Good day ladies and gentlemen and welcome to Second Quarter 2008 National Fuel Gas Company Earnings Conference Call. My name is Katrina and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference [Operator Instructions]. As a reminder this conference is being recorded for replay purposes. I would now like to turn the presentation over to our host for today's call Mr. James Welch, Director of Investor Relations, please proceed.

Thank you Katrina 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, President and Chief Executive Officer and Ron Tanski, Treasurer and Principal Financial Officer. Joining us from Seneca Resources Corporation is Matt Cabell President. At the end of the prepared remarks, we'll open the discussion to questions. As this call is being publicly broadcast, remind you that today's teleconference discussions will contain forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995. 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'll begin with Dave Smith.

Thank you Jim and good morning to everyone. Before giving a brief update on the quarter and our National Fuel's operations, I'd like take a moment to recognize Phil Ackerman who as you know will be retiring at the end of the month. Over the course of his 40 years of service to the company Phil consistently focused on building fuel assets and long term shareholder value. Along with Bernie Kennedy and Lou Reif, Phil was a principle architect of our integrated diversified corporate model. A model and a strategy that we will carry forward and build upon. In the six and a half years, since October 2001 when Phil was named CEO through the end of last quarter. National Fuel stock delivered an annualized return of about 16% nearly three times that of the S&P 500, by any measuring stick that's a record of which to be proud. Phil, was and is, also extremely proud of our impressive dividend record including the payment of an increasing dividend for the last 37 consecutive years. We have no intention of breaking that streak anytime soon. The company is in the strong condition it is today and large measure because of Phil, and we owe him a debt of gratitude. On a personal note, I worked for Phil for my entire 30 year career and can say, it's truly been a pleasure I value the friendship and the guidance Phil has provided over the years and will continue to provide. And I wish him and his family the best in retirement. Now on to the second quarter, which was another excellent quarter for National Fuel. Our consolidated $1.11 per share of net income was yet another record for the company. While higher commodity prices and increased production from continuing operations in our…

Thanks Dave and good morning everyone. Last evening's earnings release provides the explanation of the period-to-period variances of earnings in each of the segments. So I won't repeat them here. Recall though that last quarter, I pointed out that a rate design change in the New York division of the utility, would push some margin from the second quarter to the third and fourth quarters. That did happen as projected and more than $6.5 million of revenue will be spread over the third and fourth quarters. So the differences that you see in the utility segment year-over-year don't reflect any major change in an earnings trend. Instead you need to start a new trend line and establish a new base to compare future earnings in the utility segment again. We also saw a slight uptick in our customer usage per account. We are studying the data and believe that due to economic conditions and high gasoline prices people were not traveling and they were also driving less. Essentially, they were staying home and they had their heat-on. We actually expect the long term trend of declining use per account to continue. In our New York division, over 6,000 customers have already taken the advantage of rebates totaling $1 million offered under our conservation incentive program. We will step up our advertising program over the coming weeks and we expect many more customers to explore more ways to conserve energy in the face of continued high energy prices. From a consolidated company viewpoint, in early April, we issued $300 million of new ten year notes at a coupon rate of 6.5%. The proceeds will be used to refund $200 million of notes that will be maturing later this month. And the additional $100 million of funds will be used to fund…

Thanks Ron. Good morning everyone. Seneca has had another good quarter, with production, revenue and earnings up substantially. Production for the quarter was 10.4 Bcfe, a 4% increase versus the second quarter of last year. This increase came primarily from the East Division, where we produced 2.0 Bcfe versus 1.5 Bcfe last year. For the six months period our Appalachian Production is up 34%, I expect fiscal year 2008 production for all of Seneca to be closed to the middle of our guidance range of 38 to 44 Bcfe. While production appears to be very much as originally forecast. We are now planning on an increase in fiscal '08 capital spending. We are revising our original budget of $154 million, up to a revised forecast of $195 million. The upward revisions include acquisitions of approximately $18 million, primarily in California, increased drilling and lease acquisition cost in the Marcellus Shale and Appalachia. And increased development cost in the Gulf of Mexico due to our continued exploration success. Moving on to some highlights by region, in California, we completed the trade of our interest in the Ohio field plus $14 million. For additional interest in Sesby field [ph]. This allows us to consolidate our position at Sesby and also increases our daily production by 200 barrels of oil equivalent per day, and our reserves by 1.1 million barrels. In addition, we believe there are some upside potential at Sesby and we may ramp up our activity as soon as next year. In the Gulf of Mexico, we drilled another successful exploration well, extending our streak of successful exploration discoveries to four. This discovery in Highland Block 23L was tested at 20 million cubic feet per day, at 3,000 barrels of condensate per day. Seneca operates and holds 55% working interest. We…

Thank you. [Operator Instructions] Your first question comes from the line of Rebecca Followill representing Tudor Pickering. Please proceed. Rebecca Followill - Tudor Pickering Holt & Co. Securities, Inc: Hi on the Marcellus, Matt are you guys going to bring in your own rig for this drilling and...

Yes. Rebecca Followill - Tudor Pickering Holt & Co. Securities, Inc: Okay. Just one rig or you going to bring in two rigs or kind of put different timings of that, is it the summer, this fall?

Just one and the timing is anticipated to be this summer. Rebecca Followill - Tudor Pickering Holt & Co. Securities, Inc: Okay. Okay thank you.

Your next question comes from the line of Rick Shulman [ph] representing GLG Partners. Please proceed.

Hi guys how are you?

Good.

My question is with regard to just the infrastructure in place and infrastructure needs within Appalachia, I mean you have... I don't even know how many companies talking about, not only drilling up current acreage that is proved but also all this Marcellus acreage now being drilled up and proven out. And there is hundreds of thousands, if not millions and even tens of millions of acres of this Marcellus, that needs to get drilled. Is there... how fast does that infrastructure get built? Is there going to be bottleneck and how much more is that going to wind up, costing for you guys and then who eventually, ones that building out, all that the gas gathering and pipeline infrastructure and stuff like that?

Rick let me take a shot at it, few of those questions anyway. I think there are likely to be bottlenecks, I think you see that with some of the existing producers who are producing a fair amount of gas in Appalachian with regard to who is going to build it, we have set up and we plan on developing a mid stream company. We have all the legal work done. Our President of that company Duane Wassum has been spending a fair amount of time talking to a number of producers. Obviously those are... that subject to confidentiality agreements. So we see it, as a business opportunity for us to put gathering and to get to the pipeline. So and it will add us, substantial... substantially to the cost of getting the gas out of Appalachian. There is no question that a lot of Marcellus, is in areas where there aren't significant pipelines. But at least from National Fuel's perspective, we are looking at it, as a business opportunity and we are actively pursuing that now.

I just have one more follow up question and this one, a little bit more theoretical, I guess just on your thoughts. But if more and more of this...of these of gas supplies the one that are coming from these shale plays. And that puts increasing upward pressure on costs for drilling and cost per pipe. And cost for gathering systems, that constantly raises the overall floor price, or break-even price for gas, which means that inevitably drive higher prices, I mean is that guidance thoughts as well. How do you think about it?

I would look at it, a little differently and say that you are right it raises the floor. But current price environment is well above that floor. So, may be what we are defining is a new floor on gas prices. At least sort of a long term floor with ultimate leasing volatility will drop you down below occasionally.

And Rick just on the other side of that coin, you have to be careful, to the extent that, we talk about all the gas coming into Appalachian, Cove Point and Rex, in Appalachian Production and shale. We need to get the gas out of the area or you could have a real basis issue there. So we are mindful of that too and that has, that would have downward pressure on the price.

Fair enough. Thank you very much.

[Operator Instructions]. Your next question comes from the line of Mark Caruso representing Millennium Partners. Please proceed.

Good morning. I just want... had a quick question, I notice that you didn't raise... you raised the CapEx, didn't raise the production guidance and I understand you said that you are not bringing your rig to develop, further develop the Marcellus. So just curious given the... lag and timing in your fiscal year. When would you expect that, we would begin to see, as your drilling opportunities come to fruition is it sort of a fall event when we start to see those volumes start to kick-in?

Yes, I would say, that it would be fall. But also keep in mind. We are talking about the additional proposed activities being maybe 6 to 10 vertical wells. It's not necessarily a substantial impact on immediate production. But is very important for us in data gathering and being prepared to drill the horizontal wells or we'll ultimately develop our resources.

Right but those are in... I think in the release, I read you are going to be adding about 20 wells a month, into Appalachian?

The 20 wells a month are... that's what we are doing now. And that's all in the plan.

Right and these will be incremental to that?

Yes, yes.

Okay. Got you thanks.

The upper Devonian markets.

Right got you, I appreciate thank you.

With no further questions in queue, I would now like to turn the call back to Mr. James Welch for closing remark.

Thank you Katrina. We'd like to once again thank everyone for taking the time to be with us today. A replay of this call will be available in about 1 hour on both our website and by telephone. And will run to the close of business on Friday May 9th. To access the replay online, visit our Investor Relations website at investor.nationalfuelgas.com. And to access by telephone, call 1-888-286-8010 and enter pass code 39987735. We would also like to remind everyone, that we'll be making a webcast presentation at the American Gas Association Financial Forum on Monday May 5th at approximately 9:05 AM Eastern Standard Time. To listen to this webcast live or access the replay that will be available for one week following the presentation. Please visit our Investor Relations website. This concludes our conference call for today. Thank you and good bye.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your presentation you may now disconnect. Good day.