National Fuel Gas Company Annual Report 2011

FY2011 Annual Report · National Fuel Gas Company

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Your Future
Our Future

national fuel gas company

Summary Annual Report 2011

America’s energy outlook is more
promising than ever. Natural gas
produced from shale is transforming
the energy landscape for the better,
driving economic prosperity, reducing
utility bills for consumers and enhancing
domestic energy independence. Shale
gas is also shaping the future of
National Fuel Gas Company. Through
an ambitious program to develop
the Company’s substantial assets in the
Marcellus Shale, National Fuel is in
the midst of a transformation that will
drive its growth and produce lasting
benefits for shareholders, employees and
communities the Company serves.

on the cover: Depicted
on the map in light green
are the nation’s principal
natural gas shale formations.

inside: at-a-glance

national fuel gas company
6363 Main Street, Williamsville, New York 14221
716-857-7000 www.nationalfuelgas.com
nyse: nfg

national f uel ga s compan y

in v e stor infor mation

National Fuel employees, pictured at a
Habitat for Humanity project, are committed
to giving back to their communities.

Michael Donovan, an employee of Seneca
Resources Corporation, leads a
Marcellus Shale tour for elected officials.

A welder works on Empire Pipeline’s
Tioga County Extension project.

Utility foreman, Shane Becker, in the field
ensuring safe and reliable service to customers.

Developing great assets begins
with great people, and
National Fuel takes pride in
hiring, training, motivating and
retaining excellent employees.
For each operating subsidiary,
it is the employees who turn
the Company’s great assets into
successful financial results.
These same employees play
an equally important role in
the communities we serve,
continuing the longstanding
tradition at National Fuel Gas
Company of donating time,
talent and financial resources
to hundreds of organizations
each year.

footnotes:

(1) Consolidated Operating Revenues as set forth in the Company’s 2011
Statement of Income and Earnings Reinvested in the Business were
$1,778.8 million. See page 119 of the Company’s 2011 Form 10-K for details.

(2) Consolidated Operating Income as set forth in the Company’s 2011
Statement of Income and Earnings Reinvested in the Business was
$441.2 million, including Exploration & Production, $230.7 million;
Pipeline & Storage, $74.2 million; Utility, $127.7 million; Energy
Marketing, $13.1 million; and Corporate and All Other, $(4.5) million.

exploration & production

Seneca Resources Corporation explores for, develops and
produces oil and natural gas reserves in California and
Appalachia. Seneca’s primary focus is now the Marcellus Shale
in Pennsylvania, where the company controls 745,000 net
prospective acres.

2011 highlights:
Operating Revenues: $519.0 million(1)
Operating Income: $230.7 million(2)
Net Income: $124.2 million
Capital Expenditures: $648.8 million
Total Assets: $1,885.0 million
Total Annual Production: 67.6 Bcfe

pp Seneca’s reserve replacement was 448% for the fiscal year.
pp Appalachian reserve replacement ratio was 737%, which

included 249 Bcf of Marcellus reserve additions.

pp Total Marcellus production in 2011 was 35.4 Bcfe, an increase

of nearly 400% from the prior year.

pp Seneca’s 3-year average finding and development costs
were $2.09 per Mcfe, a decrease of 12% as compared to the
prior 3-year period, ended September 30, 2010.

pp Seneca’s Marcellus net risked resource potential is 8 to

15 trillion cubic feet of natural gas, which is more than
eight times Seneca’s proved reserves.

pp Seneca completed the sale of its offshore Gulf of Mexico

assets in April 2011, receiving net proceeds of $55.4 million.

2012 outlook:
pp Produce 87 to 101 Bcfe of natural gas and oil, with 62 to
72 Bcfe expected to come from the Marcellus Shale.

pp Maintain a stable level of oil production in California
by spending approximately $45 to $55 million on
additional development.

pp Continue ongoing delineation efforts in the Marcellus,
Utica and Geneseo shales across a broad section of
Seneca’s Pennsylvania acreage position.

pipeline & storage

utility

National Fuel Gas Supply Corporation and Empire Pipeline,
Inc. provide natural gas transportation and storage services to
affiliated and nonaffiliated companies through an integrated
system of 2,795 miles of pipeline and 31 underground natural
gas storage fields (including 4 storage fields co-owned with
nonaffiliated companies).

2011 highlights:
Operating Revenues: $215.1 million(1)
Operating Income: $74.2 million(2)
Net Income: $31.5 million
Capital Expenditures: $129.2 million
Total Assets: $1,131.7 million
System Throughput: 320.0 Bcf

pp Completed the second phase of the Lamont Compression

project, adding 3,400 horsepower to an existing interconnect
with Tennessee Gas Pipeline, capable of transporting
50,000 dekatherms (Dth) per day of Marcellus production.

pp Commenced construction of the first phase of the Line N
Expansion project that is designed to move 160,000 Dth
per day of southwestern Marcellus production and placed
the project in service during October 2011.

pp Began construction on the Tioga County Extension project
that is capable of moving 350,000 Dth per day of Tioga
County, Pa. Marcellus production and placed the project
in service during November 2011.

2012 outlook:
pp Construct the Northern Access Expansion Project, designed
to move 320,000 Dth per day of Pennsylvania Marcellus
production north to an interconnect with TransCanada
Pipeline at the Canadian border.

pp Expand the Line N system in southwestern Pennsylvania by
constructing the Line N 2012 Expansion, which is designed
to move 150,000 Dth per day of Marcellus production.

pp Continue to evaluate the need for additional infrastructure
expansion projects and aggressively market new projects to
further enhance the pipeline and storage network to serve
growing Appalachian production.

National Fuel Gas Distribution Corporation sells or transports
natural gas to customers through a local distribution system
located in western New York and northwestern Pennsylvania.

2011 highlights
Operating Revenues: $852.5 million(1)
Operating Income: $127.7 million(2)
Net Income: $63.2 million
Capital Expenditures: $58.4 million
Total Assets: $2,046.0 million

pp Over 75% of capital expenditures allocated to system safety

maintenance and enhancements.

pp Assisted qualifying customers in receiving $66 million in

HEAP and LIHEAP funding in New York and Pennsylvania.

pp Successful New York conservation incentive program

approved and extended through 2015.

2012 outlook
pp Address the current challenge of maintaining service to

payment-troubled, low-income customers through targeted
assistance programs and enhanced community outreach.

pp Continue to modernize system and further promote natural
gas as the safe, reliable and clean fuel choice for homes,
businesses and vehicles.

energy marketing

National Fuel Resources, Inc. sells competitively priced natural
gas to industrial, wholesale, commercial, public authority and
residential customers located in New York and Pennsylvania.

2011 highlights:
Operating Revenues: $285.0 million(1)
Operating Income: $13.1 million(2)
Net Income: $8.8 million
Total Assets: $71.1 million
Sales Volume: 52.9 Bcf

pp Expansion of residential customer base in Pennsylvania.
2012 outlook
pp Continue expansion within current markets.
pp Maintain high levels of customer satisfaction and retention.

annual meeting
The Annual Meeting of Stockholders will be
held at 9:30 a.m. (local time) on Thursday,
March 8, 2012, at The Ritz-Carlton Golf Resort,
Naples, 2600 Tiburón Drive, Naples, FL 34109.
Stockholders of record as of the close of busi-
ness on January 9, 2012, will receive in the mail
formal notice of the meeting, proxy statement
and proxy.

investor relations
Investors or financial analysts desiring
information should contact:

David P. Bauer
Treasurer
Tel.: 716-857-7318

Timothy J. Silverstein
Director, Investor Relations
Tel.: 716-857-6987
silversteint@natfuel.com

National Fuel Gas Company
6363 Main Street
Williamsville, NY 14221

additional shareholder reports
Additional copies of this report and the
Financial and Statistical Supplement to
the 2011 Annual Report can be obtained
without charge by writing to or calling:

Paula M. Ciprich
Corporate Secretary
Tel.: 716-857-7548

Timothy J. Silverstein
Director, Investor Relations
Tel.: 716-857-6987

National Fuel Gas Company
6363 Main Street
Williamsville, NY 14221

independent accountants
PricewaterhouseCoopers LLP
3600 HSBC Center
Buffalo, NY 14203

This report is printed on paper containing postconsumer
fiber. The paper used in this report is also certified under
the Forest Stewardship Council guidelines.

common stock transfer agent
and registrar
Computershare(1)
P.O. Box 358015
Pittsburgh, PA 15252-8015
Tel.: 800-648-8166
E-mail: shrrelations@bnymellon.com

Website: www.bnymellon.com/shareowner/isd

Change of address notices and inquiries
about dividends should be sent to the
Transfer Agent at the address listed above.

national fuel direct
stock purchase and dividend
reinvestment plan
National Fuel offers a simple, cost-effective
method for purchasing shares of National Fuel
stock. A prospectus, which includes details of
the Plan, can be obtained by calling, writing
or e-mailing Computershare, the administrator
of the Plan, at the address listed above.

trustee for debentures
The Bank of New York Mellon
101 Barclay Street
New York, NY 10286

stock exchange listing
New York Stock Exchange
(Stock Symbol: NFG)

(1) On December 31, 2011, The Bank of New York Mellon’s Shareowner Services business was acquired by Computershare.

This Annual Report contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements should
be read with the cautionary statements and important factors included in the Company’s Form 10-K at Item 7, MD&A, under the heading “Safe Harbor for Forward-
Looking Statements,” and with the “Risk Factors” included in the Company’s Form 10-K at Item 1A. Forward-looking statements are all statements other than
statements of historical fact, including, without limitation, statements regarding future prospects, plans, objectives, goals, projections, estimates of oil and gas
quantities, strategies, future events or performance and underlying assumptions, capital structure, anticipated capital expenditures, completion of construction
and other projects, projections for pension and other post-retirement benefit obligations, impacts of the adoption of new accounting rules, and possible outcomes
of litigation or regulatory proceedings, as well as statements that are identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,”
“plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions.

Forward-looking statements include estimates of oil and gas quantities. Proved oil and gas reserves are those quantities of oil and gas which, by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be economically producible under existing economic conditions, operating
methods and government regulations. Other estimates of oil and gas quantities, including estimates of probable reserves, possible reserves, and resource
potential, are by their nature more speculative than estimates of proved reserves. Accordingly, estimates other than proved reserves are subject to substantially
greater risk of being actually realized.

This Annual Report and the statements contained herein are submitted for the general information of stockholders and employees of the Company and are not
intended to induce any sale or purchase of securities or to be used in connection therewith. For up-to-date information, we have two sources for your use. You may call
1-800-334-2188 at any time to receive National Fuel’s current stock price and trade volume or to hear the latest news releases. You may also have news releases faxed or
mailed to you. National Fuel’s website can be found at http://www.nationalfuelgas.com. You may sign up there to receive news releases automatically by e-mail. Simply
go to the E-mail Alerts section and subscribe.

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national f uel ga s compan y

in v e stor infor mation

National Fuel employees, pictured at a
Habitat for Humanity project, are committed
to giving back to their communities.

Michael Donovan, an employee of Seneca
Resources Corporation, leads a
Marcellus Shale tour for elected officials.

A welder works on Empire Pipeline’s
Tioga County Extension project.

Utility foreman, Shane Becker, in the field
ensuring safe and reliable service to customers.

footnotes:

exploration & production

pp Seneca’s reserve replacement was 448% for the fiscal year.
pp Appalachian reserve replacement ratio was 737%, which

included 249 Bcf of Marcellus reserve additions.

pp Total Marcellus production in 2011 was 35.4 Bcfe, an increase

of nearly 400% from the prior year.

pp Seneca’s 3-year average finding and development costs
were $2.09 per Mcfe, a decrease of 12% as compared to the
prior 3-year period, ended September 30, 2010.

pp Seneca’s Marcellus net risked resource potential is 8 to

15 trillion cubic feet of natural gas, which is more than
eight times Seneca’s proved reserves.

pp Seneca completed the sale of its offshore Gulf of Mexico

assets in April 2011, receiving net proceeds of $55.4 million.

2012 outlook:
pp Produce 87 to 101 Bcfe of natural gas and oil, with 62 to
72 Bcfe expected to come from the Marcellus Shale.

pp Maintain a stable level of oil production in California
by spending approximately $45 to $55 million on
additional development.

pp Continue ongoing delineation efforts in the Marcellus,
Utica and Geneseo shales across a broad section of
Seneca’s Pennsylvania acreage position.

pipeline & storage

utility

pp Completed the second phase of the Lamont Compression

project, adding 3,400 horsepower to an existing interconnect
with Tennessee Gas Pipeline, capable of transporting
50,000 dekatherms (Dth) per day of Marcellus production.

pp Expand the Line N system in southwestern Pennsylvania by
constructing the Line N 2012 Expansion, which is designed
to move 150,000 Dth per day of Marcellus production.

National Fuel Gas Distribution Corporation sells or transports
natural gas to customers through a local distribution system
located in western New York and northwestern Pennsylvania.

2011 highlights
Operating Revenues: $852.5 million(1)
Operating Income: $127.7 million(2)
Net Income: $63.2 million
Capital Expenditures: $58.4 million
Total Assets: $2,046.0 million

pp Over 75% of capital expenditures allocated to system safety

maintenance and enhancements.

pp Assisted qualifying customers in receiving $66 million in

HEAP and LIHEAP funding in New York and Pennsylvania.

pp Successful New York conservation incentive program

approved and extended through 2015.

2012 outlook
pp Address the current challenge of maintaining service to

payment-troubled, low-income customers through targeted
assistance programs and enhanced community outreach.

pp Continue to modernize system and further promote natural
gas as the safe, reliable and clean fuel choice for homes,
businesses and vehicles.

energy marketing

National Fuel Resources, Inc. sells competitively priced natural
gas to industrial, wholesale, commercial, public authority and
residential customers located in New York and Pennsylvania.

2011 highlights:
Operating Revenues: $285.0 million(1)
Operating Income: $13.1 million(2)
Net Income: $8.8 million
Total Assets: $71.1 million
Sales Volume: 52.9 Bcf

pp Expansion of residential customer base in Pennsylvania.
2012 outlook
pp Continue expansion within current markets.
pp Maintain high levels of customer satisfaction and retention.

investor relations
Investors or financial analysts desiring
information should contact:

David P. Bauer
Treasurer
Tel.: 716-857-7318

Timothy J. Silverstein
Director, Investor Relations
Tel.: 716-857-6987
silversteint@natfuel.com

National Fuel Gas Company
6363 Main Street
Williamsville, NY 14221

additional shareholder reports
Additional copies of this report and the
Financial and Statistical Supplement to
the 2011 Annual Report can be obtained
without charge by writing to or calling:

Paula M. Ciprich
Corporate Secretary
Tel.: 716-857-7548

Timothy J. Silverstein
Director, Investor Relations
Tel.: 716-857-6987

National Fuel Gas Company
6363 Main Street
Williamsville, NY 14221

independent accountants
PricewaterhouseCoopers LLP
3600 HSBC Center
Buffalo, NY 14203

This report is printed on paper containing postconsumer
fiber. The paper used in this report is also certified under
the Forest Stewardship Council guidelines.

common stock transfer agent
and registrar
Computershare(1)
P.O. Box 358015
Pittsburgh, PA 15252-8015
Tel.: 800-648-8166
E-mail: shrrelations@bnymellon.com

Website: www.bnymellon.com/shareowner/isd

Change of address notices and inquiries
about dividends should be sent to the
Transfer Agent at the address listed above.

trustee for debentures
The Bank of New York Mellon
101 Barclay Street
New York, NY 10286

stock exchange listing
New York Stock Exchange
(Stock Symbol: NFG)

(1) On December 31, 2011, The Bank of New York Mellon’s Shareowner Services business was acquired by Computershare.

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Your Future
Our Future

national fuel gas company

Summary Annual Report 2011

on the cover: Depicted
on the map in light green
are the nation’s principal
natural gas shale formations.

inside: at-a-glance

national fuel gas company
6363 Main Street, Williamsville, New York 14221
716-857-7000 www.nationalfuelgas.com
nyse: nfg

NatioNal f uel ga s compa N y

National Fuel Gas Company is an integrated, diversified
energy company with four financial reporting
segments: Exploration and Production, Pipeline and
Storage, Utility, and Energy Marketing.

The above illustration highlights National Fuel’s
integrated system in western New York and
Pennsylvania, where the Company’s Marcellus Shale
production assets, Appalachian pipeline and storage
operations, and retail service territories share the
same geographic area. The Company also owns
significant crude oil production assets in California.
Most of the Company’s current capital spending is
focused on activities related to the Marcellus Shale
formation in Pennsylvania. There, with an acreage
footprint that is among the largest of all Marcellus
producers, Seneca Resources Corporation, the
Company’s exploration and production subsidiary,
is in the midst of an ambitious program to rapidly

grow its commercial production over the next three
years, increasing substantially from the 67.6 billion
cubic feet equivalent (Bcfe) produced in 2011. In
coordination with Seneca’s development activities, the
Company’s interstate pipeline and midstream gathering
subsidiaries are investing in facilities and upgrades
designed to bring Marcellus production to growing
markets in the northeast and Canada. With total
investment expected to reach as much as $1.5 billion
annually by 2014, this ongoing commitment to
developing and expanding our extensive Appalachian
asset base is the driver behind National Fuel’s expected
growth over the next several years.

Dev elopiNg the marcellus s hale

With an ambitious program to concurrently develop
its acreage and pipeline infrastructure
in the Marcellus Shale, National Fuel is well
positioned for future growth.

In Pennsylvania, Seneca continues to balance its active
development and delineation programs across its 745,000 net
prospective Marcellus Shale acres with an aggressive, yet
responsible program to grow natural gas production. In
California, Seneca’s stable, predictable and high margin
crude oil production continues to deliver strong cash flows
that assist in funding a significant portion of the Company’s
Marcellus development. Recent developments and exploration
efforts in two other Appalachian shale plays, the Utica and
the Geneseo, could create additional opportunities for
future growth.

With the Company’s longstanding history in the Appalachian
basin, Seneca has built its unique acreage position over many
decades, achieving a number of advantages over its peers.
Seneca owns, in fee, approximately 80 percent of its natural gas
rights. As a result, those rights carry no costly royalty payments,
providing a significant economic benefit for the Company.
Another advantage is the sheer size and contiguity of Seneca’s

acreage, enabling a cost-efficient and strategic approach to
developing its resource base. And finally, by integrating
its Marcellus development with the Company’s Appalachian
transmission and gathering expansion projects, Seneca can
achieve timely access to established markets, boosting the
Company’s earnings potential.

Seneca’s commitment to environmental protection is exemplified
by the Company’s innovative project that reclaims contami nated
water from an abandoned coal mine and uses it for Marcellus
well completions. This project is part of a comprehensive water
management program, including an ambitious “zero surface
discharge” policy, designed to safeguard the surface from any
type of pollution.

Below the surface, Seneca’s focus on protecting water supplies
includes cementing multiple layers of casing through the fresh
water aquifer. These layers of steel and concrete produce an
impermeable seal that protects the water table and assures the
well’s long-term operational integrity.

36%

Production Growth

Seneca’s exceptional oil and
natural gas production
growth in 2011 was driven by
a nearly 400% increase in
production from
the Marcellus Shale.

MARCELLUS SHALE PROVED RESERVES
Billion Cubic Feet Equivalent (Bcfe) at September 30

’11

’10

’09

202

491

94%

net revenue interest

Seneca owns nearly 80% of
its Marcellus natural gas
rights, greatly reducing its
royalty obligations and
producing a class-leading net
revenue interest of 94%.

National Fuel Gas Company Summary Annual Report 20111

PreservinG our
environment

resPonsible drillinG
PrActices

continuinG AcreAGe
delineAtion

senecA AcreAGe

Seneca installs four
layers of steel casing and
cement to protect the
water supply and utilizes
multi-well pads (pictured
on page 2) to limit its
surface impact.

The Marcellus, separated
from aquifers by thou-
sands of feet of highly
impermeable rock, is
hydraulically fractured
utilizing industry best
practices for safety and
environmental protection.

In addition to the
Marcellus Shale, other
Appalachian shales,
the Utica and the
Geneseo, are being
explored to determine
the magnitude of their
growth potential.

Note: This representation, not drawn to scale, is of one location. Shale depths and thickness can vary in different geographic locations.

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iN v e stiN g iN a ppal achiaN iN f r a struct ur e

National Fuel’s pipeline and storage network
is a critical link between the Marcellus Shale and
high-demand natural gas markets.

Prior to World War II, National Fuel’s pipeline system delivered
natural gas primarily from conventional sandstone formations
in Appalachia to the Company’s utility customers in New York
and Pennsylvania. As Appalachian production was gradually
replaced by gas from the southwest and Gulf of Mexico, and later
by gas from western Canada, National Fuel’s pipeline system
was configured to transport supplies from major, long-haul
pipeline interconnections to the Company’s Utility segment
and points east. For decades, Appalachian production
became relegated to a minor and declining source of supply
used to serve major markets.

Today, however, the Marcellus Shale has caused Appalachia
to reemerge as a major supply basin. Capitalizing on this
resurgence, National Fuel is realigning its Appalachian pipeline
system to meet the growing capacity demands of Marcellus
producers and customers in downstream markets.

This realignment involves a series of transmission pipeline
projects under a multi-year expansion program that will
dramatically increase firm transportation capacity available for
Marcellus production. Emblematic of the changes wrought
by Marcellus production, two of those projects, the Northern
Access Expansion and Tioga County Extension, will utilize
existing lines that were configured to ship gas into our service
area from Canada and reverse that flow to move Marcellus
supplies north into Canadian markets.

Concurrent with the development of the Company’s
transmission pipeline projects, National Fuel Gas Midstream
Corporation is rapidly investing in gathering infrastructure,
initially to create an outlet for Seneca’s Marcellus production,
and later to serve other Appalachian producers who, like
Seneca, seek to develop remote, but highly productive Marcellus
acreage. These projects, and others on the drawing board,
are helping to establish National Fuel’s position as a leading
integrated natural gas company in the Marcellus Shale.

$750m

1.5 bcf

2,795

infrAstructure sPendinG

mArcellus shAle cAPAcitY

interstAte PiPeline miles

Starting in 2009, the Company
began an expansion
of its Appalachian pipeline
network, with current
plans to spend approximately
$750 million through 2014.

Eight different interstate pipeline
projects either being planned
or currently in-service will increase
capacity by up to 1.5 Bcf to move
rapidly growing Marcellus volumes.

National Fuel’s extensive interstate
transmission system, sitting
above the Marcellus, Utica
and Geneseo shales, is well
positioned to transport
expanding production.

National Fuel Gas Company Summary Annual Report 20111

unlockinG new
demAnd mArkets

trAnsPortinG
mArcellus Production

GAtherinG senecA’s
nAturAl GAs

PiPeline sYstem

Empire’s Tioga County
Extension (pictured
on page 4) will enable
the transportation
of Marcellus production
to growing Canadian
markets.

New compression and
pipelines, including
Supply’s Line N Expansion
project, are components
of several key expansions
that are enhancing
the system for use by
Marcellus producers.

Midstream Corporation
is currently constructing
the Trout Run Gathering
System, its second project
in central Pennsylvania
to transport Seneca’s
Marcellus production.

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focusiNg oN s af et y

The operating subsidiaries of National Fuel have
more than one hundred years of experience
in the design, construction and maintenance of
safe and reliable natural gas infrastructure.

With more than a century of experience in building and operating
natural gas infrastructure, National Fuel has developed a culture
of safety, encompassing every aspect of its business. Furthering
that tradition, in 2011, National Fuel appointed James Ramsdell
as its first, enterprise-wide, Chief Safety Officer with responsibility
for leading the Company’s initiatives for safety throughout all of
its business operations. Mr. Ramsdell brings more than 35 years
of experience in constructing and operating safe and reliable gas
delivery systems to the Company’s pipeline, gathering, storage,
drilling and all related activities.

Our first and highest priority is the safety of our customers,
employees and communities. The Company diligently observes
all laws and regulations governing pipeline safety, but also
goes further and aims to exceed safety metrics established by
regulators. For example, the Utility, with crews on call 24 hours
per day, 7 days per week and 365 days per year, routinely

responds to more than 99 percent of leak calls in 60 minutes or
less, a record of performance that is recognized for excellence.

The Company’s emphasis on safety is also reflected in its
ongoing program to modernize its distribution and transmission
systems in both New York and Pennsylvania. Annually, the
Company invests a significant amount of capital in infrastructure
improvement, demonstrating its commitment to maintaining
a safe and reliable pipeline system. In 2012, the Company is
scheduled to complete the assessment of transmission pipe lines
under a 10-year federal pipeline integrity program. This program
will continue with systematic reassessments designed to
maintain ongoing pipeline integrity. The program also includes
a significant upgrade of the Company’s pipeline mapping
system, using state-of-the-art technology to better enable crews
to quickly and accurately locate, mark and repair transmission
and distribution facilities in New York and Pennsylvania.

570

miles of PiPeline rePlAced

As part of an ongoing commitment
to modernize its pipeline
system, the Company has replaced
more than 570 miles of vintage
pipelines and service lines during
the past three years.

$67m

AnnuAl sPendinG on
infrAstructure uPGrAdes

With a focus on safety and reliability,
the Company spends an
average of $67 million annually to
improve its distribution and
transmission pipeline systems.

100%

miles of PiPeline Assessed

By the end of 2012,
100% of the Company’s transmission
pipelines identified in
baseline high-consequence
areas will be assessed.

National Fuel Gas Company Summary Annual Report 20111

continuinG focus on
PiPeline sAfetY

utilizinG modern
sAfetY technoloGY

National Fuel continues
to replace vintage steel
and iron infrastructure
with modern pipelines,
installing an average
of 185 miles of new
pipeline annually.

Technologies such as
in-line inspections using
“smart pigs” (pictured
above) and hydrostatic
testing help to assess the
safety and integrity of
the Company’s pipelines.

mAnAGinG
infrAstructure
inteGritY

Ongoing integrity manage-
ment programs, active
line inspections and
physical markers (shown
on page 6) are designed
to protect the safety
of nearby communities.

utilitY territorY
PiPeline sYstem

the p r ef er r eD eN ergy c hoice

New domestic natural gas production from
shale formations, including the
Marcellus Shale, is generating affordable and
stable energy prices for home and business.

Retail natural gas and electric customers are enjoying the
benefits of shale gas through lower prices and an improved
supply outlook. The U.S. Energy Information Administration
credits shale gas for a dramatic increase in the nation’s
recoverable supplies of natural gas, further enhancing the
likelihood of stable and affordable prices for the long run. This
is good news for National Fuel’s retail gas customers in New York
and especially in Pennsylvania, where shale gas production is
generating the added benefit of new employment, tax revenues
and local development.

Gas supplies are currently growing, but energy conservation
remains an important regulatory objective for the long run.
In New York, the Utility has been a partner in the state’s con-
serva tion initiative since 2007, and the Pennsylvania division
continues to seek rate design changes that would enable it to
promote conservation without creating a need to file costly rate
cases. The abundance of low-cost, clean natural gas has also
caught the attention of vehicle fleet owners who can achieve

significant savings by switching to compressed natural gas
(CNG). To promote the burgeoning CNG market, National Fuel
recently won the approval of New York state regulators for a
program that will provide project financing to offset the cost of
customer-owned CNG vehicles and filling stations.

The Utility’s dedication to excellent customer service is exemplified
by a simple, but increasingly rare consumer experience: when
National Fuel customers call the Utility, their calls are answered,
the vast majority within 30 seconds or less, by highly trained
professionals stationed in state-of-the-art call centers. Moreover,
these call centers are located not in some far-off location, but
in the Utility’s service territory. As the initial and primary point
of contact, a National Fuel representative personally addresses
all aspects of customer service, from emergency assistance, to
designing complex solutions to maintain service for payment-
troubled customers. The Utility is able to provide this high level
of service while consistently meeting or exceeding its own and
state-mandated customer service performance targets.

92%

customer sAtisfAction

On average, for the past
12 months, 92% of New York
Utility customers were
satisfied in the areas of
billing, field service,
collections, leak calls and
service applications.

AVERAGE EMISSIONS RATES FOR U.S. POWER GENERATION*
Carbon Dioxide Emissions (pounds per Megawatt hour)

Natural Gas-Fired

1,135

Oil-Fired

Coal-Fired

1,672

2,249

*According to the U.S. Environmental Protection Agency

Natural gas is the cleanest fossil fuel used to generate
electricity for homes and businesses.

$400

YeArlY sAvinGs

Since 2009, lower natural gas
prices have reduced the
average annual bill for
a National Fuel retail customer
by nearly 30%, equating
to a yearly savings
of approximately $400.

National Fuel Gas Company Summary Annual Report 20112

efficient And
reliAble fuel for
home And business

With programs promoting
energy conservation and
efficiency, National Fuel
is helping customers
save money and reduce
their carbon footprint.

PowerinG the
electric Grid

fuelinG vehicles with
nAturAl GAs

utilitY territorY

Natural gas-fired electric
generation, with the
lowest overall emissions
of any fossil fuel-based
power generation, is an
increasingly important
part of a diversified
electric supply portfolio.

With start-up funding
approved under a new
Utility program, Waste
Management, Inc.
has opened a public
CNG fueling station
in metro Buffalo, N.Y.

let ter to shar eholDer s

To Our
Shareholders

Your future is our future. With respect to energy,
Americans are all in it together. Natural gas development
is obviously good for National Fuel, but in terms of
environmental benefits, energy security, affordability and
jobs, it is also good for the nation. Closer to National Fuel’s
home turf, this theme resonates at a more personal level:
thousands of National Fuel investors, customers,
employees, retirees and their families live and do business
in New York and Pennsylvania, literally on top of or near
the Marcellus Shale natural gas play that, today, is the engine
driving National Fuel’s growth. National Fuel’s historic
connection to the gas industry in Appalachia, where the
Marcellus Shale is located, has helped to build the
Company’s competitive advantage in the region, and also
explains why our strategic vision is focused on responsible
success over the long run.

I make this observation because disagreement over national
energy policy has been brought directly to the natural
gas industry’s doorstep in the form of opposition – regrettably
often uninformed opposition – to the natural gas drilling
technology known as hydraulic fracturing. Hydraulic
fracturing is high-tech American ingenuity. Combined
with horizontal drilling, it has enabled producers, like our
Seneca Resources, to literally “unlock” vast quantities
of natural gas in shale plays that were previously beyond
economic development by conventional methods. In
practice, hydraulic fracturing has dramatically increased
commercially obtainable supplies of natural gas, which
has reduced prices, dampened volatility, and increased
confidence in natural gas as a reliable and long-term fuel
source. Already the technology is credited with reducing
imports of foreign oil and easing inflationary pressures on
consumers. With our 745,000 net acres prospective for the
Marcellus Shale, National Fuel is a key player in the natural

gas renaissance that is positively influencing energy
markets now, and has the potential to change America’s
energy future for the better.

“Your future is our future” recognizes that National Fuel is
tied to the cities, towns and villages where we do business.
We have a personal stake in the communities where we
operate, whether in Pennsylvania, New York, Texas or
California. This is why we employ environmental best
practices in our drilling program and operations; this is why
we apply the highest ethical standards to all of our activities;
and this is why we consistently take the long view in our
business decisions.

Growth-driven results. Our approach to doing
business has delivered solid financial results for more than
a century, and 2011 was no exception. National Fuel’s net
income grew 14 percent, reaching $258 million, driven
largely by growth in operating results and a gain related
to the sale of non-core assets. Despite a year of economic
uncertainties, low natural gas prices and market dynamics
that affected pipeline systems including our own, the
Company’s commitment to a measured and methodical
plan to develop its Marcellus assets furthered long-term
growth. We achieved our 109th year of consecutive dividend
payments and our 41st year of increasing dividends. Few
corporations can match our dividend record, which we
believe reflects National Fuel’s extraordinary commitment
to long-term value.

Operationally, we also had a successful year, growing total
production by 36 percent over the prior year, reaching
67.6 Bcfe. This was achieved despite the sale of our higher-
risk offshore Gulf of Mexico properties. The sale of those
assets has allowed us to sharpen our focus on lower-
risk development opportunities. We maintained stable

National Fuel Gas Company Summary Annual Report 2011let ter to shar eholDer s

41 YEARS OF DIVIDEND INCREASES
Annualized Dividend Rate at Fiscal Year End

MARCELLUS-DRIVEN RESERVE GROWTH
Company Proved Reserves (Bcfe) at September 30

’11

’10

’09

’08

$1.42

$1.38

$1.34

$1.30

’11

’10

’09

’08

935

700

528

503

production from our oil properties in California, which
continues to provide us with the free cash flow that helps
to fund our Marcellus program. Ultimately, we were able to
replace 448 percent of our production, increasing Seneca’s
reserve base to 935 Bcfe, which still is only a small portion
of the 8 to 15 trillion cubic feet equivalent of its risked
resource potential.

We also made significant advances in development plans
to expand our pipeline infrastructure in the Marcellus Shale
region. Designed to add capacity and enable Marcellus
producers to move their gas to market, these projects will be
leading drivers in the growth expected out of our pipeline
and gathering businesses in 2012.

focus on the customer. Undergirding the success we
achieved in 2011 was the performance of our retail business
units. Serving customers in New York and Pennsylvania,
the Utility continues to generate predictable earnings
while maintaining safe operations and delivering excellent
customer service. The Utility remains a bedrock business
segment that helps support the reliable dividend that many of
our shareholders have come to expect. Likewise, our energy
marketing subsidiary, National Fuel Resources, delivered
another year of strong performance by providing value-
driven, reliable natural gas supply service to thousands of
retail choice customers across New York and Pennsylvania.

where we Are heAded. While 2011 was an excellent

year for National Fuel, we are not content to rest on our
laurels. Quite the opposite: building from the foundation
of our highly integrated assets and strong balance sheet,
we are embarking on a period of significant growth.

We continue to pursue a strategy of integrating Seneca’s
production with our pipeline construction projects in the
Marcellus Shale, in particular with gathering pipelines

planned by Midstream. Supply Corporation and Empire
will develop open-access interstate pipeline expansion
projects to enable the delivery of Marcellus production,
including Seneca’s production, to pipelines serving
downstream markets. By planning and developing these
programs to access Marcellus production as a producer,
gatherer and interstate transporter, we are able to maximize
the present value of Seneca’s production stream and at the
same time grow throughput across our Appalachian pipeline
systems. Given Seneca’s industry-leading acreage contiguity,
high level of fee ownership and our pipeline development
expertise, we are able to identify localized areas for full
development and independently construct the infrastructure
needed to quickly bring new production to market. As a
result, during the next three years we anticipate that Seneca’s
production will grow 30 to 50 percent each year.

Pipeline companies are undergoing a period of transforma-
tion as Appalachian production displaces deliveries from
traditional production areas in the Gulf and the southwest.
I am pleased to say that National Fuel’s Pipeline and Storage
segment is part of this transformation, to the Company’s
long-term advantage. Adding to the expansion projects that
went in-service this past fall, we have several other major

“Few corporations can
match our dividend record,
which we believe
reflects National Fuel’s
extraordinary commitment
to long-term value.”

let ter to shar eholDer s

INVESTING IN THE COMPANY’S FUTURE
Consolidated Capital Expenditures ($ Millions)

MAINTAINING A STRONG BALANCE SHEET
Shareholders’ Equity to Total Capitalization at Fiscal Year End*

’12*

’11

’10

’09

*Forecast

$501

$341

~$1,200

$854

’11

’10

’09

’08

63%

58%

56%

59%

*Total Capitalization includes the Current Portion of Long-Term Debt

initiatives in various stages of planning that will fuel growth
into the future. We expect a substantial realignment of our
pipeline system, not only via throughput growth, but also
by incorporating operational flexibility that allows us to
take advantage of the changing dynamics of the regional
pipeline network. This includes our Tioga County Extension
and Northern Access Expansion projects, which by enabling
flow reversals on two segments of our pipeline facilities will
bring increased Marcellus production into northern markets
and enhance its availability at regional trading points.

All told, extant and planned projects will drive a consider-
able expansion of the Company in the near term. To
achieve our growth targets, we will deploy a significant
level of capital. We are confident, however, in the
Company’s ability to implement its plans for growth while
maintaining a commitment to a strong balance sheet,
as is National Fuel’s practice.

As is also the Company’s practice, we are capable of adjusting
our development plans in the event there is a material
change in circumstances. With the recent growth in
domestic natural gas supply, price outlooks have reached
their lowest level in recent history. This is undoubtedly good
news for retail customers, but lower gas prices might also
adversely impact financial expectations for our major capital

“Building from the foundation
of our highly integrated assets
and strong balance sheet,
we are embarking on a period
of significant growth.”

5-YEAR TOTAL SHAREHOLDER RETURNS (Assumes Dividend Reinvestment)
At September 30*

$175

$150

$125

$100

National Fuel

SIG Oil Exploration
& Production
Index (EPX)

PHLX Utility Sector
Index (UTY)

S&P 500 Index

$75

’06

’07

’08

’09

’10

’11

*Assumes $100 invested on September 30, 2006 and reinvesting of dividends

National Fuel Gas Company Summary Annual Report 2011let ter to shar eholDer s

“I look forward to another year of excellent service
to our customers and sustainable growth
for the Company, its employees and our shareholders.”

we can skillfully coordinate business plans and maximize
opportunities for growth on a consolidated basis.

For three years running, I have had the good fortune of
using this space to reflect on National Fuel’s strong
financial and operational performance. In each year, this
one included, I express confidence that the Company will
deliver another year of solid financial results. The synergies
of our diversified business model are more in evidence today
than ever before. As a result, I look forward to another year
of excellent service to our customers and sustainable growth
for the Company, its employees and our shareholders.

Sincerely,

dAvid f. smith

Chairman of the Board and Chief Executive Officer
January 9, 2012

projects. Should that happen, we are able to scale down
the Company’s growth plans accordingly. With regard to its
drilling program, Seneca’s substantial mineral ownership
position minimizes lease expiration concerns and the need
to drill uneconomic wells to fulfill lease obligations. Our
pipeline expansion projects are built not on speculation of
future demand, but with the support of long-term contracts
with creditworthy customers. Thus, while our projects
are certainly ambitious, they nonetheless are rooted in
the Company’s history of financial conservatism and core
commitment to responsible growth.

buildinG sYnerGies. Today it seems hard to believe

that as recently as 2003, there were fears that a natural
gas shortage would depress growth in certain sectors of
the economy. Since then, technology and market forces
intervened, and the nation’s energy outlook has changed
dramatically for the better.

National Fuel’s robust performance continues to improve
the Company’s outlook as we execute plans for further
development of our Marcellus and other shale assets.
From our first Marcellus Shale test well drilled in 2009,
to our current program integrating Marcellus production
with our Appalachian pipeline systems, to promising early
results in the expansion of our drilling program into the
Utica Shale, we have demonstrated National Fuel’s ability
to turn opportunity into results. We also have shown that
we have indigenous strengths – a diversified asset base,
local knowledge, experience in pipeline construction
and management, and an ability to navigate a complex
regulatory environment – that in my opinion make National
Fuel uniquely able to leverage its opportunities. Our diverse
business model has long acted as a hedge for each operating
segment, and our Marcellus program is demonstrating that

pr iNcipal of f icer s

National fuel gas company
David F. Smith
Chairman and Chief Executive Officer

National fuel gas supply corporation
David F. Smith
Chairman

National fuel gas Distribution
corporation
David F. Smith
Chairman

Ronald J. Tanski
President and Chief Operating Officer

John R. Pustulka
President

David P. Bauer
Treasurer

James R. Peterson
Secretary and General Counsel

Karen M. Camiolo
Controller

Ronald C. Kraemer
Vice President

empire pipeline, inc.
David F. Smith
Chairman

Ronald C. Kraemer
President

David P. Bauer
Treasurer

James R. Peterson
Secretary

Karen M. Camiolo
Controller

Matthew D. Cabell
Senior Vice President

James D. Ramsdell
Senior Vice President and
Chief Safety Officer

David P. Bauer
Treasurer and Principal Financial Officer

Karen M. Camiolo
Controller and Principal Accounting Officer

Paula M. Ciprich
General Counsel and Secretary

Donna L. DeCarolis
Vice President Business Development

PrinciPAl officers of
PrinciPAl subsidiAries

seneca resources corporation
David F. Smith
Chairman

Matthew D. Cabell
President

Barry L. McMahan
Senior Vice President and Secretary

John P. McGinnis
Senior Vice President

Cindy D. Wilkinson
Controller

Anna Marie Cellino
President

Carl M. Carlotti
Senior Vice President

Paula M. Ciprich
Secretary

Karen M. Camiolo
Controller

Richard E. Klein
Treasurer

Bruce D. Heine
Vice President

Jay W. Lesch
Vice President

Steven Wagner
Vice President

Sarah J. Mugel
Vice President and General Counsel

Ann M. Wegrzyn
Vice President

National fuel resources, inc.
Joseph N. Del Vecchio
Vice President

National Fuel Gas Company Summary Annual Report 2011PhiliP c. AckermAn 3,5^
Former Chairman of the Board of Directors,
Chief Executive Officer and President of the
Company. Director of Associated Electric
and Gas Insurance Services Limited. Board
member since 1994.

robert t. brAdY 2, 3, 4^
Executive Chairman, former Chief
Executive Officer and President of Moog
Inc. Director of Astronics Corporation,
M&T Bank Corporation, member of the
Board of the Buffalo Niagara Partnership
and a member of the Governor’s Regional
Economic Development Council of
Western New York. Former Director of
Seneca Foods Corporation. Board
member since 1995.

r. don cAsh 1,2,4
Chairman Emeritus and Board Director of
Questar Corporation. Former Chairman,
Chief Executive Officer and President of
Questar Corporation. Director of Zions
Bancorporation, Associated Electric and
Gas Insurance Services Limited and the
Ranching Heritage Association. Former
Director of TODCO (The Offshore Drilling
Company). Board member since 2003.

stePhen e. ewinG 1,2,5
Former Vice Chairman of DTE Energy.
Former President and Chief Operating
Officer of MCN Energy Group Inc., and
former President and Chief Executive
Officer of Michigan Consolidated Gas
Company. Director of CMS Energy.
Trustee and immediate past Chairman of
the Board of The Skillman Foundation.
Chairman of the Auto Club of Michigan
(AAA) and Vice Chairman of the
Board of the Auto Club Group (AAA).
Former Chairman of the American Gas
Association, the National Petroleum
Council, the Midwest Gas Association and
the Natural Gas Vehicle Coalition. Board
member since 2007.

Dir ector s

rollAnd e. kidder 1,4
Founder, former Chairman and President
of Kidder Exploration, Inc., and former
Trustee of the New York Power Authority.
Former Director of two Appalachian-based
energy associations: the Independent Oil
and Gas Association of New York and the
Pennsylvania Natural Gas Association.
Former Executive Director of the Robert
H. Jackson Center, Inc. Board member
since 2002.

crAiG G. mAtthews 1^,3,5
Former President, Chief Executive Officer
and Director of NUI Corporation. Former
Vice Chairman, Chief Operating Officer
and Director of KeySpan Corporation.
Director of Hess Corporation and Board
member of Republic Financial Corporation.
Member and former Chairman of the
Board of Trustees of Polytechnic Institute
of New York University, member of the
National Advisory Board for the Salvation
Army and founding Chairman of the
New Jersey Salvation Army Board. Board
member since February 2005.

GeorGe l. mAzAnec 1,2^,3,5
Former Vice Chairman of PanEnergy
Corporation (now part of Spectra) and
former President and Chief Executive
Officer of Texas Eastern Transmission
Corporation. Former Director of Dynegy
Inc. Director of Associated Electric
and Gas Insurance Services Limited
and member of the Board of Trustees
of DePauw University. Board member
since 1996. The services of Mr. Mazanec
conclude at the 2012 Annual Meeting
(March 2012).

richArd G. reiten 2,4
Former Chairman, Director, Chief
Executive Officer and President of
Northwest Natural Gas Company.
Former President of Portland General
Electric Company and Portland General
Corporation. Director of Associated
Electric and Gas Insurance Services

Limited, U.S. Bancorp, and IDACORP Inc.
Former Chairman and Director of the
American Gas Association and former
Director of Building Materials Holding
Corporation. Board member since 2004.

frederic v. sAlerno 2,4
Senior Advisor to New Mountain Capital,
L.L.C. Director to GGCP, Inc. Former Vice
Chairman and Chief Financial Officer
of Verizon Communications. Trustee
and former President of the Inner City
Scholarship Fund and former Chairman
of the Board of Trustees of the State
University of New York. Director of Akamai
Technologies, Inc., Intercontinental
Exchange, Inc., Viacom, Inc., and CBS
Corporation. Former Director of Bear
Stearns & Co, Inc. and Consolidated
Edison, Inc., and former Chairman of the
Board of Orion Power Holdings. Board
member since 2008.

dAvid f. smith 3^,5
Chairman, Chief Executive Officer
and former President of National Fuel
Gas Company. Board member of the
American Gas Association (Executive
Committee), American Gas Foundation,
Gas Technology Institute (Executive
Committee), the Business Council of New
York State (Chairman and member of
the Executive Committee), immediate
past Chairman of the Buffalo Niagara
Enterprise (Executive Committee), the
Buffalo Niagara Partnership (Executive
Committee), the State University of
New York at Buffalo Law School Dean’s
Advisory Council and The Sabres
Foundation. Board member since 2007.

1 Member of Audit Committee

2 Member of Compensation Committee

3 Member of Executive Committee

4 Member of Nominating/Corporate Governance

Committee

5 Member of Financing Committee

^ Denotes Committee Chairman

f iNa Ncial aND oper atiNg highlights

National fuel gas company Year Ended September 30

operating revenues (Thousands) (1)

$ 1,778,842

$ 1,760,503

$ 2,051,543

$ 2,396,837

$ 2,034,400

Net income available for common stock (Thousands)

258,402 (2)

225,913 (3)

100,708 (4)

268,728

return on average common equity (6)

14.2%

13.5%

6.3%

16.6%

337,455 (5)

22.0%

2011

2010

2009

2008

2007

per common share

Basic Earnings

Diluted Earnings

Dividends Paid

Dividend Rate at Year-End

Book Value at Year-End

$ 3.13

$ 2.78

$ 1.26

$ 3.27

$ 4.06

$ 3.09

$ 2.73

$ 1.25

$ 3.18

$ 3.96

$ 1.39

$ 1.35

$ 1.31

$ 1.26

$ 1.21

$ 1.42

$ 1.38

$ 1.34

$ 1.30

$ 1.24

$ 22.85

$ 21.27

$ 19.74

$ 20.27

$ 19.53

common shares outstanding at year-end

82,812,677

82,075,470

80,499,915

79,120,544

83,461,308

Weighted average common shares outstanding

Basic

Diluted

82,514,015

81,380,434

79,649,965

82,304,335

83,670,802

82,660,598

80,628,685

84,474,839

average common shares traded Daily

534,526

411,256

551,327

654,620

83,141,640

85,301,361

593,424

common stock price

High

Low

$ 75.98

$ 54.42

$ 48.30

$ 63.71

$ 47.87

$ 48.67

$ 42.83

$ 26.67

$ 38.04

$ 35.02

$ 48.68

$ 51.81

$ 45.81

$ 42.18

$ 46.81

Net cash provided by operating activities (Thousands) $ 677,286

$ 459,695

$ 611,818

$ 482,776

$ 394,197

total assets (Thousands)

$ 5,284,742

$ 5,105,625

$ 4,769,129

$ 4,130,187

$ 3,888,412

capital expenditures (Thousands)

$ 837,612

$ 455,764

$ 313,633

$ 397,734

$ 276,728

volume information

utility throughput – mmcf

Gas Sales

Gas Transportation

pipeline & storage throughput – mmcf

73,857

66,273

68,760

60,105

69,414

59,751

73,470

64,267

73,031

62,240

Gas Transportation

319,954

301,366

352,182

358,370

356,088

production

Gas – MMcf

Oil – Mbbl

Total – MMcfe

proved reserves

Gas – MMcf

Oil – Mbbl

Total – MMcfe

energy marketing volume – mmcf

Gas

average Number of utility retail customers

average Number of utility transportation customers

Number of employees at september 30

50,467

2,860

67,627

674,922

43,345

934,992

52,893

609,126

122,474

1,827

30,345

3,220

49,665

428,413

45,239

699,847

58,299

619,897

108,850

1,859

22,284

3,373

42,522

248,954

46,587

528,476

60,858

624,149

103,176

1,949

22,341

3,070

40,761

225,899

46,198

503,087

56,120

627,938

98,925

1,943

26,266

3,450

46,966

205,389

47,586

490,905

50,775

645,723

79,676

1,952

(1) Excludes discontinued operations.
(2) Includes gain on sale of unconsolidated subsidiaries of $31.4 million.
(3) Includes gain on sale of Horizon LFG, Inc. of $6.3 million.

(4) Includes impairment of oil and gas producing properties of ($108.2) million.
(5) Includes gain on sale of Seneca Energy Canada, Inc. of $120.3 million.
(6) Calculated using average Total Comprehensive Shareholder Equity.

National Fuel Gas Company Summary Annual Report 2011

national f uel ga s compan y

in v e stor infor mation

National Fuel employees, pictured at a
Habitat for Humanity project, are committed
to giving back to their communities.

Michael Donovan, an employee of Seneca
Resources Corporation, leads a
Marcellus Shale tour for elected officials.

A welder works on Empire Pipeline’s
Tioga County Extension project.

Utility foreman, Shane Becker, in the field
ensuring safe and reliable service to customers.

footnotes:

exploration & production

pp Seneca’s reserve replacement was 448% for the fiscal year.
pp Appalachian reserve replacement ratio was 737%, which

included 249 Bcf of Marcellus reserve additions.

pp Total Marcellus production in 2011 was 35.4 Bcfe, an increase

of nearly 400% from the prior year.

pp Seneca’s 3-year average finding and development costs
were $2.09 per Mcfe, a decrease of 12% as compared to the
prior 3-year period, ended September 30, 2010.

pp Seneca’s Marcellus net risked resource potential is 8 to

15 trillion cubic feet of natural gas, which is more than
eight times Seneca’s proved reserves.

pp Seneca completed the sale of its offshore Gulf of Mexico

assets in April 2011, receiving net proceeds of $55.4 million.

2012 outlook:
pp Produce 87 to 101 Bcfe of natural gas and oil, with 62 to
72 Bcfe expected to come from the Marcellus Shale.

pp Maintain a stable level of oil production in California
by spending approximately $45 to $55 million on
additional development.

pp Continue ongoing delineation efforts in the Marcellus,
Utica and Geneseo shales across a broad section of
Seneca’s Pennsylvania acreage position.

pipeline & storage

utility

pp Completed the second phase of the Lamont Compression

project, adding 3,400 horsepower to an existing interconnect
with Tennessee Gas Pipeline, capable of transporting
50,000 dekatherms (Dth) per day of Marcellus production.

pp Expand the Line N system in southwestern Pennsylvania by
constructing the Line N 2012 Expansion, which is designed
to move 150,000 Dth per day of Marcellus production.

National Fuel Gas Distribution Corporation sells or transports
natural gas to customers through a local distribution system
located in western New York and northwestern Pennsylvania.

2011 highlights
Operating Revenues: $852.5 million(1)
Operating Income: $127.7 million(2)
Net Income: $63.2 million
Capital Expenditures: $58.4 million
Total Assets: $2,046.0 million

pp Over 75% of capital expenditures allocated to system safety

maintenance and enhancements.

pp Assisted qualifying customers in receiving $66 million in

HEAP and LIHEAP funding in New York and Pennsylvania.

pp Successful New York conservation incentive program

approved and extended through 2015.

2012 outlook
pp Address the current challenge of maintaining service to

payment-troubled, low-income customers through targeted
assistance programs and enhanced community outreach.

pp Continue to modernize system and further promote natural
gas as the safe, reliable and clean fuel choice for homes,
businesses and vehicles.

energy marketing

National Fuel Resources, Inc. sells competitively priced natural
gas to industrial, wholesale, commercial, public authority and
residential customers located in New York and Pennsylvania.

2011 highlights:
Operating Revenues: $285.0 million(1)
Operating Income: $13.1 million(2)
Net Income: $8.8 million
Total Assets: $71.1 million
Sales Volume: 52.9 Bcf

pp Expansion of residential customer base in Pennsylvania.
2012 outlook
pp Continue expansion within current markets.
pp Maintain high levels of customer satisfaction and retention.

investor relations
Investors or financial analysts desiring
information should contact:

David P. Bauer
Treasurer
Tel.: 716-857-7318

Timothy J. Silverstein
Director, Investor Relations
Tel.: 716-857-6987
silversteint@natfuel.com

National Fuel Gas Company
6363 Main Street
Williamsville, NY 14221

additional shareholder reports
Additional copies of this report and the
Financial and Statistical Supplement to
the 2011 Annual Report can be obtained
without charge by writing to or calling:

Paula M. Ciprich
Corporate Secretary
Tel.: 716-857-7548

Timothy J. Silverstein
Director, Investor Relations
Tel.: 716-857-6987

National Fuel Gas Company
6363 Main Street
Williamsville, NY 14221

independent accountants
PricewaterhouseCoopers LLP
3600 HSBC Center
Buffalo, NY 14203

This report is printed on paper containing postconsumer
fiber. The paper used in this report is also certified under
the Forest Stewardship Council guidelines.

common stock transfer agent
and registrar
Computershare(1)
P.O. Box 358015
Pittsburgh, PA 15252-8015
Tel.: 800-648-8166
E-mail: shrrelations@bnymellon.com

Website: www.bnymellon.com/shareowner/isd

Change of address notices and inquiries
about dividends should be sent to the
Transfer Agent at the address listed above.

trustee for debentures
The Bank of New York Mellon
101 Barclay Street
New York, NY 10286

stock exchange listing
New York Stock Exchange
(Stock Symbol: NFG)

(1) On December 31, 2011, The Bank of New York Mellon’s Shareowner Services business was acquired by Computershare.

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Your Future
Our Future

national fuel gas company

Summary Annual Report 2011

on the cover: Depicted
on the map in light green
are the nation’s principal
natural gas shale formations.

inside: at-a-glance

national fuel gas company
6363 Main Street, Williamsville, New York 14221
716-857-7000 www.nationalfuelgas.com
nyse: nfg