Discussion Agenda Second Quarter Review 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 3
Q2 Overview 4
Q2 2012 Highlights Business Environment Record breaking warm weather across utility service territories Lower natural gas and crude oil prices Multiple wildfires in Colorado, Wyoming and South Dakota impacted utility and oil and gas…
Q2 2012 Highlights Coal Mining Commenced operations for revised south to north mine plan including infrastructure preparation haul road, power lines, topsoil stripping Oil and Gas Total production volumes increased 23% - crude oil…
Q2 2012 Financial Highlights Key Earnings Drivers (in millions) (per share) 15.1 New COE generation in service Jan. 1 0.34 New IPP generation in service Jan. 1 Warm weather benefited Electric Utilities Coal mine cost…
Q2 2012 Financial Highlights Change in Income from Continuing Operations, as adjusted*, from Prior Year (in millions) 8.8 Q2 2011 5.6 Electric Utilities (3.2) Gas Utilities 3.4 Power Generation 1.6 Coal Mining (2.2) Oil &…
Financial Overview 9
Earnings Per Share Analysis Q2-2011 Q3-2011 Q4-2011 Q1-2012 Q2-2012 Net Income (loss) 0.19 (0.27) 0.60 0.68 (0.31) Loss (gain) from discontinued operations (0.10) (0.02) (0.16) 0.12 0.03 Income (loss) from continuing ops 0.09 (0.29)…
Income Statement Q2 2012 Q2 2011 Comments Revenue 242.4 260.6 Decline in Gas Utilities from warm weather Gross margin 178.9 156.8 New generation, COE increased rates, hot June weather Operating expense (90.0) (88.4) DD&A (41.4)…
Q2 Revenue/Op Income Summary 149.7 Total Revenue Electric Util 139.5 (in millions) 260.6 Gas Util 70.4 99.9 18.8 Power Gen 7.8 Q2 2012 13.1 Q2 2011 242.4 Coal Mining 15.6 20.6 Oil & Gas 18.8 (30.2) Corporate, net of I/C…
Q2 Utilities Revenue/Op Income Electric Utilities Change Q2 Key Performance Drivers (in millions) 149.7 139.5 New Colorado generation and Q2 2012 rates Q2 2011 Warmer than normal weather with new peak loads for COE and CLFP…
Q2 Non-Regulated Energy Revenue/Op Income Power Generation (in millions) 18.8 Q2 2012 Change Q2 Key Performance Drivers Q2 2011 New Colorado generation in 10.1 service with high availability 7.8 2.6 Revenue Operating…
Q2 Non-Regulated Energy Revenue/Op Income Oil & Gas * (in millions) Change Q2 Key Performance Drivers 20.6 18.8 23% increase in crude oil and natural gas volumes Q2 2012 Q2 2011 Lower crude oil and natural gas prices 1.0…
Capital Structure (In millions) Jun. 30, Dec. 31, Jun. 30, 2011 2011 2012 Short term debt: Current maturities 3.6 2.5 227.6 Corporate 380.0 345.0 225.0 383.6 347.5 452.6 Long term debt: 1,183.6 1,280.4 1,044.9 Total Debt 1,567.2…
2012 Earnings Guidance Black Hills reaffirms its expected 2012 earnings per share from continuing operations, as adjusted, to be in the range of 1.90 to 2.10, as previously issued on May 3, 2012. 17
Strategic Overview 18
Long Term Objectives Continue focus on growth from core businesses within Midwest and Rocky Mountain regions Improve profitability by: Growing organically through investment in rate-based, vertically-integrated assets Employing…
Capital Investments by Segment Historical and Forecasted Capital Expenditures (in millions) 2009 2010 2011 2012E* 2013E* 2014E* Electric Utilities Generation 48 155 82 Transmission 45 44 30 Environmental Other 86 80 75 Subtotal…
Growth Opportunities Announced Future 2012-2016 Capital Expenditures* Excludes routine capital expenditures for maintenance of assets (2015-2016 Expected In- (in millions) Service Date 2012 2013 2014 or unscheduled) Total…
Colorado Electric Wind Project New Wind Generation Helps Meet Renewable Portfolio Standards In Colorado Overview: Project consists of sixteen 1.8 MW turbines for total 29 MW; ready to serve Colorado Electrics utility customers in Q4…
Utilities - Regulatory Updates Cheyenne Prairie Generating Station Progressing Cheyenne Light and Black Hills Power received CPCN approval on July 31 from Wyoming Public Service Commission for new 237 million, 132 MW project in…
Impact of EPA Regulations Industrial & Commercial Boiler Regulations for Area Sources of Hazardous Air Pollutants (Boiler MACT Rule) Rules effective May 20, 2011 with compliance deadline of March 21, 2014 On Aug. 6, announced…
Impact of EPA Regulations continued Electric Utility Hazardous Air Pollutant Rule (Utility MACT Rule), also known as Mercury and Air Toxics Standards (MATS) Rule Final rule published in Feb. 2012 with compliance deadline of April 16,…
Oil & Gas 26
Oil and Gas Strategy Capital expenditures may vary depending on oil and gas pricing environment Further define Mancos shale natural gas reserve potential while minimizing capital outlay in San Juan and Piceance Basins Defer 2012 San…
Oil and Gas Strategy - Mancos Shale Update Three successful test wells drilled in 2011 affirmed potential in San Juan and Piceance Basins Second Piceance Basin test well produced condensate and higher Btu gas Further delineation…
2012 Scorecard Strategy 2012 Progress and Future Initiatives UTILITIES Complete construction of Colorado Electric 29 MW wind project (Q4) + Acquire regulated utility properties in our geographic region Complete CPCN process for third…
Q2 2012 Summary Focused on Serving Customers and Building Shareholder Value Commercial operation of new generation in Pueblo, Colo. improved earnings Cost containment measures and expiration of unprofitable train load-out contract…
Questions 31
Appendix 32
Black Hills Corporation Overview A diversified energy company with a tradition of exemplary service and a vision to be the energy partner of choice. Based in Rapid City, SD, with corporate offices in Denver, CO, and Papillion, NE, the…
Electric and Natural Gas Utilities Regulated Electric and Natural Gas Utilities Serving over 765,000 customers Cheyenne Iowa Black Hills Nebraska Gas Light Power Gas Cheyenne Colorado Light Gas Kansas Gas Colorado…
Electric Utility Generation Availability(%) * Excludes KS HDD data since state has weather normalization 96.4 81.0 Q2 2012 449 Q2 2012 95.0 2,536 Q1 2012 (Total for all gas service* areas weighted by 90.8 Q1 2012 Gas…
Efficient Cost Recovery Electric Utility Cost Recovery Mechanisms * Jurisdiction Environmental DSM/ Energy Fuel Cost Trans- Purchased Fixed Cost Cost Efficiency mission Power Recovery BHP - South Dakota BHP - Wyoming BHP - Montana…
Environmental Impact Policy Assessment RICE (Recipricating National Internal Ambient Air Hazardous Air Rules Combustion Quality Regional Haze Coal Ash Greenhouse Gas (MACT) Engine) Rules Standards Standards Clean Water Act Rule…
Environmental Control Equipment Legend: X = current emission control equipment O = emission control equipment to be added and projected time frame for installation * = closure by 2014 + = Minor modifications to existing scrubbers…
Non-Regulated Energy Power Generation Coal Mining Ownership in three power generation facilities totaling 309 MW Serves as fuel supply to adjacent mine mouth electric power generation customers Wygen I - 69 MW of a 90 MW coal-fired…
Q2 2012 Q2 2012 Controllable costs 1.28 3.12 Q1 2012 * Controllable costs: depreciation, fuel, equipment, labor, etc. Other costs: property taxes, production taxes, royalties, etc Other costs Q4 2011 Q1 2012…
Coal Mining 12 Year Revised Mine Plan Reduces cubic yards of overburden removal in early years of revised mine plan Wyodak Mine - 12 Year Overburden Trend 16,000,000 SOUTH TO NORTH PROGRESSION OPEN WEST PIT New Mine Plan…
Coal Contracts Summary Approximately 50% of coal production sold under contracts that include price adjustments based on actual mining costs Most of the remaining 50% of coal production sold under contracts where sales price changes…
Oil and Gas Mancos Shale Update Mancos Drilling Program: Well Test Summary 30-Day Avg. Production as of 6/30/12 Lateral Initial Gas Conden- Length Frac Rate Gas sate Water Basin/Well Feet Stages MMCFD MMCFD Bbls Bbls San Juan -…
Piceance Basin Mancos Shale LEGEND Black Hills Piceance Basin Acreage Black Hills Piceance Basin Units EnCana Units CO Piceance Basin NM 44
Mancos Shale Production Piceance Basin Production Rates in Mcf/D 100,000 10,000 Gas Flow in Mcf/D 1,000 100 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 MONTHS BHEP HDU 21-41H BHEP HSC 4-28 AH Keinath…
San Juan Basin Mancos Shale 16 miles CO 45 miles San Juan Basin NM EnCana Five Mancos horizontal wells drilled. One reported completion 786 BOPD 838 MCFD Nine additional locations staked. 46
Mancos Shale Production Note: All production flow data publicly available 47
Credit Facilities and Debt Primary Credit Facilities Capacity Utilized Available As of 6/30/2012 500 million 75 million Corporate Revolver - Matures Feb. 2017 with 250 million 389 million 36 million (LC) accordion feature Term…
Credit Ratings Black Hills Corporation S&P Moodys Fitch Long-Term Issuer BBB- * Baa3 BBB- Senior Unsecured BBB- * Baa3 BBB- Outlook Stable Stable Stable Black Hills Power S&P Moodys Fitch Long-Term Issuer BBB- Baa2 BBB…
Use of Non-GAAP Financial Measures - EBITDA (in thousands) Q2 2012 Q2 2011 Income from continuing operations (12,323) 3,706 Depreciation, depletion and amortization 41,431 32,246 Impairment on long-lived asset 26,868 - Interest…
Use of Non-GAAP Financial Measures Income from Continuing Operations (in thousands, after-tax) Electric Gas Power Coal Oil and QTD June 30, 2012 Utilities Utilities Generation Mining Gas Corporate Total Income (loss) from continuing…
Vision: Be the energy partner of choice. Mission: Improving life with energy. 52
Loading...
