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APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation

Black Hills Corporation · Apr 8, 2013 · 52 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. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 1
    Investor Meetings April 8 - 10, 2013
  2. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 2
    Black Hills Corp. Investment Highlights Utility-centered energy company Significant capital expenditures forecast over next three years Utility investments driving earnings growth Newer generation fleet reduces risk Oil and Gas…
  3. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 3
    Company Overview 4 Investor Meetings April 2013 Pueblo Airport Generating Station
  4. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 4
    Black Hills Corporation Today Black Hills Power & Light incorporated Average 3 - month trading volume 1941 approx. 221,000 shares daily Listed on NYSE since 1980, trading Increased annual dividend for 43 under symbol BKH consecutive…
  5. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 5
    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…
  6. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 6
    Electric and Gas Utilities Regulated Electric and Gas Utilities Serving over 769,000 customers Cheyenne Iowa Black Hills Nebraska Gas Light Power Gas Cheyenne Colorado Light Gas Kansas Gas Colorado Electric Electric…
  7. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 7
    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…
  8. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 8
    Strategic Objectives Investor Meetings April 2013 Busch Ranch wind farm south of Pueblo
  9. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 9
    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…
  10. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 10
    Strategic Objective Operating Performance 2012 Customer Service O&M Expense per Customer 70.00 60.00 50.00 BHC Safety Other CIS IT 40.00 Collection Revenue Protection 30.00 Business Offices Call Center Cash…
  11. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 11
    Strategic Objective Operating Performance Power Plant Fleet Availability by Fuel Type Natural Gas Turbine Starting Reliability 100% 100% BHC Industry BHC Industry 96% 96% 92% 92% 88% 88% 84% 84% 80% 80% Coal (61%*) Gas…
  12. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 12
    Strategic Objective Operating Performance Generation Mix by Fuel Type Generation Mix by Fuel Type 1,200 80% % of Generation by Fuel type Megawatts of Generation 1,000 70% 60% 800 50% 600 40% 30% 400 20% 200 10% 0 0%…
  13. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 13
    Strategic Objective Earnings Growth Historical and Forecasted Capital Expenditures (in millions)* 490 452 416 384 339 205 340 108 199 95 287 54 127 116 344 285 285 289 217 213 171 2009 2010 2011 2012 2013E 2014E 2015E *…
  14. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 14
    Strategic Objective Earnings Growth Capital Investments by Segment Historical and Forecasted Capital Expenditures (in millions) 2009 2010 2011 2012 2013E* 2014E* 2015E* Generation 72 151 82 30 Transmission 38 36 40 21 Other 57 97…
  15. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 15
    Strategic Objective Earnings Growth Cheyenne Prairie Generating Station New Generation Helps Meet Growing Demand and New Environmental Regulations Overview: New 132 MW, 237 million generating plant jointly owned by Cheyenne Light and…
  16. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 16
    Utilities - Regulatory Updates Cheyenne Prairie Generating Station Major equipment ordered; construction expected spring 2013 with completion Oct. 2014 Construction financing rider approved by Wyoming Public Service Commission for…
  17. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 17
    Strategic Objective Earnings 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 Participate in limited…
  18. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 18
    Strategic Objective Earnings Upside Oil and Gas Mancos Shale Strategy 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…
  19. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 19
    Financial Review Investor Meetings April 2013
  20. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 20
    Earnings Per Share Analysis Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 YTD 2012 YTD 2011 Net Income (loss) 0.60 0.68 (0.31) 0.78 0.70 1.85 1.24 Loss (income) from discontinued operations (0.16) 0.12 0.03 - - 0.16 (0.23) Income (loss)…
  21. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 21
    Income Statement (in millions, except earnings per share) 4th QTR YTD 2012 2011 2012 2011 Revenue 318.9 356.0 1,173.9 1,272.2 Gross margin 195.0 186.7 766.8 697.2 Operating expenses (87.7) (96.4) (366.7) (375.4) DD&A (33.2) (38.2)…
  22. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 22
    2012 Revenue/Op Income Summary 626.9 Electric Util* Total Revenue 614.3 (in millions) 454.1 1,272.2 Gas Util 1,173.8 554.5 81.0 Power Gen* 31.7 YTD 2012 57.8 YTD 2011 Coal Mining 66.9 79.1 Oil & Gas 79.8 (125.1)…
  23. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 23
    Growth Operating Income and EPS, as Adjusted* (in millions, except per share amount) 300.0 2.30 2.40 2.09 2009 2013 EPS CAGR = 13.6% 250.0 2.00 36.2 1.67 1.69 200.0 1.60 5.2 1.38 19.0 150.0 1.20 19.9 100.0 210.4 0.80…
  24. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 24
    Capital Structure (In millions, except for ratios) Dec. 31, March 31, June 30, Sep. 30, Dec. 31, 2011 2012 2012 2012 2012 Capitalization Short-term Debt 347.5 234.0 452.6 553.3 381.0 Long-term Debt 1,280.4 1,272.0 1,044.9 943.0…
  25. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 25
    Debt Maturities Long-term Debt Maturities by Year 300 250 200 In Millions 150 100 50 0 26 Investor Meetings April 2013
  26. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 26
    Strategic Objective Credit Ratings Standard and Poors and Moodys changed their ratings outlook for Black Hills Corporation from stable to positive during October Standard & Poors changed Black Hills Corporations business risk profile…
  27. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 27
    Strategic Objective - Dividend Growth Increased for 43 consecutive years 1.55 Dividend yield was 3.5% on March 29, 2013 1.52 1.50 1.48 1.46 1.45 1.44 1.42 Annual Dividend 1.40 Per Share 1.40 1.35 1.30 1.25 1.20…
  28. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 28
    2013 Earnings Guidance Guidance for 2013, as most recently listed in our investor presentation on Feb. 6, 2013, for earnings from continuing operations, as adjusted, is in the range of 2.20 to 2.40 per share, based on the following…
  29. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 29
    2013 Scorecard Strategy 2013 Progress and Future Initiatives UTILITIES + Acquire regulated utility properties in our geographic region Commence construction on Cheyenne Prairie Generating Station (CPGS) (Q2) + Construct additional cost…
  30. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 30
    Questions 31 Investor Meetings April 2013
  31. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 31
    Use of Non-GAAP Financial Measures Use of Non-GAAP Financial Measures EBITDA and EBITDA, as adjusted We believe that our presentation of earnings before interest, taxes, depreciation and amortization (EBITDA) and EBITDA, as adjusted…
  32. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 32
    Use of Non-GAAP Financial Measures - EBITDA (in millions) Q4 2012 Q4 2011 YTD 2012 YTD 2011 Income from continuing operations 30.9 18.8 88.5 40.4 Depreciation, depletion and amortization 33.2 38.1 154.6 135.6 Impairment Oil and Gas…
  33. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 33
    Use of Non-GAAP Financial Measures Revenue, as Adjusted Power Generation Electric Gas Power Coal Oil and Inter-co Other Inter- Q4 2012 Revenue, as Adjusted Utilities Utilities Generation Mining Gas Corporate Lease Elims co Elims…
  34. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 34
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in millions) Electric Gas Power Coal Oil and YTD Dec 31, 2012 Utilities Utilities Generation Mining Gas Corporate Total Operating Income (loss) 131.7 66.2 44.8 2.1…
  35. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 35
    Appendix 36 Investor Meetings April 2013
  36. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 36
    Black Hills Corporation History Originating company started in Deadwood in 1883 (130 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…
  37. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 37
    Black Hills Legal Organization 38 Investor Meetings April 2013
  38. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 38
    Electric Utility Generation Availability(%) * Excludes KS HDD data since state has weather normalization 97.2 Q4 2012 95.6 Q4 2012 2,345 98.5 Q3 2012 Q3 2012 (Total for all gas service* areas weighted by 150 95.4 Gas…
  39. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 39
    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…
  40. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 40
    Gillette Energy Complex Value proposition through integrated approach Coal production, generation, transmission utility and non-regulated assets Shared staff, facilities, land and infrastructure Wyodak Mine Wyodak Plant…
  41. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 41
    Pueblo Airport Generating Station 2012 Earnings Growth Driven By New Natural Gas-Fired Generation Projects that Started Serving Colorado Utility Customers on Jan. 1, 2012 Colorado Electrics 180 MW Generation Project completed on Dec.…
  42. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 42
    Rate Case Activity Jurisdiction Effective Revenue Return on Cap Status Date Increase Equity Structure BHE-CO Gas 12/10/2012 0.2 million 9.6% 50% debt/ Complete 50% equity CLF&P 7/1/2012 4.3 million 9.6% 46% debt/ Complete Electric…
  43. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 43
    Non-Regulated - Statistics IPP Generation Contract Availability (%) Coal Production Revenue and Expense per Ton Sold Coal-fired plants (Coal in millions of tons and overburden in millions (Units = tons sold plus cubic yards of…
  44. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 44
    Coal Mining Benefits of Revised Mine Plan Stripping Ratios* 2.1 to 1 2.1 to 1 2.1 to 1 1.5 to 1 1.6 to 1 2.2 to 1 2.1 to 1 1.8 to 1 1.5 to 1 1.3 to 1 * The ratio of the volume of overburden required to be…
  45. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 45
    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…
  46. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 46
    Oil and Gas Exploration & Development Program Note: approximate areas of geologic basins does not reflect BHEP acreage 47 Investor Meetings April 2013
  47. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 47
    Reserve Data and Net Present Value Reserve calculations at Dec. 31, 2012 Average Average Net Oil Net Gas Net Equiv PV10 Price Oil Price Nat Gas (MBO) (BCF) (BCFE) (MM) Per BBL per MCF PDP* 3.8 54.1 76.9 140.8 85.39 2.25 PNP* 0.1…
  48. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 48
    Piceance Basin Mancos Shale Map Legend Horizontal Mancos Producing Well BHEP Piceance Basin Acreage 49 Investor Meetings April 2013
  49. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 49
    Piceance Basin Mancos Production Piceance Basin 100,000 10,000 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 32 33 34 35 36 37 38 39 40 41 42 43 44 45…
  50. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 50
    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. Investor Meetings April 2013
  51. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 51
    San Juan Basin Mancos Production Rosa Units are Williams wells 52 Investor Meetings April 2013
  52. APRIL 2013 INVESTOR MEETINGS – Black Hills Corporation – slide 52
    Vision: Be the energy partner of choice. Mission: Improving life with energy. 53

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