated to offset the losses (gains) on the forecasted sale. Collar - A financial arrangement that effectively establishes a price range between a floor and a ceiling for the underlying commodity. The purchaser bears the risk of fluctuation between the minimum (or floor) price and the maximum (or ceiling) price. Development Costs - Costs necessary to gain access to, prepare and equip development wells in areas of proved reserves. Development Well - A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive. Downspacing - An increase in the number of available drilling locations as a result of a regulatory commission order. Dry Well - An exploratory or a development well found to be incapable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well. Exploration Expenses - Costs primarily associated with drilling unsuccessful exploratory wells in undeveloped properties, exploratory geological and geophysical activities, and costs of impaired and expired leaseholds. Exploratory Well - A well drilled to find and produce oil or gas in an unproved area, to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir, or to extend a known reservoir. Long-Lived Reserves - Reserves generally considered to have a productive life of approximately 10 years or more, as measured by the reserves-to-production ratio. MCFE - The quantity of natural gas occupying a volume of one thousand cubic feet at a temperature of sixty degrees Fahrenheit and at a pressure of fourteen and seventy-three hundredths pounds per square inch absolute; a unit of measure in the oil and gas industry for natural gas. Net Well or Acre - A net well or acre is deemed to exist when the sum of fractional ownership working interests in gross wells or acres equals one. Pay-Add - An operation within a currently producing wellbore that attempts to access and complete an additional pay zone(s) while maintaining production from the existing completed zone(s). Pay Zone - The formation from which oil and gas is produced. Production (Lifting) Costs - Costs incurred to operate and maintain wells. Productive Well - An exploratory or a development well that is not a dry well. Proved Developed Reserves - The portion of proved reserves which can be expected to be recovered through existing wells with existing equipment and operating methods. Proved Reserves - Estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved Undeveloped Reserves (PUD) - The portion of proved reserves which can be expected to be recovered from new wells on undrilled proved acreage or from existing wells where a relatively major expenditure is required for completion. Recompletion - An operation within an existing wellbore whereby a completion in one pay zone is abandoned in order to attempt a completion in a different pay zone. Reserves-to-Production Ratio - Ratio expressing years of supply determined by dividing the remaining recoverable reserves at year end by actual annual production volumes. The reserve-to-production ratio is a statistical indicator with certain limitations, including predictive value. The ratio varies over time as changes occur in production levels and remaining recoverable reserves. Secondary Recovery - The process of injecting water, gas, etc., into a formation in order to produce additional oil otherwise unobtainable by initial recovery efforts. Service Well - A well employed for the introduction into an underground stratum of water, gas or other fluid under pressure or disposal of salt water produced with oil or other waste. Sidetrack Well - A new section of wellbore drilled from an existing well. Working Interest - Ownership interest in the oil and gas properties that is burdened with the cost of development and operation of the property. Other Energy Terminology: Fee-Based Contracts Gas is gathered, treated and processed for a fixed fee. Fees typically take form in either a demand payment or a volumetric payment. Keep-Whole Contracts Contract structure where the processor takes title to the NGLs removed from the natural gas stream and compensates (keeps whole) the producer for the equivalent amount of Btus removed from the stream. Liquefied Natural Gas (LNG) - Natural gas that is liquefied by reducing the temperature to negative 260 degrees Fahrenheit. LNG typically is used to supplement traditional natural gas supplies during periods of peak demand. Natural Gas Liquids (NGL) - Liquid hydrocarbons that are extracted and separated from the natural gas stream. NGL products include ethane, propane, butane, natural gasoline and other hydrocarbons. Percent of Proceeds Contracts Contract structure where the processor retains a percentage of the outlet stream, either in the form of liquids or gas or a combination. Transportation - Moving gas through pipelines on a contract basis for others. Throughput - Total volumes of natural gas sold or transported by the gas utility.
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