1. Atmos Energy Corporation
Preparing for Winter
Atmos Energy Corporation

2. Disclaimer
Contents of this presentation do not necessarily reflect Atmos Energy Corporation’s views. This presentation and its contents have been provided to you for informational purposes only. This information is not advice on or a recommendation of any of the matters described herein or any related commercial transactions. Atmos Energy is not responsible for any inaccuracies in the information contained herein. Atmos Energy makes no representations or warranties, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information, assumptions or analysis contained herein or in any supplemental materials, and Atmos Energy accepts no liability in connection therewith. Atmos Energy deals and trades in natural gas and may have positions consistent with or different from those implied or suggested by this presentation. This presentation may contain forward-looking statements. Any statements that are not historical facts, including statements about Atmos Energy’s beliefs or expectations, are forward-looking statements. These statements are based mostly on publically available information, estimates and projections and you should not place undue reliance on them. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast, suggested or implied in any forward-looking statements in this presentation due to a variety of factors. Factors which could cause actual results to differ from these forward-looking statements may include, without limitation, general economic conditions; conditions in the markets; behavior of customers, suppliers, and competitors; technological developments; the implementation and execution of new processes; and changes to legal, tax, and regulatory rules. The foregoing list of factors should not be construed as exhaustive. Atmos Energy disclaims any intention or obligation to publicly or privately update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Participants should seek their own advice and guidance from appropriate legal, tax, financial and trading professionals when making decisions as to positions to take in the market.

3. Atmos Energy Corporation
One of the Nation’s Largest Pure-Gas Distribution Companies
Provides natural gas service in eight states serving three million customers
288 Bcf in annual requirements
Over 4 Bcf in peak day requirements
Over 67 Bcf of storage capacity
Financially or physically hedge up to 58 Bcf per year
Over 2.3 Bcf of daily transportation capacity on 18 interstate pipelines
Atmos owns one of the largest intrastate pipelines in Texas
Connects the Waha, Katy and Carthage hubs
Dedicated to Atmos’ needs of 2.4 Bcf per day

4. Overview
Atmos takes a very proactive approach to managing its gas supply.
Serving eight states across a wide geographic area allows us to take what we learn from one area and apply it throughout the enterprise.
Planning
Design Day
Instruments
Hedging
Shifted Volume
Simulations
Daily Management
Tariff Changes

5. Planning Atmos Planning Overview
Forecast the volumetric natural gas requirements
Design day
Normal purchases
Short term daily usage forecast
Recommend the appropriate upstream pipeline transportation and storage capacity
Annual review with statistical expert to improve forecast methodology
Validate current processes and results
Recommend improvements in methodology

6. Planning Changes to Design Day
Problem: During the winter usage approached and exceeded Atmos’ calculated design day; however, HDDs did not.
(844)
(9,054)
(17,851)
Load studies done in winter
Design Day HDD
Actual HDD 67 63
Design Day HDD
Actual HDD 89 76
Design Day HDD
Actual HDD 56 47
Forecast models are run each year incorporating most recent usage
If an anomaly is witnessed in one area, we review the data to see where we can use this information in other areas
Forecasted (Dth)
Actual (Dth)

7. Planning Changes to Design Day
Solution: Incorporate the wind into our design day variables
Forecasted
Actual
Forecast with Wind
Incorporating Wind into our models increased accuracy
Utilizing the same methodology across all of Atmos’ territories required additional transport capacity, all of which was used during the winter
a Reserve margin is enough to make up for shortfall after incorporating wind
b Forecasted for Design Day (HDDs for Actual volume were 9° warmer), growing area

8. Hedging Atmos Hedging Overview
Hedge normal winter usage net of expected storage withdrawals
Depending on area, able to hedge using fixed physical contract, swaps, call options and deferred premium call options
Call option
Premium is due within two business days of the trade
If I bought a May-15 call option today, payment for the premium would be due on October 13th
Deferred premium call option
Premium is due after the underlying has settled
If I bought a May-015 call option but the premium was deferred, payment for the premium would be due the first part of May 2015 (after the contract settled)

9. Hedging Call Options
As prices of options have decreased as a result of lower volatility and price of the underlying security, Atmos began seeking regulatory approval to use them
Regulators comfortable having a known, maximum cost, view call options akin to an insurance policy
At the money call options taken first trading day Apr-Oct of each month for the following January contract

10. Hedging Shifting Volume
Typically storage levels and supply are robust at the end of October through November (which is when the Nov-Dec contracts expire)
Atmos’ customers use the majority of their gas during the Jan-Mar period, which is also when one could see storage constraints and production freeze-offs
Atmos has shifted some of its hedging volume from the months that may not be as high of a risk from price increases due to weather and overall usage and increased the hedging volume for the months that would be at risk.

11. Daily Management Scenario Planning
Atmos’ gas supply portfolio contains several components. In order to meet their customers demand, Atmos runs through a simulated “winter” with its Gas Reps.
Variables Include:
Forecasted Weather/Demand
Current Storage Levels
Try to meet incremental demand in the most economic way
Daily/Monthly Market Price
In some areas, it has been a few years since a design day has occurred. Having Atmos’ Gas Reps. look through supply/transport agreements during these scenarios will help the decision process if/when adverse conditions occur.

12. Daily Management Tariff Language
Problem: Transport customers do not always purchase gas in the spot market to match their expected usage. Background: Transport customers either balance their imbalance monthly or pay a fixed amount per MMBtu ($0.50 above FOM for example) for their overage which may not reflect the market price of gas.

13. Physical Gas Prices February 2014 ICE Daily Averages
Marketers/Transporters do not want to purchase gas in the spot market and pay these prices...
…but would much rather work off their imbalance during this part of the month.
$5.28

14. Daily Management Tariff Language
Problem: Transport customers do not always purchase gas in the spot market to match their expected usage. Background: Transport customers either balance their imbalance monthly or pay a fixed amount per MMBtu ($0.50 above FOM for example) for their overage which may not reflect the market price of gas.
Solution:
Move from monthly balancing to daily
Change tariff language so that the cashout price is a multiple of the prevailing gas daily price index