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Credit Suisse Energy Summit 2014 – Black Hills Corporation

Black Hills Corporation · Feb 13, 2014 · 68 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 1
    Nathan Woods, Black Hills Power Credit Suisse Energy Summit 2014 February 10 13, 2014
  2. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 2
    Discussion Agenda Company Overview David Emery Chairman, President and CEO Financial Update Tony Cleberg Executive Vice President and CFO Strategic Overview David Emery Chairman, President and CEO Q&A Credit Suisse…
  3. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 3
    Company Overview Pueblo Airport Generating Station near Pueblo, Colo. Credit Suisse - February 2014 4
  4. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 4
    Black Hills Corporation Today Began serving electric customers in 44.5 million shares outstanding Deadwood, SD in 1883 Average 3 - month trading volume Black Hills Power incorporated 1941 approximately 278,000 shares daily Listed on…
  5. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 5
    Black Hills Corporation Overview A growth-oriented, vertically-integrated energy company with a tradition of exemplary service and a vision to be the energy partner of choice. Based in Rapid City, South Dakota, the company serves 769,000…
  6. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 6
    Electric and Gas Utilities Black Hills Power Cheyenne Nebraska Light Gas Iowa Cheyenne Black Hills Gas Light Power Colorado Gas Kansas Colorado Gas Electric Electric Utilities* Natural Gas Utilities* Generates, transmits…
  7. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 7
    Non-Regulated Energy Power Generation* Owns interests in three power generation facilities totaling 309 MW Wygen I - 69 MW of a 90 MW coal-fired facility in Gillette, WY CT II - 40 MW combustion turbine in Gillette, WY (will be sold…
  8. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 8
    Q4 2013 Highlights Business Environment Colder weather in utility service territories compared to same period last year and compared to normal Utilities Black Hills Power filed request on Jan. 17, 2014, with Wyoming Public Service…
  9. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 9
    Q4 2013 Highlights Utilities continued Announced in Jan. 2014 the acquisition of a small natural gas distribution system adding 400 customers in northeastern Wyo.; approval required by Wyoming Public Service Commission with closing…
  10. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 10
    Financial Review Stan Lindholm of Exploration & Production Credit Suisse - February 2014 11
  11. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 11
    Earnings Per Share Analysis Q4-2013 Q3-2013 Q2-2013 Q1-2013 Q4-2012 2013 2012 Net Income (loss) (GAAP) 0.41 0.52 0.69 0.97 0.70 2.59 1.85 Loss (income) from discontinued operations (GAAP) 0.02 - - - - 0.02 0.16 Income (loss) from…
  12. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 12
    Income Statement (in millions, except earnings per share) 4th Qtr Full Year 2013 2012 2013 2012 Revenue 355.4 318.9 1,275.9 1,173.9 Gross margin 202.2 195.0 783.7 766.8 Operating expense (96.0) (87.7) (386.9) (366.7) DD&A (35.1)…
  13. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 13
    2013 Revenue/Op Income 665 Total Revenue, as adjusted* Electric Util 627 (in millions) 540 1,276 Gas Util 1,174 454 85 Power Gen 81 2013 57 2012 Coal Mining 58 55 Oil & Gas 79 (126) Corporate, including I/C Eliminations…
  14. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 14
    Estimated Utility Rate Base Estimated Rate Base* by Utility Segment 2010 2011 2012 2013 (in millions) Electric Utilities 901 1,007 1,272 1,248 Gas Utilities 425 443 450 454 Total 1,326 1,450 1,722 1,702 * Estimated rate base…
  15. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 15
    Capital Structure (In millions, except for ratios) Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2013 2013 2013 2013 2012 Capitalization Short-term Debt 82.5 394.0 355.5 349.6 381.0 Long-term Debt 1,396.9 956.0 958.6 936.5 938.9…
  16. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 16
    Growth Operating Income and EPS, as Adjusted (in millions, except per share amount) 350 2.80 2.60 ** 2009 2014 EPS CAGR = 13.5% 2.45 300 2.40 2.09 250 2.00 36.1 1.67 1.69 36.2 200 5.2 1.60 1.38 19.0 150 1.20 19.9 210.4…
  17. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 17
    Earnings Guidance Black Hills Corp. reaffirms its guidance for 2014 earnings from continuing operations, as adjusted, to be in the range of 2.50 to 2.70 per share as previously issued on Dec. 2, 2013, based on the assumptions listed in…
  18. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 18
    Strategic Overview Busch Ranch Wind Farm near Pueblo, Colo. Credit Suisse - February 2014 19
  19. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 19
    Strategic Objectives Utility-centered energy company well positioned to build upon a track record of successful utility growth Achieve top-tier operational performance in a culture of continuous improvement Lead industry peers in…
  20. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 20
    Strategic Objective Operating Performance 2012 IEEE Reliability Benchmarking Study Safety Performance Total Annual Outage Minutes BHC TCIR is defined as the average number of work-related injuries incurred by 100 workers…
  21. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 21
    Strategic Objective Operating Performance Power Plant Fleet Availability by Fuel Type Natural Gas Turbine Starting Reliability 100% 100% BHC Industry BHC Industry 95% 96% 90% 85% 92% 80% 75% 88% 70% 84% 65% 60% 80%…
  22. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 22
    Strategic Objective Earnings Growth Historical and Forecasted Capital Expenditures (in millions)* 490 441 416 369 385 205 340 127 341 199 84 134 127 133 285 285 314 217 213 251 208 2010 2011 2012 2013 2014F 2015F 2016F…
  23. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 23
    Strategic Objective Earnings Growth Capital Investment by Segment (in millions) 2009 2010 2011 2012 2013 2014F 2015F 2016F Generation 168 146 85 72 130 92 42 58 Transmission 21 28 20 38 32 64 38 14 Other 53 59 68 57 60 95 109 89…
  24. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 24
    Strategic Objective Earnings Growth Select Major Utility Projects Forecasted Capital Expenditures * Projected Excludes routine capital expenditures for maintenance of assets In-service 2016F (in millions) Date 2013 2014F 2015F - 2018F…
  25. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 25
    Strategic Objective Earnings Growth Cheyenne Prairie Generating Station New Generation Helps Meet Growing Demand and New Environmental Regulations Overview: New 222 million, 132 MW generating plant jointly owned by Cheyenne Light and…
  26. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 26
    Strategic Objective Earnings Growth Utilities Regulatory Updates Black Hills Power South Dakota Public Utilities Commission approved rate case settlement on Sept. 18 authorizing 8.8 million increase in annual electric revenue…
  27. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 27
    Strategic Objective Earnings Growth Utilities Regulatory Updates continued Cheyenne Light Evaluating timing for Cheyenne Light to exercise its option to acquire the Wygen I coal- fired power plant Option to purchase Black Hills…
  28. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 28
    Strategic Objective Earnings Growth Utilities Regulatory Updates continued Filing Date 2013 2014 Progress Dates UTILITY AND FILING BHP- construction financing rider filing Dec. 2012 Approved Sept. 18 BHP - general rate case…
  29. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 29
    Strategic Objective Value Upside Oil and Gas Growth Strategy Prove up and capture value of existing oil and gas properties Prove up probable and possible reserves Capture value through optionality Pursue disciplined oil…
  30. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 30
    Strategic Objective Value Upside Oil and Gas Mancos Shale Strategy Three successful test wells drilled in 2011 affirmed potential in San Juan and southern Piceance Basins; second southern Piceance Basin test well produced condensate and…
  31. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 31
    Strategic Objective Credit Rating Moodys Investors Service on Jan. 30, 2014, raised its corporate credit rating on Black Hills Corp. to Baa1 from Baa2 and Black Hills Powers corporate credit rating and senior secured debt rating to A3…
  32. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 32
    Strategic Objective Dividend Growth Dividend Increased for 44 Consecutive Years 1.60 Dividend yield was 2.9% on Jan 30, 2014* 1.56 1.55 1.52 1.50 1.48 1.46 Annual Dividend 1.45 1.44 Per Share 1.42 1.40 1.35 1.30…
  33. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 33
    2013 Scorecard Strategy 2013 Progress and Future Initiatives UTILITIES + Construct additional cost effective rate-base generation and Commence construction on Cheyenne Prairie Generating Station (CPGS) (Q2) associated transmission to…
  34. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 34
    2014 Scorecard Strategy 2014 Progress and Future Initiatives UTILITIES + Construct additional cost effective rate-base generation and Complete 222 million Cheyenne Prairie Generating Station prior to Oct. 1, 2014 associated transmission…
  35. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 35
    Questions Harney Peak , Black Hills, SD Credit Suisse - February 2014 36
  36. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 36
    Appendix Natural gas line installation near White Creek, Neb. Credit Suisse - February 2014 37
  37. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 37
    Black Hills Corporation History Originating company started in Deadwood in 1883 (131 years ago) Company was soon sold to new investors to introduce lights into all the towns and cities of the Hills and the name Black Hills Electric…
  38. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 38
    Black Hills Organizational Structure Credit Suisse - February 2014 39
  39. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 39
    2014 Guidance Assumptions Guidance assumptions for 2014 as most recently presented on Nov. 5, 2013. Capital spending of 447 million, including oil and gas capital expenditures of 118 million; Normal operations and weather conditions…
  40. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 40
    In Millions 0 100 200 300 400 600 500 2014 2015 275MM Term Loan 2016 Credit Suisse - February 2014 2017 75MM 2018 2019 2020 200MM 5.88% Note Debt Maturities 2021 CLFP Industrial Revenue Bond 2022…
  41. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 41
    Electric Utility Generation Availability(%) * Excludes KS HDD data since state has weather normalization 96.1 Q4 2013 96.4 2,695 Q4 2013 95.8 Q3 2013 (Total for all gas service* areas weighted by 97.6 79 Q3 2013 Gas…
  42. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 42
    Siting Synergies Multiple generation sites with expansion potential along the Front Range Shared staff, facilities, land, infrastructure Each location has advantageous fuel supply logistics and/or wind potential Reduces asset…
  43. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 43
    Utility Regulatory Results Authorized Electric Effective Return on Rate Base Jurisdiction Or Gas Date Equity Capital Structure (in millions) BHP-SD Electric 6/16/2013 Global Settlement Global Settlement 440.2 BHP-WY Electric…
  44. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 44
    Mitigating Regulatory Recovery Risk Mechanisms reduce regulatory lag and the risk of non-recovery Electric Utility Cost Recovery Mechanisms Jurisdiction Environmental DSM/ Trans- Fuel Cost Trans- Purchased Fixed Cost Financing Cost…
  45. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 45
    Q4 2013 Non-Regulated Update IPP Generation Contract Availability (%) Coal Production Revenue and Expense per Ton Sold (Coal in millions of tons and overburden in millions (Units = tons sold plus cubic yards of overburden Coal-fired…
  46. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 46
    Coal Contracts Summary Approximately 50% of coal production sold under contracts that include price adjustments based on actual mining costs plus a return on mine capital investments Most of the remaining 50% of coal production sold…
  47. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 47
    Oil & Gas Exploration & Development Program Note: approximate areas of geologic basins does not reflect BHEP acreage Credit Suisse - February 2014 48
  48. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 48
    Reserve Data and Net Present Value Reserve calculation at Dec. 31, 2013 Average Average Net Oil Net Gas Net Equiv PV10 Price Oil Price Nat Gas (MMBO)** (BCF)** (BCFE)** (MM) Per BBL per MCF PDP* 3.7 55.1 77.1 163.5 89.88 3.26 PNP*…
  49. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 49
    Southern Piceance Basin Western Colorado Credit Suisse - February 2014 50
  50. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 50
    Southern Piceance Basin Mancos Drilling Program 2013-2015 Credit Suisse - February 2014 51
  51. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 51
    Southern Piceance Basin Mancos Production Piceance Basin Type Curve 10,000 10,000' Lateral Type Curve 9.5 BCFE GAS, Mcf/D 5,000' Lateral Type Curve 5.4 BCFE 1,000 100 1 11 21 31 41 51 61 MONTHS Note: Predicted…
  52. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 52
    San Juan Basin Mancos Shale 16 miles 45 miles Encana Five Mancos horizontal wells drilled. One reported completion 786 BOPD 838 MCFD Nine additional locations staked Credit Suisse - February 2014 53
  53. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 53
    San Juan Basin Mancos Production Production Rates in Mcf/D 10,000 EUR 6.9 BCFE Gas Flow in Mcf/D 1,000 100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 MONTHS WPX - Rosa Unit…
  54. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 54
    Use of Non-GAAP Financial Measures Gross Margin Our financial information includes the financial measure Gross Margin, which is considered a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a…
  55. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 55
    Use of Non-GAAP Financial Measures (continued) Segment Revenue, Operating Income, Income from Continuing Operations and EPS, as adjusted We have provided non-GAAP earnings data reflecting adjustments for special items as specified in the…
  56. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 56
    Use of Non-GAAP Financial Measures EBITDA For the Three Months Ended Dec. 31, (in thousands) 2013 2012 Income from continuing operations 19,007 30,934 Depreciation, depletion and amortization 35,149 33,234 Interest expense, net…
  57. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 57
    Use of Non-GAAP Financial Measures EBITDA For the Twelve Months Ended Dec. 31, (in thousands) 2013 2012 Income from continuing operations 115,846 88,505 Depreciation, depletion and amortization 141,217 154,632 Impairment of Oil…
  58. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 58
    Use of Non-GAAP Financial Measures Revenue, as adjusted Credit Suisse - February 2014 59
  59. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 59
    Use of Non-GAAP Financial Measures Revenue, as adjusted Credit Suisse - February 2014 60
  60. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 60
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Electric Power QTD Dec. 31, 2013 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Operating income (loss) (GAAP)…
  61. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 61
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Electric Power YTD Dec. 31, 2013 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Operating income (loss) (GAAP)…
  62. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 62
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Electric Power YTD Dec. 31, 2011 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Operating income (loss) (GAAP)…
  63. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 63
    Use of Non-GAAP Financial Measures Income from Continuing Operations, as adjusted (in thousands, after-tax) Electric Gas Power QTD Dec. 31, 2013 Utilities Utilities Generation Coal Mining Oil and Gas Corporate Total Income (Loss) from…
  64. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 64
    Use of Non-GAAP Financial Measures Income from Continuing Operations, as adjusted (in thousands, after-tax) Electric Gas Power YTD Dec. 31, 2013 Utilities Utilities Generation Coal Mining Oil and Gas Corporate Total Income (Loss) from…
  65. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 65
    Use of Non-GAAP Financial Measures EPS, as adjusted Earnings Per Share, as adjusted 2009 2010 2011 Net income (GAAP) 2.11 1.76 1.24 Discontinued Operations (0.11) (0.14) (0.23) Income from Cont. Ops., (GAAP) 2.00 1.62 1.01…
  66. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 66
    Use of Non-GAAP Financial Measures Depreciation, Depletion & Amortization, adjusted for Intercompany Capital Lease* (in thousands, pre-tax) Regulated Non-Regulated Corporate Electric Gas Total Power Coal Oil and Total Non- YTD Dec. 31,…
  67. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 67
    Use of Non-GAAP Financial Measures Depreciation, Depletion & Amortization, adjusted for Intercompany Capital Lease* (in thousands, pre-tax) Regulated Non-Regulated Corporate Electric Gas Total Power Coal Oil and Total Non- YTD Dec. 31,…
  68. Credit Suisse Energy Summit 2014 – Black Hills Corporation – slide 68

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