NFG

National Fuel Gas Co

Utilities, Energy


Presented:09/15/2017
Price:$59.09
Cap:$5.09B
Current Price:$60.86
Cap:$5.56B

Presented

Date09/15/2017
Price$59.09
Market Cap$5.09B
Ent Value$6.61B
P/E Ratio18.54x
Book Value$19.70
Div Yield2.79%
Shares O/S86.06M
Ave Daily Vol403,619
Short Int8.56%

Current

Price$60.86
Market Cap$5.56B
National Fuel Gas Co. is an integrated energy company, which engages in the production, gathering, transportation, distribution and marketing of natural gas. It operates through the following segments: Exploration and Production; Pipeline and Storage; Gathering; Utility; and Energy Marketing. The Exploration and Production segment operations are carried out by Seneca Resources Corp., which is engaged in the exploration for, and the development and production of, natural gas and oil reserves in California and in the Appalachian region of the United States. The Pipeline and Storage segment operations are carried out by National Fuel Gas Supply Corp., which provides interstate natural gas transportation and storage services. The Gathering segment operations are carried out by National Fuel Gas Midstream Corp., which builds, owns and operates natural gas processing and pipeline gathering facilities in the Appalachian region. The Utility segment operations are carried out by National Fuel Gas Distribution Corp., which sells natural gas or provides natural gas transportation services. The Energy Marketing segment operations are carried out by National Fuel Resources, Inc., which markets natural gas to industrial, wholesale, commercial, public authority and residential customers. The company was founded on December 8, 1902 and is headquartered in Williamsville, NY.

Publicly traded companies mentioned herein: National Fuel Gas Co (NFG)

Highlights

National Fuel Gas (NFG) is an integrated natural gas company with assets in Pennsylvania and New York (~785,000 net acres in Appalachia). The presenter is short at $59 because a significant portion of NFG’s acreage and producing wells are in “inferior parts of the Marcellus: the western assets are ‘B-/C+’ and the eastern would be graded ‘B-’ at best”. If the company is running low on quality inventory looking out to 2019-2020, management could need to buy additional acreage to mitigate the risk of slowing growth. At an EV of $6.8bn, the risk is to the downside, as a sum-of-the-parts model suggests fair value is closer to $50 (base case).

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Idea Discussion

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