ASTORIA SALEM ALBANY VANCOUVER THE DALLES MADRAS LINCOLN CITY EUGENE NEWPORT LNG COOS BAY PALOMAR EAST MIST STORAGE MOLALLA GASCO LNG PORTLAND PALOMAR WEST SACRAMENTO SAN FRANCISCO FRESNO GILL RANCH STORAGE KEY REGIONAL RESOURCE CENTER NW NATURAL SERVICE TERRITORY PROPOSED PALOMAR PIPELINE EAST PROPOSED PALOMAR PIPELINE WEST HEADQUARTERS GILL RANCH STORAGE UNDERGROUND STORAGE LNG PLANT comparison of five-year cumulative total return (based on $100 invested on 12/31/04) Total shareholder return (annualized) over the five years ending December 31, 2009 was 9.77 percent, compared to the Standard & Poor’s (S&P) Electric & Gas Utilities Index rate of 2.2 percent and the S&P Small Cap 600 Index rate of 0.2 percent. nwn s&p utilities index s&p small cap 600 50 75 100 125 150 175 $200 2004 2009 2008 2007 2006 2005 nw natural corporate profile - strength in turbulent times NW Natural (nyse: nwn) is a 151-year-old natural gas local distribution and storage company headquartered in Portland, Oregon. NW Natural serves about 668,000 customers in Oregon and Southwest Washington. In keeping with its steady growth, the company has increased dividends paid to shareholders for 54 consecutive years, a feat matched by few publicly traded companies. NW Natural operates gas storage facilities in its service territory and provides gas storage services to other companies in the Northwest. NW Natural is developing the Gill Ranch Storage facility near Fresno, California, and plans to develop a new gas transmission pipeline in Oregon called Palomar to provide enhanced gas deliverability and reliability for the region. 2009 selected financial statistics (12 months ended December 2009) Common stock price: $45.04 52-week price range: $37.71 - 46.47 Annualized dividend (current): $1.66 per share Earnings per diluted share: $2.83 Book value per share: $24.88 Market capitalization (current): $1.2 billion Common shares outstanding: 26.5 million shares Institutional ownership: 58 percent Dividend payout ratio: 56.5 percent Dividend yield at year-end: 3.7 percent Price/earnings ratio: 15.9x Service Territory & Infrastructure Projects company strategy NW Natural has a focused business and operating strategy that is centered on three key platforms: 1) Stabilize the company’s profitability (margins) through regulation. e company was the first gas distribution company to implement constructive regulatory mechanisms that are working well for both customers and shareholders alike. 2) Manage the company’s cost structure by continuing to make improvements to keep expenses under control. Over the past several years, the company has reduced its work- force by more than 20 percent, while still maintaining high customer satisfaction rankings. Despite these changes, NW Natural routinely ranks among the top three in the nation among other utilities in the J.D. Power and Associates Gas Utility Residential Customer Satisfaction Survey. 3) Add growth through projects that utilize the company’s core competencies. is includes building a proposed natural gas pipeline in Oregon that will improve regional gas deliverability and supply options, and also by developing a 20 billion cubic foot natural gas storage facility in a prime location in central California, near Fresno. NW Natural is a national leader in seeking progressive solutions to protect the environment while supporting the economy, including being the first local gas distribution company in the nation with a program to allow customers to voluntarily offset their carbon emissions through the company’s innovative Smart Energy program.