Good day, ladies and gentlemen, and welcome to the FourthQuarter 2007 National Fuel Gas Company Earnings Call. My name is Lacy and Iwill be your operator for today’s call. At this time, all participants are in a listen-only mode. Wewill be facilitating a question-and-answer session towards the end of thisconference. (Operator Instructions). As a reminder, this conference is beingrecorded for replay purposes. I would now like to turn the presentation over to our hostfor today’s call, Mr. Jim Welch, Director of Investor Relations. Pleaseproceed. Jim Welch Thank you, Lacy, and good morning, everyone. Thank you forjoining us on today's conference call for a discussion of last evenings'earnings release. With us on the call from National Fuel Gas Company are PhilAckerman, Chairman and Chief Executive Officer; Dave Smith, President and ChiefOperating Officer; and Ron Tanski, Treasurer and Principal Financial Officer; andfrom Seneca Resources Corporation, Matt Cabell, President. At the end of the prepared remarks, we will open thediscussion to questions. Also, since this call is being publicly broadcast, we remindyou that today's teleconference discussion will contain forward-lookingstatements as defined by the Private Securities Litigation Reform Act of 1995. While National Fuel's expectations, beliefs, and projectionsare made in good faith and are believed to have a reasonable basis, actualresults may differ materially. These statements speak only as or on the datewhich they are made, and you may refer to last evening's earnings release for alisting of certain specific risk factors. With that, we'll begin with Phil Ackerman. Phil Ackerman Thank you, Jim and good morning. Our quarter and full years'numbers are great at a $1.84 and $3.96 per share. We are raising our guidancefor 2008 and National Fuel has great money-in-the-bank type assets, such asCalifornia Heavy Oil, the undeveloped Devonian sands and pipeline and storage. Standing on the base of the utility,…

Thank you, Philip. And good morning to everyone. As Philsaid the three months ended September 2007, was yet another outstanding quarterand it capped an exceptional fiscal year for the Company. For both the quarterand the fiscal year, each of our major segments posted results that met orexceeded our expectations. Excluding non-recurring items, our 2007 earnings were 10%higher than they were in 2006. More importantly, even at the low end of ourguidance, we expect 2008 earnings will be at least 10% higher than they were in2007. The market has recognized and rewarded that strongperformance. As Phil said over the past year, National Fuel shares haveproduced a total return of 32%, twice that of the S&P 500. While we areproud of our accomplishments, we are certainly not content to rest on (inaudible).We continue to work diligently, to improve upon areas of concern, and to takeadvantage of opportunities to grow the company, with a view towards increasinglong term shareholder value. We expect much of that growth to come in thePipeline and Storage segment and also in the E&P segment. As I've said in the past, expansion of Pipeline and Storagesegment is a major priority for National Fuel. And the Empire Connector is thefirst of what we hope and expect would be a number of Pipeline and Storageprojects. We broke ground on the Empire Connector in early Septemberand expect to complete at least 20 miles by December 2007. The project is onbudget and on schedule. To-date we spent a little more than $20 million, and expectto spent a another $30 million by the end of this calendar year. We remain ontrack for a November 1, 2008 in service date. Looking beyond the Empire project, earlier this year SupplyCorporation held an open season to assess market interest in additional west toeast capacity. The results of…

Thanks Dave. Good morning. Let me start by saying thatfiscal 2007 was a good year for Seneca Resources. First of all, we increasedour U.S.production to over 39 Bcfe. Secondly, we sold our Canadian operations for $232million or $4.75 per Mcfe. And most notably, we continue to accelerate ourdrilling program in Appalachia, growing oureast division [proved] reserves by 32%. As we announced in our October 11th press release; in Appalachia we drilled 233 wells and added 33 Bcf of crudereserves. That’s five times our annual East Division production. We’re extremely pleased with these results, and plancontinued acceleration of our drilling program with 280 wells planned forfiscal ’08. While we do have aggressive growth plans, I must stress theimportance of balancing the increased drilling pace with detailed geologicmapping and continuous integration of new drilling results. We will continue toaccelerate our drilling pace at a rate, which will allow us to achieve that balanceand therefore maximize the value of our asset. In addition to our outstanding growth in the upper Devonian,we’ve now drilled three vertical wells for the Marcellus Shale and haverecently drilled our first Marcellus horizontal well, with our joint venturepartner EOG. The horizontal has been completed in fact with testing planned fornext week. So far, all indications are positive. For fiscal '08, we may drill up to 18 additional Marcelluswells, 10 of them horizontal. And with significant success we could do more. Weare also seeing industry activity in the Marcellus heating up, on trend to ouracreage, another operator has reported the results of their first threeMarcellus horizontal wells, with initial production rates ranging form 1million to over 3 million cubic feet per day, per well. Also in the October 11th press release, we disclosed theresults of Netherland Sewell's analysis of undeveloped, proved, probable andpossible reserves on our Appalachia acreage.As we pointed…

(Operator instructions). Your first question will come fromthe line of Jim Harmon with Lehman Brothers. Please proceed.

Good morning. I have got three questions probably for Matt,and the first is if we could look at the Gulf of Mexico we've had a lot offocus on Appalachia. We’re seeing productiongrowth out of that region, but we haven’t really seen reserve growth, so what'sin your mind over the next 12 months to 18 months, are you going to be doingwith that region is it more of a production or will we see reserve growth?

That’s a good question, I guess the way I would look at howwe’re going to measure success, its going to be based on finding anddevelopment cost, and on the rate of return that we estimate for the wells thatwe drill over the course of the year. So, at the rate of capital spendingversus the production we’re going to have this year it might not be anysignificant reserve adding activity, but yet it’ll be a value adding activity.

Okay. Fair enough, second question on the rising gasenvironment and oil environment, you always get asking of this, it makes senseto hedge mines. And I know it took a while for you to get your ability to hedgeoil, and I was wondering if triple digit prices doesn’t make sense to lot morethan it, because I didn’t see any new hedges in last night's release.

I'm going to let Ron take that one.

Yeah we did have some new hedges from the last quartersrelease Jim, but as I mentioned on the call we have got 50% hedged right nowand I think as you say.

Oil?

Yes.

Okay. My mistake.

Yeah that's on page 26 of the release I believe.

We'll double check that.

Yeah, we’ve ran through those numbers and right now we areabout 50% hedged overall. And as you said given the rising prices right nowwe're comfortable with that.

Okay, oh it's possible; I miss something on a 30 pagerelease. Okay. The last question is, assuming everything hits all cylinders inAppalachia can Matt or anyone talk about what the infrastructure is, like youhandle the volumes and what would need to be done in order to make thatoperation as smooth as possible?

Well one of the continuous challenge for us is building thegathering system at a pace that will keep up with our drilling program, butit's not a challenge that can't be met, its just one that is very much part ofour emphasis.

Yeah I think Jim; this is Dave, on the upper Devonian itsjust kind of an incremental keeping on building it out. Certainly if the Shaletakes off like it might, we've already put in place the structure which wouldrevolve around a number of limited partnerships. And I mentioned previouslythat the main loss in this has been heading that up. Not only talking toSeneca, but to a number of other producers, and winding up what we need to doin order to, essentially run that as a separate business. Right now it's not needed with respect to the presentAppalachian production, but certainly if the Shale takes off, that's a businesswe'll be getting into. And we have all the regulatory work, all the corporatework, all the legal work lined up and ready to go.

Okay.

Jim let me just add this is Phil.

Sure.

Jim let me just add this as well. That if the shale takesoff as Dave says, it goes beyond near gathering. It's a different order ofmagnitude then and you wind up meeting takeaway capacity to get all that gascompletely out of the region, and then you are looking at some significanttransmission facilities as well.

Okay, great. Thank you very much.

Our next question comes from the line of Carl Kirst withCredit Suisse. Please proceed.

Hey good morning everybody.

Hey Carl.

Three questions, the first ones pretty easy today. I justdidn't get a chance to scroll down the numbers. Matt I think you had runthrough what the production growth expectations were by region could you?

Certainly, certainly. 15% to 20% on Appalachia; 5% to 10% onthe Gulf of Mexico; and flat to a slight decline in California.

Okay, great. The second question really was kind of onekeying off of Jim's and your answer to him with respect to the Gulf is, F&Dis certainly one of the metric that you are looking at to build value. Can youI guess two part for this question, with 2007 results here is it possible tobreakout F&D by region for the three remaining region? And two when you aresaying for the Gulf of Mexico as we look forward, can you help us out withwhere you think F&D should be if you are successful as we hope your.

Let me answer that last part first and say that $4 is ourtarget and with the high rates that we get in the Gulf of Mexico, $4 finding and development cost provides very economicproject. In terms of what are -- you are asking about what was our F&D.

The N&D by region right for '07.

I don't have that off the top of my head. In the Gulf itwould have been relatively high, but I should carry out that by saying that wehave significant probable reserves added in but not disclosed, but added in theHigh lsland 24-L area, which if you included those the finding and developmentcost wouldn't look too bad.

Okay. Actually, off of that, whether you want to, maybe theeasier question is just for the company as a whole on the [E&P] side, asyou look at your PV-10 calculation here for year end. In that calculation, youhave an estimate for what future development cost would be?

Not at my finger tips.

I could follow-up offline or get it --

[Scorning] around you are looking for it. May be you can goto the next question. [Multiple Speaker]

This needs some refinement Carl, because it has also all theP&A cost.

Okay.

So we're going to have work on, refine this a little bitmore.

We'll get back to you on that.

Okay. Fair enough. Last question was simply on the -- thoughthe west to east potential project coming up here. And I understand, from pastengineering and what the final size may or may not be. But, is it possible 324miles pipelines through that area, even though its non-existing right of way, Iwould think, it's not going to be a smaller project. Do you have any sort ofbookings of what size we might be talking about, whether or not that would thenrequire you to take on a partner or howshould we think about that?

Well we’ve been looking at 24 to 30 inch depending upon whatthe market calls for. It is very helpful to have the existing rates as yourecognize. And, you know Carl there are about 15, depending if you count theover the top projects, there are about 15 projects our there and certainly notall or most of those projects are going to move forward. So, we would not need to partner-up but, we are certainlynot ruling that out and we have had discussions with other pipelines and othersabout potentially partnering up. So, that certainly is something that we wouldconsider, although at this point we don't regard it as necessary.

Okay, that's helpful. And far as capital cost size should webe thinking of $1 million to $2 million a mile or could it be significantlyless than that considering the….

Estimates would range between $630 million and $725 million.

Okay.

With the whole thing.

Alright, that’s what that we were thinking. Okay, Iappreciate. Allright thanks guys

Thanks Carl.

(Operator Instructions). Our next question comes from theline of Becca Followill with Tudor Pickering. Please proceed. Becca Followill -Tudor Pickering & Co.: Hello, first question is on the Marcellus. What is yourdisclosure going to be on that? Are you going to disclose individual wells oryou are going to give us periodic updates or are you going to wait until youhave significant amount of information, what's is the plan there?

Well Becca, we recognized that all our shareholders areanxious to hear about our drilling results as soon as possible. While werecognize that, we've got to balance the value of that confidentiality with thebenefit derived by disclosing those flow rates and reserves. So, the play isbecoming very competitive, and I guess this is a long way, to say we don't knowyet exactly what we'll disclose.

Are you leasing at this point?

That again goes into that same very question aboutcompetitive issues and I guess what I would say is the success of the play iscertainly going to drive our leasing activity in our leasing plans.

Okay, thank you. Second question on you mentioned Phil thatthe rebuttal New Mountain, will take more lengthy document, I assume that youguys at this point are going to make another filing that rebuts New Mountain isthat correct?

That's right.

And the timing for annual meeting, would we expect that tobe in the normal time?

It will be in February.

Okay.

Well, the annual meeting, but are you asking Becca, when therebuttal would?

No, when the annual meeting is, I assume it's at the normaltime. And then finally back to the pipeline question, I think this is maybe thefifth or the sixth proposed pipeline that's coming for the terminus of Rockies, why does this project have a competitiveadvantage over the others?

There is at least five or six. And I mean number one, wewere at it very quickly, I think we might have been the first out of the box.Number two, we do have the existing rights, number three, fortunately becauseof our geographic area there is an awful lot of potential storage right onwhere we are proposing to lay the line. So, I think when you add all of that together, we're in arelatively good position, that's not to say, some of the other projects lookinteresting as well, but I think when you put it all together we're in a prettygood position and we'll know, we’ve been out talking with the customers at somelength for some time and we are coming fairly close to a conclusion.

Great, thank you. And then one last question on the New Mountainfiling that they made they talk about Schlumberger's PT10 value. Do you thinkthat that is an accurate assessment?

I think we've said right along and Matt said that we thinkit was a very cursory analysis, based on numbers I don't think they agree withours. That the numbers that they appear to use in terms of reserves per wellsimply don't agree with the reserve numbers that we come up with and with ouractual experience, it seems to have been based on a different portion of thebasin, and I wished that number was there.

I'll add one thing to Phil's comments back in, that is thatbeyond proved reserves as you will know and particularly when you get outsideof three 3P reserves and you are talking about perspective resources arecognition of risk is appropriate and required when you value those additionalresources. And I guess my question would be have they recognized that riskproperly.

Exactly, Okay. Thank you. And I'm sorry I have one morequestion, on the Californiareserve write-down I know there was an auditor taking a look at it, but whatwere the big pieces behind that significant change in the reserves?

The vast majority of it was a change in our recovery factor.

Okay. Can you give us metrics on from what to what?

I'm going to say from 80% to 70% and that's a roughballpark.

Okay, Great. Thank you gentlemen.

And if Carl is still on the line, the future CapEx that'sbuilt into our PV10 numbers is approximately $220 million.

And our next question comes from the line of Shneur Gershuniwith UBS. Please proceed.

Hi. Good morning guys. It's actually Chris. Most of myquestions have been answered, but I just have one quick one. Given the recentstrength in the stock, and healthy CapEx well for 2008, what's the status of yourshare buyback?

The share buyback remains authorized by the Board, thenumber of shares that have actually been bought back they are disclosed in the10-Q.

We didn't buy any shares during the last quarter, Chris.

No, for fishing around, I am just curious looking forward isthat something to kind of carry on or are you -- I mean, looking into thefuture at these levels, at these CapEx , I guess, the quarters buyback kind ofsomething that you're targeting?

Well, I guess, one way to look at it is, yes, share buybacksare competing use of capital and as Matt said if the Marcellus takes off, wewould be looking at using more dollars there and investing it in the groundrather than buying shares. But as I've sated before, with respect to the sharebuyback, we've got Board authorized targets and volumes and amount and pricingthat were not going to be disclosed beforehand.

Okay. Thank you guys very much.

At this time there are no questions in the queue. I wouldnow like to turn the call back over to Jim Welch for closing remarks.

Thank you, Lacy. At this point, we'll conclude our call fortoday. We'd like to once again thank everyone for taking the time to be with ustoday. A replay of this call will be available in about one hour on both ourwebsite and by telephone. And both will run through the close of business onFriday, November 16th. Our website address is www.nationalfuelgas.com.The telephone replay number is 1888-286-8010, using pass code 19287282. Thisconcludes our conference call for today. Thank you and good bye.

Thank for your participation in today's conference. Thisconcludes your presentation, you may now disconnect. Good day.