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DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation

Black Hills Corporation · Dec 11, 2009 · 50 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. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 1
    December 2009 Investor Update 1
  2. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 2
    Discussion Agenda Recent Highlights Financial Update Strategic Overview Q&A 3
  3. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 3
    Recent Highlights 4
  4. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 4
    Black Hills Footprint We are 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 Golden, CO, and Omaha, NE, the company…
  5. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 5
    Black Hills Corporation An integrated and diversified energy company Fuel, Generation & Utilities Utilities Gas Utilities Electric Utilities Colorado Natural Gas Black Hills Power Kansas Natural Gas Cheyenne Light, Fuel & Power *…
  6. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 6
    Recent Highlights Low commodity prices remain challenging Oil and Gas performance impacted by low natural gas prices Lower margins for Energy Marketing Lower off-system sales margins for electric utilities Strong overall corporate…
  7. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 7
    Electric Utilities Q3 Update Quarter Income Comparison Total MWh Sales Capital Expenditures (from continuing operations in millions) (in millions) (in millions) 273.4 279.8 Utility Customers Off-system Sales 219.5 10.8 0.62…
  8. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 8
    Gas Utilities Q3 Update Quarter Income Comparison Total Dth Sales Capital Expenditures (from continuing operations in millions) (in millions) (in millions) Prior Year * Current Year 56.5 56.1 39.6 -1.9 19.3 -3.5 32.5 39.2…
  9. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 9
    Power Generation Q3 Update Quarter Income Comparison Generation Availability (%) Capital Expenditures (from continuing operations in millions) (in millions) 99.9 99.4 99.1 99.7 98.5 98.7 98.0 98.0 147.8…
  10. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 10
    Coal Q3 Update Quarter Income Comparison Coal Production Capital Expenditures (from continuing operations in millions) (Coal in million tons Overburden in million cubic yards) (in millions) Coal Production Overburden Removed…
  11. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 11
    Energy Marketing Q3 Update Quarter Income Comparison Avg. Daily Natural Gas Volumes Avg. Daily Crude Oil Volumes (from continuing operations in millions) (physical bcf per day) (barrels per day) 6.9 13,332 2.3 2.2 2.2…
  12. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 12
    Oil & Gas Q3 Update Quarter Income Comparison Bcf Equivalent Sales Capital Expenditures** (from continuing operations in millions) (in millions) 30.0 to 1.5 89.2 40.0 72.2 3.9 3.8 3.8 3.6 3.5 3.5 3.4…
  13. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 13
    Unification Update Building scalable platform of unified systems and processes to gain efficiencies and prepare for future growth People Processes Systems Common values, aligned goals, Integrate best practices From complex &…
  14. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 14
    Timeline of Events 2008 2009 2010 anticipated 2011 anticipated Strategic Development Unified Unified Unified IPP sale Inventory complete PeopleSoft Work Mgt Systems system system Unified Aquila Unified Unified Unified Unified…
  15. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 15
    Financial Update 16
  16. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 16
    Q3 Earnings Drivers Solid performance by utilities; Oil & Gas and Energy Marketing impacted by weak natural gas prices Utilities Non-Regulated Energy Solid base performance during a challenging Oil & Gas impacted by lower commodity…
  17. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 17
    Q3 Earnings Per Share Analysis Earnings Per Share (EPS) 3rd Quarter 2009 2008 (Loss) Income from Continuing Operations (0.10) 0.51 Add-back notable loss items: Unrealized Gain on Interest Rate Swap 0.15 -- BHE…
  18. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 18
    Earnings Per Share Analysis Earnings Per Share (EPS) Q4 2008 Q1 2009 Q2 2009 Q3 2009 (Loss) Income from Continuing Operations (2.52) 0.66 0.64 (0.10) Exclude notable gain items: Wygen I Sale Completed in January 2009 -- (0.44)…
  19. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 19
    Consolidated Income Statement In millions, except per share amounts 2009 2008 QTD EPS QTD EPS Comments 2009 vs. 2008 Revenue 225.8 291.9 Low natural gas prices Gross margin 131.7 160.6 Operating expense (114.8) (117.9) Operating…
  20. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 20
    Revenue / Operating Income Roll-Up In millions Revenue Operating Income (Loss) 2009 2008 2009 2008 QTD QTD QTD QTD Comments Electric Utilities 128.9 136.7 18.8 20.7 Lower off-system sales margins Gas Utilities 62.7 83.9 (1.3) 0.9…
  21. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 21
    Consolidated Statement of Capitalization Dec. 31, Mar. 31, Jun. 30, Sept. 30, In millions 2008 2009 2009 2009 Short term debt: Current maturities 2.1 32.1 32.1 32.1 Notes Payable 703.8 479.8 270.5 350.5* 705.9 511.9 302.6 382.6…
  22. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 22
    Credit Ratings Black Hills Corporate 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 Senior Secured…
  23. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 23
    Credit Facilities & Debt Proactively managing cash flows, capital expenditures and credit needs in balance with our growth strategy Primary Credit Facilities Capacity Utilized Available As of 9/30/2009 Bridge Loan (BHE acquisition)…
  24. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 24
    Strategic Overview 25
  25. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 25
    Positioned For Growth Diversified platform for growth based on stable cash flows, more predictable earnings and increased efficiencies Asset Mix By Business Focus (approx) 2009 Forecasted Capex By Segment R e g ulate d Utility Gas…
  26. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 26
    Growth Opportunities Capital investments a priority to grow earnings and build shareholder value Excludes routine capital expenditures, such as maintenance and new customer growth capital (millions) 2008 2009 2010-2011 Total Wygen…
  27. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 27
    BHE - Colorado ERP August 2008: BHE - CO Electric Resource Plan Filed BHE Colorado Electric filed a proposal with the Colorado Public Utility Commission (PUC) detailing how the company plans to provide electrical service to its…
  28. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 28
    CO IPP Generation Project Black Hills Colorado IPP (BHCI) submitted response to a request for proposals from Black Hills Energy Colorado Electric Proposal selected by BHE-COE working with an independent evaluator appointed by CO-PUC…
  29. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 29
    Regulatory Update Delivering the service and reliability customers depend on and the value investors expect Jurisdiction Overview Status New FERC transmission rates implemented January 1, 2009 representing Black Hills Power 3.8…
  30. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 30
    Strategy Strategy Scorecard 2009 Progress & Future Initiatives UTILITIES 5 Complete BHP FERC rate case (1/2009) + Acquire regulated utility properties in our geographic focus 5 Close on sale of 25% interest in Wygen III to MDU…
  31. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 31
    Earnings Guidance 32
  32. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 32
    2009 Earnings Per Share Guidance 1.75 to 1.85 2009 Earnings Guidance Assumptions 16.9 million, or 0.44 per share, gain on the sale of a 23.5 percent ownership interest in the Wygen I power generation facility; 24.6 million, or 0.64…
  33. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 33
    2010 Earnings Per Share Guidance 1.80 to 2.05 2010 Earnings Guidance Assumptions Planned capital expenditures in 2010 estimated at 425 million to 475 million; including oil and gas capital expenditures of 30 million to 40 million…
  34. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 34
    Summary 2009 Low natural gas prices impacted the electric utilities, oil and gas and energy marketing segments Tight basis spreads limited energy marketing margin opportunities Mild summer weather had negative impact on electric…
  35. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 35
    Q&A 36
  36. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 36
    Appendix 37
  37. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 37
    Electric Utilities Operational Summary Service Areas Revenue by Customer Class Our electric utilities generate, transmit MT Other and distribute electricity to Off -system 3% Resident ial approximately 202,100 customers Black Hills…
  38. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 38
    Gas Utilities Operational Summary Service Areas Revenue by Customer Class Industrial MT 7% Distributes natural gas to approximately 524,000 customers in SD Transportation 3% Commercial CO, IA, KS, and NE WY 24% Gas Operations…
  39. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 39
    Power Generation Operational Summary Generation Locations Construction Projects Managed Name Fuel Size In-Service Date Neil Simpson II (WY) Coal 90MW 9/1995 Smaller plant approach to incremental Neil Simpson CT (WY) Gas 40MW 6/2000…
  40. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 40
    Coal Operational Summary Facility Location Coal Production (millions of tons) Includes approximately 274 million tons of low-sulfur Powder River Basin coal for low-cost, mine-mouth generation: a 42 year supply at 6.0 6.0…
  41. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 41
    Energy Marketing Operational Summary Four Primary Business Strategies (by approximate % gross margin rounded to nearest 5%) Producer Services 10% Doing business under the name Producer Services 15% Producer Services 25% Enserco…
  42. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 42
    Oil & Gas Operational Summary 2008 YE Reserves 2008 YE Production Includes operated wells in San Juan Gas 83% Gas 83% Basin, Powder River Basin, Big Horn Basin, Piceance Basin and Denver Julesberg Basin Includes non-operated…
  43. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 43
    Energy Marketing Natural Gas Market Update 14.00 0.85 12.00 0.65 10.00 0.45 0.25 8.00 0.05 6.00 (0.15) (0.35) 4.00 (0.55) NYMEX ROX MC SPREAD 2.00 (0.75) O 9 O 0 Ju 8 Ja 8 Ju 9 Ja 9 Ju 0 Ja…
  44. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 44
    Black Hills Power SD Rate Case Requested Date September 30, 2009 (filed) Revenue Increase 32 million ROE 11.5% Cap Structure 48% debt / 52% equity Rate Base 393 million Average Monthly Residential 17.99 Customer Increase Using…
  45. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 45
    Black Hills Power WY Rate Case Requested Date October 19, 2009 (filed) Revenue Increase 3.8 million ROE 11.5% Cap Structure 48% debt / 52% equity Rate Base 27.6 million Average Monthly Residential 19.44 Customer Increase Using…
  46. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 46
    Efficient Cost Recovery Cost Recovery Mechanisms * Regulated Jurisdiction DSM/ Capital Bad Debt Weather Fuel Cost Trans- Purchased Fixed Cost Energy Additions Normal. mission Power Recovery Efficiency BHP - South Dakota 5 5 5 BHP -…
  47. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 47
    Utility Energy Efficiency & Renewable Programs Expanding our renewable energy portfolio at reasonable rates for customers Black Hills Power National Wind For Schools project includes installation of a 2.4 KW wind generator in Box…
  48. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 48
    DOE Smart Grid Stimulus Grant All three Black Hills electric utilities selected for smart grid investment grant funding totaling 16.7 million from the DOE Black Hills Energy Colorado Electric: 6.1 million Black Hills Power: 5.6…
  49. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 49
    Vision: Be the energy partner of choice. Mission: Improving life with energy. 50
  50. DECEMBER 2009 INVESTOR PRESENTATION – Black Hills Corporation – slide 50
    Black Hills Corporation 625 9th Street Rapid City, SD 57701 NYSE Ticker: BKH www.blackhillscorp.com Company Contact Jason Ketchum Director, IR & Corporate Communications 605-721-2765 jason.ketchumblackhillscorp.com 51

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