The case for NFG ....
Raised divis for past 39 years
current yield ~2.80%
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David F. Smith has seen the future of National Fuel Gas Co.—and it lies beneath the hills of northwestern Pennsylvania.
That’s where, trapped more than a mile underground in a vast rock formation known as the Marcellus Shale, lies vast amounts of natural gas that Smith believes could lead to a fundamental transformation of the Amherst-based energy company.
National Fuel is best known in the Buffalo Niagara region for its utility business that provides natural gas service to homes and businesses, but the Marcellus Shale in the coming years could spur rapid growth in the two other main parts of its business — its oil and gas drilling operations and its business that transports gas through pipelines and stores it underground until it’s needed by consumers.
“People think of us as National Fuel, the local utility. But we’re much more than that,” Smith said. “We’ve gone from being primarily a utility to basically being a business that’s split 50-50 between our regulated [utility and pipeline] units and our unregulated one.”
The regulated utility and pipeline businesses provide a solid earnings base for the company, while its oil and gas drilling operations offer the biggest growth potential. The company’s California oil fields, with oil prices above $70 a barrel, are generating much of the cash National Fuel needs to fund its push in the Marcellus region.
“We like the mix. We like the different roles the companies play,” Smith said.
Yet as National Fuel accelerates what started as a cautious foray into Marcellus drilling into a much more aggressive exploration program, the energy production business will take on an even bigger role, possibly even accounting for as much as 70 percent of its assets, Smith said.
“The shale is a massive game changer,” Smith said. “We’re in a very good place.”
More at...
buffalonews.com.
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""It is overwhelming, the scale of it," said Guy Shirey, manager of production and reservoir engineering for Seneca Resources, a subsidiary of Buffalo's National Fuel Gas Co."
Overwhelming indeed:
720,000 acres
100 acres/well
7,200 wells
3.5 BCF/well
= 25.2 TCF
That's just for the Marcellus.
We haven't begun to talk about the Utica or Upper Devonian.
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WILLIAMSVILLE, N.Y. (AP) -- Seneca Resources Corp., a subsidiary of National Fuel Gas Co., announced results of two new Marcellus Shale wells on Wednesday and its plans to explore joint-venture opportunities in the Marcellus Shale.
The company said it tested a well in Lycoming County, Pa., at a rate of 15.8 million cubic feet per day. In Clearfield County, Pa., a well operated by its joint-venture partner, EOG Resources Inc., flowed at a 24-hour rate of 8.9 million cubic feet per day.
The company has a 100 percent working interest in the Lycoming County well and a 50 percent working interest in the Clearfield County well.
The company expects to drill about 80 wells in the Lycoming County area in the next three to four years, said Matthew D. Cabell, Seneca president.
Seneca said it has asked Jefferies & Co. to explore joint-venture opportunities across its holdings in Marcellus Shale in the Appalachian region.
National Fuel CEO David F. Smith said the company is planning for the future in the area and would now consider a joint-venture, though there was no guarantee that would happen.
"We are prepared to consider entering into a new joint-venture in order to further accelerate our current Marcellus Shale development plans," he said in a news release. "In conjunction with those plans, we will continue to expand our investment in the infrastructure required to timely deliver gas into major markets."
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