Good day, ladies and gentlemen, and welcome to the Quarter Two 2014 National Fuel Gas Company Earnings Conference Call. My name is Caroline, and I will be your operator for today. At this time all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. (Operator Instructions) As a reminder, the call is being recorded for replay purposes. And now I would now like to turn the call over to Tim Silverstein, Director of Investor Relations. Please go ahead.

Thank you, Caroline, and good morning. We appreciate you 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 Ron Tanski, President and Chief Executive Officer; Dave Bauer, Treasurer and Principal Financial Officer; and in Houston, Matt Cabell, President of Seneca Resources Corporation. At the end of the prepared remarks, we will open the discussion to questions. This morning, we posted a new slide deck to our Investor Relations website. We may refer to it during today's call. 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, I will begin with Dave Bauer.

Thank you, Tim, and good morning, everyone. As you saw in last night’s release the second quarter was another great quarter for National Fuel. Consolidated EBITDA was up more than 10% over the prior year with all of the major business segments contributing to the increase. On a GAAP basis earnings were $1.12 up $0.10 per share or 10%. Included in that amount were a few non-recurring items that I would like to highlights. First was a $3.6 million or $0.04 per share gain on corporate owned life insurance, which is reflected in other income in the corporate segment. We use life insurance policies on our senior executives as a funding vehicle for certain non-qualified deferred compensation arrangements. Earlier this year, a former executive passed away at the age of 90. The death benefit from this policy exceeded the cash surrender value we had recorded on our books, which led to beginning. Going in the other direction, Seneca recorded a $2.4 million after-tax or $0.03 per share charge for well plugging and abandonment costs associates with its former offshore Gulf of Mexico program. Several years ago, Seneca had farmed out a shallow water lease to another operator. That operator recently filed for bankruptcy. As the original lessee, Seneca is now responsible for a portion of the costs to plug and abandon for wells on the lease. We begin to [wear] this item late in the first quarter of fiscal ‘14 and recorded an initial $800,000 after-tax accrual for us. This past quarter, after receiving bids from contractors, we have to accrue the match fee updated cost estimates. Our work is expected to be completed this summer. Lastly, there were two non-cash deferred tax adjustments that impacted our earnings for the quarter. One related to a change in New York tax…

Thanks Dave and good morning everyone. Total production for the quarter was 36.9 Bcfe or 28% higher than last year’s second quarter and essentially flat versus first quarter 2014. With average daily production actually up slightly from 404 million cubic feet equivalent per day to 410 million cubic feet equivalent per day. In California, production was up 10% versus last year’s second quarter. More importantly our production in California has been growing all the year to a current net daily rate of over 10,200 barrels of oil equivalent per day. Notably this is 1,100 BOE per day or 12% above our daily rate in April of last year. Primarily due to continued drilling success at South Midway Sunset and East Coalinga. Our first two Mississippian wells are in Kansas acreage produced at 7 day rates of 180 BOE per day and 300 BOE per day, with the better of the two about 35% oil. Currently both wells are shut in as we evaluate the results and consider next steps. While we believe a portion of our acreage position is in a relative sweet spot given variability of the play over short distances, we will likely need better oil production rates and more importantly more running room to make this meaningful development for Seneca. As we evaluate our next steps we will not drill any additional wells this year, which reduces our fiscal ‘14 CapEx by about $20 million. In the East division production was up 31% as compared to last year’s second quarter. And essentially flat from first quarter 2014 as no new wells were brought online. Last month however, we initiated production on Pad R and Tract 100. The seven Pad R wells came on at rates ranging from 17 million a day to 22 million a day. The…

Thanks Matt and good morning everyone. Well once again, we had another solid quarter, for every one of our segments performing well. I’d like to take a minute to acknowledge and publically think all of our employees that kept the gas flowing throughout our systems this past winter. In our utility service territory in our New York and Pennsylvania we have a coldest winter in the last 50 years. Our service men and women in the field, our customer response representatives on the phones are dispatch operators and compression engineers, all kept the gas flowing to all of our customers with only minor exceptions. Even in those instances, our crudes have those outages fixed usually in a matter of hours. On the exploration of production side, our employees and contractors were just as dedicated as evidenced by the 28% increase in production over the last year. We had great financials and operating statistics for the quarter and for the first six months and I’m excited about our future. While continue to drive down drilling and completion cost in Seneca, we're getting our gathering systems in place to get Seneca's completed wells flowing as safely and quickly as possible. And we’ve got our interstate pipeline folks working on projects to get Seneca's production to market. With respect to our flowing gas production that tap two questions that are in everyone’s list during our Analyst and Investor meetings are; commodity pricing and basis differentials. Our teams are hammering away of both issues and we regularly update our investor deck to layout as transparently as possible our approach to pricing and selling Seneca's production. Even that the street consensus earnings estimate came right at top of our quarterly results; I’d say people seem to understand our approach. For the future, Seneca is being…

Thank you. (Operator Instructions). The first question comes from the line of Christine Cho from Barclays. Please go ahead.

Good morning, everyone.

Good morning Christine.

Good morning Christine.

In your gathering segment, quarter over quarter volumes were down overall, yet revenues were up, implying that your gathering rate is inching up. Can you explain what's going on here? Did your Covington and Trout Run systems charged different rate than depending on where the incremental production coming from the overall rates move around? Also when your new gathering system is up in 4Q, is that going to charge something different?

Yes Christine, the different systems have different rates. What you see is a dynamic of the Trout Run system A, having a higher rate than Covington and then B, also reflecting compression services this quarter, which if you look last quarter compression wasn't on for the entire quarter. So, that gets to the dynamics that you were seeing. When we get to our Rich Valley Clermont system later in the year that will still have a different rate than the other systems. We haven't settled on a final rate yet. But once we do, we'll get that out there.

And are these like, like transfer rates or are there -- because I don't think you guys are getting much third-party volumes now. So are you charging market rates or is this really a transfer rate?

The intent is for it to be a market rate. So we look at the capital cost, the day-to-day operating cost and then assume a cost of capital and using those inputs drive the rates to charge those same rates to a third party customer once we [lend] them.

Okay, perfect. Your EDA spot sales and WDA production is what really exposed the basis differentials since your firm sales essentially eliminate your base effect as you hedge that correctly, is that how I think about it?

Yes.

And then, so can you talk about the pricing points you are exposed to and what firm transport you have for the EDA spot sales and WDA production?

Yes. Christine, the EDA, most of the EDA spot sales are at Transco, so there are (inaudible) places. The WDA production is -- it’s a different point; it’s into Tennessee 300, but it’s probably most closely reflects Station 219.

Okay, is it literally spot or is this really big re-pricing?

It swings, so it’s -- yes, it’s more of a spot price.

Okay. This might be premature but can you give us any insight into what you are thinking for rig plants in 2015. Are you going to say at three or add some, and is this all a function of what you think you can get in firm sales and firm’s transports better price markets or is this something else?

Our plan for ‘15 is to stay at 3.

Okay.

And those 3 rigs will be primarily in the WDA, mostly in that Claremont Rich Valley area.

Okay.

I think Christine, the thing to keep in mind is what we want to see and Ron kind of laid this out in his comments, what we want to see before we add rigs is some high degree of confidence in achieving a price say greater than $4 an Mcf for a significant period of time and that’s at realized price, not an NYMEX price.

Okay. So it sounds like you have to go beyond firm sales because firm sales you can only do like a year-out or something?

Yes, and that’s where we're putting these firm transportation deals in to place.

Okay. I mean because of the base of concerns in the Marcellus, would you rather deploy your capital in to more midstream projects?

Christine, we're always looking at midstream projects. And as I mentioned, we've got one that we are working on with Seneca and we have further plans to add more projects going out in to the future. The typical way we do that is obviously signing up customers for credit worthy customers for long-term contracts and we will continue to do that. At the same time, Seneca moves along with its drilling program. I've said a number of times that the best thing we can do to prove up the value of all of our acreage to the outside world is to continue to drill in the legacy WDA area and so we intend to work at both of those consecutive or concurrently.

If I could add to that Ron, I think that Christine, the thing to understand is we haven't yet found ourselves in a situation where we had projects in the midstream and projects in the E&P that are competing for the same capital where we have to decide to do one or the other because we don’t have enough funding, we have not been in that situation.

Okay. This is last question for me. You talk about your per unit LOE cost being higher due to the higher transportation cost associated with production from Tract 100 and Lycoming, can you talk a little bit about what’s going on there?

Yes, it’s largely the new compression services that were added in well late in the first quarter of the fiscal year when those compression services went in, the rate went up.

Okay, thank you.

Yes. If I can add to that Christine, the thing to keep in mind is while that’s up a little, overall our LOE in the East division, so in the Marcellus is substantially lower than it is in California. So as you see our East division production grow relative to California, you are going to see our LOE trend downward.

Right. I just wanted to make sure like you didn’t have some contract rollover and it got renewed at a much higher rate or something like that.

No.

Thank you.

Thank you for that question. The next question we have comes from the line of Carl Kirst from BMO Capital. Please go ahead.

Thank you. Good morning everybody. Just a couple of actually follow-ups from Christine and maybe thinking about the Northern Access, the 2016 project and understanding that the way these are structured to be set up as to be more market based pricing, is there -- to the extent that we haven’t seen that get the green light just yet is that just a matter of sort of the negotiations if you will internally as far as set pricing or is there any other gating factor or risk that could potentially [stop] that from happening.

It’s a combination Carl, it's still working out details internally, but in combination with that it's getting things settled with TransCanada of the associated transportation to the actual market in Canada.

Considering that's not going to reach settlement or not any of these [putting] not going to roll in that till the end of the year. Does that have to be a, is that a pre-condition before getting these done?

No, no, obviously you're right. The rate aspect of that contract will still be subject to the final settlement of their rate case. But we are working with them or Seneca's working with them to actually get the physical transportation volumes and those terms that obviously with a little bit of uncertainty in the rate. But to the extent, we're able to get a proceeding agreement done with TransCanada that matches up with Northern access 2016, we're ready to move forward.

Excellent. And then maybe one other question on that because in part it speaks perhaps to the timing of when Northern Access would come in and I've generally tend to think of it as a later 2016 event. So correct me if I am wrong there. But here you guys now with Atlantic Sunrise have a great asset as far as capacity on the East and historically, you all have a sign sometimes that capacity to work with marketers. Is there any merit to perhaps assigning that capacity such that it might help bridge the 2016 basis out East?

Well yes, those are options. First of all going back to the Northern Access project, you’re re right; it is coming on later in the year. As a matter of fact I referred to what is our fiscal 2017 year because we're looking at November of ‘16 for that. That is the timeframe to the extent we don't have the details worked out just yet, but as I mentioned we're looking to get that done this quarter, we can be in shape to get that flowing. And yes with respect to the capacity on Transco and even the capacity on Northern Access there is always the opportunity to work with the marketer under asset-management arrangements to kind of leverage that not only for the future, when the pipelines are in service, but with respect to current sale today to match that up together.

Okay. Any lots and lots of pushes too much, but are those types of negotiations or something that perhaps might be more in 2015 announcement 2014 or any sense of how that bakes?

Well, 2014 we're well into it already, but there is, let's put it this way. There is ongoing discussion all the time to maximize the pricing we can get. So, it can be any combination, you are absolutely thinking about it the right way the same way we're thinking about it.

Great. And then just last question and I apologize if this was mentioned (inaudible) but I believe I heard that I April there were no curtailments and I didn’t catch if there were any curtailment actually in the fiscal second quarter?

No, not significant anyway in the first quarter.

I just say nothing material that is standing out, okay. All right, thank you guys. I appreciate it.

Yes.

(Operator Instructions). We have another question and it comes from the line of Chris Sighinolfi from Jefferies. Please go ahead.

Hey Ron, how are you?

Good, Chris. How are you?

I am well. I was just wondering if you could dig in from the pipeline for a moment, obviously you’ve had a lot of projects in the pipeline towards the last couple of years, but as I look at the quarter, it’s quite nice performance. I was curious if there was any granularity to provide to how much either weather benefited acutely in the quarter or some of the basis deteriorations that Matt spoken until to get on your system, maybe contributing to some upside that might not always; can you just talk about that for a moment?

Yes. I guess first of all for the quarter, it was primarily weather because of the volatility and the variation in the weather this past quarter, I think we had 10 days that we saw throughput on our system exceeded Bcf a day. Historically, if we had one or two days where a throughput was more than one Bcf, that was a lot. So this year, it was customers and all shippers and marketers looking to scramble and get gas moved around to their particular market. So, there is some, let’s say exposure moving on to next year that we don’t see that completely filled. So, it was a lot of short-term firm business that we did but more and Chris, our sales folks are being seen as the go-to folks to actually be able to provide that service to a bunch of shippers. So we're attempting the best we can to turn that in to a long-term firm services.

Okay, great. And switching gears perhaps from that, we saw some activity in California on sort of the fracing [dam] front if you will. And I was just curious if there was any impact, it seems geographically there wouldn't be, given where that action has taken place versus where you are but just wondering as you might be closer to put up wins out there of any sort transcending views on that that might impact the operations for you for Seneca and [Elk County]?

Chris, we don’t see any significant impact to us. Now, I will tell you that the new state fracing regulations have caused some delay in permitting the fracs are too horizontals at South Lost Hills, but it's a delay; it's not going to keep us from getting it done. And I guess I would say that because of the fracing ban to some of these communities, it is probably a cause for some concern but we think it’s very unlikely to affect our operations.

Okay, great. Thanks a lot for the time here.

Thank you. We have no further questions. And now I would like to turn the call back over to Tim Silverstein for closing remarks.

Thank you, Caroline. We would like to thank everyone for taking the time to be with us today. A replay of this call will be available at approximately 3 pm Eastern Time on both our website and by telephone and will run through the close of business on Friday, May 16, 2014. To access the replay online, visit our Investor Relations website at investors.nationalfuelgas.com; and to access by telephone, call 1 (888) 286-8010 and enter passcode 28597632. This concludes our conference call for today. Thank you and goodbye.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.