New Mountain Vantage buys more National Fuel Gas shares, makes recommendations

By Lisa Kerner

Charlotte, N.C., Sept. 12 - National Fuel Gas Co. shareholder New Mountain Vantage GP, LLC urged the company's board of directors to move quickly on the investor's recommendations related to the company's Appalachian oil and gas assets, strategic focus and governance.

Specifically, the investor recommended that National Fuel Gas:

• Develop and communicate a plan to maximize the value of National Fuel Gas' Appalachian exploration and production assets;

• Retain a top-tier investment bank to advise the board on the master limited partnership structure, and disclose the identity of the board's advisers and the expected timing of the board's conclusions;

• Retain a top-tier investment bank to sell the company's miscellaneous non-core operations, using the proceeds for a special shareholder dividend or to repurchase shares; and

• Eliminate the 10% poison pill and recommend shareholder approval of the elimination of its staggered board at the 2008 annual meeting.

New Mountain Vantage said its recommendations are supported by the California Public Employees' Retirement System.

On Sept. 7, the investor had discussions with chairman and chief executive officer Philip C. Ackerman, president and chief operating officer David F. Smith and treasurer Ronald J. Tanski.

New Mountain reiterated its recommendations in a letter to the board included as part of a schedule 13D filing with the Securities and Exchange Commission.

New Mountain said it has "performed extensive analytical work" regarding National Fuel Gas with the assistance of Schlumberger Data & Consulting Services over the past 20 months.

"Our work has convinced us that NFG's enterprise value would be substantially higher if the company followed key steps to build its business, tighten its strategic focus, and improve its corporate governance," the investor's letter said.

New Mountain investors purchased 485,520 shares of the company's stock between Aug. 2 and Aug. 31 priced from $42.85 to $44.34 each. The reporting persons own 8,106,346 shares, or 9.7%, of the Williamsville, N.Y., diversified energy company.

On Aug. 7, New Mountain reported owning 7,737,826 shares, or about 9.3% of National Fuel's outstanding stock.

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