National Fuel Gas Company and New Mountain Vantage Settle Proxy Contest

Business Wire, Jan 24, 2008

WILLIAMSVILLE, N.Y & NEW YORK -- National Fuel Gas Company (NYSE: NFG) ("National Fuel" or the "Company") and New Mountain Vantage GP, L.L.C. and its affiliates, including the California Public Employees' Retirement System, ("Vantage") jointly announced today that they have reached a settlement in the proxy contest pertaining to the election of directors to the National Fuel Gas Company Board of Directors (the "Board") at the Company's 2008 Annual Meeting of Stockholders. The Company and Vantage have determined that the Company's shareholders, employees, retirees and customers would be best served by resolving this matter and working together in a cooperative and productive manner.

As part of the settlement, the Company has agreed to increase the size of its Board from 10 to 11 directors and to nominate, as a new director, Vantage's candidate Frederic V. Salerno. In accordance with Vantage's policies and at their request, Mr. Salerno will receive no compensation for his Board service for as long as Vantage continues to own Common Stock of the Company. Mr. Salerno will be added to the Company's original slate of the following continuing directors: Robert T. Brady, Rolland E. Kidder and John F. Riordan.

All four candidates will be nominated to serve for a term to expire in 2011. Upon election to National Fuel's Board, Mr. Salerno will join the Compensation and the Nominating/Corporate Governance Committees.

"We are pleased to announce this settlement and look forward to welcoming Fred Salerno to our Board. We are confident that, in finding common ground where we can jointly focus our attention on continuing to grow shareholder value, National Fuel is very well positioned to maintain its long record of providing superior returns to all of our investors," said Philip C. Ackerman, Chairman and Chief Executive Officer, National Fuel.

"We have always sought to achieve a productive relationship with National Fuel's management and Board for the benefit of all shareholders," said David DiDomenico, Managing Director of Vantage. "We believe that together we can successfully advance the Company's interests by focusing on developing the Appalachian acreage, including the Marcellus Shale, by carefully evaluating ongoing and future activities in the Gulf of Mexico, by considering Vantage's other suggestions, and by taking important steps to improve corporate governance."

The Company will file a supplement to its Proxy Statement and a new voting card to reflect these nominees, which will be mailed to its shareholders. Likewise, Vantage will immediately cease efforts related to its own proxy solicitation, and withdraw its Proxy Statement and its own nominations.

Certain of the provisions in the Settlement Agreement relate to corporate governance matters. For example, in order to have separate individuals serve as Chairman of the Board of Directors and as Chief Executive Officer, the parties agree that, following the February 2008 Annual Meeting, Philip C. Ackerman will continue to serve as Chairman of the Board and David F. Smith will be named Chief Executive Officer of the Company. In addition, future equity awards will vest or become exercisable only upon the attainment of certain performance goals to be established by the Compensation Committee.

Other elements of the Settlement Agreement include:

* The Company and Vantage have agreed to a standstill whereby, until September 2009, Vantage will not, among other things: acquire Voting Securities that would increase its beneficial ownership to more than 9.6 percent of the Company's Voting Securities; engage in any proxy solicitations or advance any shareholder proposals; attempt to control the Company's Board, management or policies; call a meeting of shareholders; obtain additional representation to the Board; or effect the removal of any member of the Board.

* The Company and Vantage agree that the Company's Appalachian acreage, including the Marcellus Shale, is extremely valuable and should be developed with all reasonable speed and on a commercially reasonable best efforts basis. The Company will provide, in conjunction with its quarterly conference call, information on these development efforts, to the extent material and not competitively sensitive.

* The Company reaffirms that it intends to evaluate the divestiture of its assets in the Gulf of Mexico as one key alternative if performance targets set by the Company are not met during this fiscal year. The Company will keep shareholders apprised of its progress in conjunction with its quarterly conference call, to the extent material and not competitively sensitive.

* Vantage will provide to the Company copies of all reports and analyses developed or based upon the research and analysis of Schlumberger Data and Consulting Services.

* The Company will provide its new director, Mr. Salerno, with a copy of the Morgan Stanley report and the other reports, materials and information reviewed by non-executive directors of the Board in evaluating or analyzing Vantage's suggestions.