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National Fuel Gas: Production to Jump Another 23% in 2014

National Fuel Gas Co. (NFG), which recently raised its production guidance for 2013 by 6 Bcfe to 102-112 Bcfe, said Monday it expects production to jump to 126-138 Bcfe in 2014.

At the midpoint of the production ranges, growth for fiscal 2013 and 2014 is estimated to be 28% and 23%, respectively, the Williamsville, NY-based company said. In 2014 NFG expects to produce 105-115 Bcfe from its Appalachia operations and another 21-23 Bcfe from California and Kansas.

The company's total capital expenditures (capex), which have been forecast at $665-795 million for 2013, are expected to grow substantially to $770-945 million in 2014, including $550-650 million for the exploration and production (E&P) segment, NFG said. Another $80-100 million will go to the pipeline and storage segment; $75-125 million to National Fuel Gas Midstream Corp.; and $65-70 million to the utility segment. A majority of the 2014 capex, $460-520 million, will be devoted to the East Division (Appalachia).

The 2014 production forecast is the fourth in a row of more than a 20% increase in natural gas and oil production. "In addition to that, we remain aggressive in the pursuit of infrastructure expansion projects in Appalachia and continue to build upon the growth that we have delivered over the past several years," said CEO Ronald J. Tanski.

Last month, Tanski's predecessor, Dave Smith, said the promise of production from seven "exceptional" wells brought online in January in Pennsylvania's Marcellus Shale and continuing additions to its pipeline business painted an expanding future for NFG (see Shale Daily, Feb. 12).

Seneca Resources Corp., NFG's E&P subsidiary, reported 24.5 Bcfe of crude oil and natural gas production in the final three months of 2012, a 34% (6.3 Bcfe) increase compared with the same period in 2011. Appalachian production increased approximately 48% to 19.5 Bcfe, including production from the Marcellus Shale of 17.8 Bcfe, the company said.

Little more than a year ago, low natural gas prices forced Seneca to scale back capex on exploration and production, including dropping two drilling rigs in the Marcellus Shale (see Shale Daily, Feb. 8, 2012).

NFG's board elected Tanski CEO and Smith executive chairman on March 7. Tanski joined the company in 1979 and has served in a variety of positions, including president and COO since June 2010. He will continue to serve as president of the company.

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