Exploration & Production | Quarterly / Earnings Reports | Third Quarter (3Q) Update | Drilling Program
Black Hills Drills 2 Wells in Mancos Shale in 3Q 2014
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Black Hills Corp. has announced third-quarter 2014 financial results.
David R. Emery, chairman, president and chief executive officer of Black Hills Corp said: "We are pleased with our improved financial performance and strong operational execution across our business segments.
Adjusted earnings per share increased 28 percent compared to the same period in the prior year, highlighted by improved operating results at our gas utility and coal mining segments and lower interest expense. Cooler weather benefited our gas utilities and tempered results at our electric utilities. Our electric utilities are experiencing continued retail load growth, particularly at Cheyenne Light which set a new all-time peak load during the quarter.
We advanced several key initiatives during the quarter benefiting our growth strategy. We achieved a significant milestone with the commencement of commercial operations at our new Cheyenne Prairie Generating Station. We also sold a combustion turbine for $22 million and announced an agreement to acquire a gas utility with 6,700 customers in northwest Wyoming.
Our oil and gas subsidiary continued making excellent progress reducing capital costs in our Mancos Shale drilling program. We drilled, cased and cemented two wells during the quarter and are currently drilling a third well. Once we case and cement the third well, we plan to move the drilling rig to another surface pad to drill three additional wells. We will also begin completing the first three wells, which we expect to place on production starting in December and continuing into 2015.
With strong financial performance this year, we are increasing our guidance for 2014 earnings, as adjusted, to $2.80 to $2.95 per share. Looking to next year, we are initiating guidance for 2015 earnings, as adjusted, of $2.90 to $3.10 per share."
2015 Earnings Guidance Initiated
Black Hills initiated guidance for 2015 earnings, as adjusted, of $2.90 to $3.10 per share based on the following assumptions:
- Capital spending of $432 million, including oil and gas capital expenditures of $123 million;
- Normal operations and weather conditions within our utility service territories that impact customer usage, and planned construction, maintenance and/or capital investment projects;
- Successful completion of rate cases for electric and gas utilities;
- No significant unplanned outages at any of our power generation facilities;
- Oil and natural gas production in the range of 13.5 to 15.0 billion cubic feet equivalent;
- Oil and natural gas annual average NYMEX prices of $3.85 per million British thermal units for natural gas and $82.00 per barrel for oil; production-weighted average well-head prices of $2.47 per MMBtu and $72.00 per Bbl of oil, and average hedged prices received of $2.60 per MMBtu and $73.99 per Bbl;
- Oil and natural gas depletion expense in the range of $2.35 to $2.55 per million cubic feet equivalent;
- No equity financing in 2015 except for approximately $3 million from the dividend reinvestment program; and
- No significant acquisitions or divestitures.