Good day ladies and gentlemen and welcome to the Fourth Quarter 2012 National Fuel Gas Company Earnings Call. My name is Coressa, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host Mr. Tim Silverstein, Director of Investor Relations. Please proceed.

Thank you, Coressa, and good morning everyone. Thank you for joining us on today's conference call for a discussion of last evening's earnings release. With us on the call from National Fuel Gas Company are Dave Smith, Chairman and Chief Executive Officer; Ron Tanski, President and Chief Operating Officer; and Dave Bauer, Treasurer and Principal Financial Officer. Joining us from Seneca Resources Corporation is Matt Cabell, President. At the end of the prepared remarks, we will open the discussion to questions. 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 last evening's earnings release for a listing of certain specific risk factors. With that, we will begin with, Dave Smith.

Thank you, Tim, and good morning to everyone. The fourth quarter was a very good quarter for National Fuel and provided a strong finish to our fiscal year. Even with the exclusion of the non-recurring adjustment related to the approval of Supply Corporation's rate settlement, our $0.43 per share of operating results was at the high end of our range of expectations. Seneca's production was up 46% over the prior year's quarter. Combined the operating results of our regulated segments were up over the prior year's quarter an impressive $0.12 per share, driven largely by the projects placed in service last fall, the Line N and Tioga expansion projects. On a fiscal year basis, our performance was equally impressive. Overall, Seneca's production was up 15.7 Bcfe or 23% with a dramatic increase in Marcellus production and importantly a meaningful increase in California crude oil production. Operating results for the Pipeline and Storage segment were up 50%, largely on the strength of the expansion projects I noted. These accomplishments help to offset the significant headwinds that resulted from a 21% drop in realized natural gas prices at Seneca and a 22% warmer than normal winter in our Pennsylvania utility service territory. Bottom line, I think it's fair to say that all things considered, it was a very good year for National Fuel from a financial performance perspective. It was also a good year operationally, with things proceeding according to our plans. In the E&P segment, Seneca remains focused on increasing production in the Eastern Development Area, where we completed some great wells during the quarter from the second pad on Tract 100. As a result of our continued success, we expect to maintain a two rig development program in the EDA next year. Seneca also continues to make good progress in…

Thanks, Dave, and good morning, everyone. In addition to our solid financial performance for the fiscal year, fiscal 2012 was a good year from an operations point of view and we've started 2013 in great shape. In the Utility, we kept pace with all our major capital maintenance projects. We again spent $58 million on upgrades or replacements in our utility system to assure that it's operating reliably and safely. Going into the winter heating season, the Utility has 99% of its gas storage capacity filled to help assure that reliability. Assuming a normal winter, we are projecting that our average customers heating bills for the entire winter will be about $660 in our New York jurisdiction and $619 in our Pennsylvania jurisdiction. While the cost per cubic foot of gas is about 5% less than it was last year, remember that last year was about 21% warmer than normal and our projections are based on normal weather. In the Pipeline and Storage segment, all our pipeline integrity and maintenance work that we had planned for the year was also substantially completed and pretty well on budget. On Page 20 of last night's release where we show $144.2 million of spending in the Pipeline and Storage segment, $35.9 million of that total was for maintenance and pipeline integrity work. The rest was for expansion projects; including our most recent Line N pipeline and compressor station expansion, our Northern Access project pipeline and compression station work, and completion work earlier in the year in our Tioga County Extension for the Empire Pipeline. In addition to our Utility having 99% of its gas in storage for the upcoming winter, all of supply corporations other East Coast customers have their contracted storage space filled up to the 98.5% level. They are in good…

Thanks Ron and good morning everyone. Seneca produced 24.6 Bcfe in the fiscal fourth quarter a 46% increase over last year's fourth quarter and an 11% increase over third quarter 2012. For the fiscal year we produced 83.4 Bcfe a 23% increase over fiscal 2011. The recent production increase comes primarily from new wells at Tract 100 in Lycoming County. These wells have been outstanding with eight wells tested to-date having peak 24-hour IP rates of 10.5 million to 16.1 million cubic feet per day. The best well, from the first pad averaged 14 million cubic feet per day over its first 30 days of production and produced its first billion cubic feet in just 94 days. We estimate the average EUR of our producing wells in Tract 100 at 11.5 BCF. Also in the Marcellus we tested our well in Rich Valley area at a peak 24-hour rate of 6.3 million cubic feet per day with very little decline over the five-day test period. Our preliminary estimated ultimate recovery for this well is 6.4 BCF. This was a relatively long lateral at 6,300 feet and we used the reduced cluster spacing for the completion, both of which led to a relatively high well cost of approximately $10 million. However, in a full development mode with economies of scale from multi-well pads and shared water handling facilities, we believe we can drill and complete 6 BCF wells for about $7 million, resulting in pre-tax IRR's of 25% at $4 per Mcf or perhaps shorter lateral, less costly wells with slightly lower EURs, but similar economics. Remember, we own most of this acreage in fee, and therefore pay no royalties. In the Utica, we will be drilling our plugs at Tionesta soon, and should have some initial flow data by the…

Thank you, Matt. Good morning, everyone. Considering the drop in natural gas prices, the fourth quarter was a great quarter for National Fuel. GAAP earnings were $0.58 per share, included in that amount was one-time non-cash $0.15 per share benefit to earnings related to the settlement of Supply Corporation's rate case. Previously, Supply Corp. had a deferral mechanism under which any difference between actual retiree medical expense and our rate allowance for that expense was deferred as a regulatory asset or liability. Over the years, $21 million regulatory liability had accumulated on the balance sheet. Under the rate settlement approved by FERC this quarter, effective as of May 1, 2012, Supply Corp and the other parties agreed to end this deferral mechanism. In addition, because of the regulatory liability had been funded to an external trust, the parties also agreed to remove it from our balance sheet. The credit side of the entry was recorded in the revenue from external customer's line item on the income statement, which is why the variance in pipeline and storage revenue for the quarter is so large. Excluding this $0.15 per share adjustment, operating results were $0.43 per share, which as Dave said earlier is at high-end of our range of expectations. Several factors contributed to this outperformance. First, thanks to our strong well results at Tract's 100 and 595, Seneca's reserve bookings at quarter-end were higher than we had anticipated, which had a big impact on our depletion rate. This caused Seneca's DD&A expense for the quarter to be about $5 million, or $0.04 per share lower than we had expected. Looking into fiscal '13, we now expect our DD&A rate will be in the range of $2.10 to $2.25 per Mcfe. Going in the other direction was an adjustment related to Seneca's…

(Operator Instructions) And your first question comes from line of Carl Kirst. Please proceed.

Thanks and good morning everybody. And I apologize, I jumped on two minutes after the start, was anything said about the storm, I just want to make sure there was no storm related issues, if I could start there.

No, there are no storm related issues.

Okay, appreciate that.

Nothing was said about it.

Okay. Thank you. And then, Matt, may be just to clarify couple of things on the proved reserve report. Were all the revisions price related, or was there any meaningful non-price related revision?

We had performance related revision that went in both directions. But overall they were positive, net positive on the performance revision.

Okay. And was anything meaningful from Tract 100 in that or was that too soon?

You mean in the total or in the…

Yeah, yeah.

Tract 100 is a fairly substantial part of it. I don't have a specific number for you Carl, but Tract 100 was important.

But the puds are what drove that. Okay, al right. Just wanted to

There were keep in mind we've got eight wells producing there. So and they are big wells. So the PDPs are substantial at Tract 100 as well as the puds.

Okay, I appreciate that clarification. And then lastly if I could just Ron, I just wanted to make sure I understood you had suggested maybe there may be part of a larger wet gas solution that might be being negotiated right now. Did I understand you just said that you guys were perhaps looking at the piece that would be high pressure wet gathering and then perhaps a takeaway from a processing facility on the dry gas side, but not the processing facility itself or I just want to make sure I had this moving parts.

Yes. You have those moving parts, but let's back up a little bit. We're not actually negotiating a deal right now, it's very early stages. Out on Supply Corporation's website, we have a map that kind of indicates the activity area that we're interested in and that pretty much centers right on our Line N pipeline, our legacy pipeline. And so, we're looking at – we're talking with a bunch of people and as you know that drilling over in that area is just in its preliminary stages, so that's exploratory. We have nothing built into our formal CapEx guidance for any of those projects this year, because we expect those are going to be a little bit longer-term and larger projects that would require a FERC filing.

Great, thank you very much for the color.

Hey Carl.

Yeah.

Just further on reserves, our overall PUD percentage is unchanged from '11 to '12.

Understood, thank you.

And your next question comes from the line of Mark Barnett. Please proceed.

Hey good morning everyone.

Hi, Mark.

Hi. Mark.

Just a couple of quick questions. The six BCF wells were about $7 million that you mentioned as kind of a future target, obviously a really attractive economics. Do you have any kind of idea of when that might start to play out, when you might be able to drive that scale?

You mean when can we get to that kind of a well cost?

Yeah.

It's more a function of when we get to a full development program, when we identify the area we want to really get after and then we can drive that kind of a cost. So, if for instance say in mid-2014, we decide we're really go forward with a big development program in the Western area. We could be at that cost in a fairly short order.

So not really something to look for through 2013?

2013 we're primarily focused on delineation on the Western acreage and development on the Eastern acreage.

Just one quick more if I can. You've got about half a year of production now on those kind of earlier Lycoming wells with some really high IP rates. I'm wondering if you've got enough to really kind of extrapolate some of your decline rates in that region or is it still too early?

Let me answer that like this. We've got enough data to estimate the EUR of the existing wells, the wells we've already drilled to be about 11.5 BCF.

Okay, thanks for that.

And your next question comes from the line of Ray Deacon. Please proceed.

Yes, hi. My question was for Matt. I was wondering on the Boone Mountain and Rich Valley areas, will you have results on those next quarter to talk about?

I guess I'm not really sure what you're asking me. I just gave results on Rich Valley; Boone Mountain has been producing for a year or so.

Okay, got it. I guess I just meant in terms of – you mentioned in the comments that you thought that returns might actually turn out to be better than what you got on Tract 100 and I guess do you feel like you have off of a sample?

Let me clarify one thing. I didn't say better than Tract 100, I said potentially it could turn out that in the long run some of those areas could be as good or better than Tioga County; Tract 100 and Lycoming County. Part of that reason is that we pay no royalty in those areas, but these are – if we can consistently get wells that are coming on at 6 million a day and have 6 BCF of EURs. There isn’t any reason to believe that those would be at least as good as our Tioga County developments.

Okay, got it. And I guess just any preliminary thoughts on the Utica based on couple of dozen wells that have been announced, are you thinking you should have some areas that has liquids on your acreage or is that likely to be dry gas?

Our acreage is likely to be mostly dry gas, you can see our acreage on a map and there's one area there that obviously has the potential that has some liquids content. But what we've seen to-date from our drilling is good-quality rock relatively thick section. And as we interpreted a higher gas in place the Marcellus we have in those same areas.

Got it. Okay, great. Just on Sespe how many locations do you think you have remaining there and what are well costs looking like?

We haven’t speculated on the total number of locations there yet, because we need a little more history on this down spacing, but it could be fairly substantial. Well costs are in excess of $3 million drilling complete.

Thank you.

And there are no further questions. At this time I would like to turn the call over to Mr. Tim Silverstein for closing remarks.

Thank you, Coressa. We like to thank everyone for taking the time to be with us today. A replay of this call will be available at approximately 2 pm Eastern Time on both our website and by telephone and will run through the close of business on Friday, November 9, 2012. To access the replay online, visit our Investor Relations website at investor.nationalfuelgas.com and to access of by telephone call 1-888-286-8010, and enter passcode 80430237. This concludes our conference call for today. Thank you and goodbye.

Thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.