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Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation

Black Hills Corporation · Jan 29, 2010 · 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. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 1
    David Emery Chairman, President & CEO Tony Cleberg Executive Vice President & CFO January 29, 2010 2009 Full Year & Fourth Quarter Update 1
  2. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 2
    Discussion Agenda Full Year & Quarter Review David Emery Chairman, President & CEO Financial Update Tony Cleberg Executive Vice President & CFO Strategic Overview David Emery Chairman, President & CEO Q&A 3
  3. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 3
    Full Year & Quarter Review David Emery Chairman, President & CEO 4
  4. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 4
    2009 Full Year Summary Income from continuing operations improved to 78.8 million (2.04 per share) compared to a loss of 52.0 million (1.37 per share) full year 2008 Utilities Non-Regulated Energy Income from continuing operations…
  5. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 5
    Utility Highlights Strong operational performance; better than expected financial results from gas utilities and low commodity prices impact off-system electricity sales margins 2009 Full Year 2009 Fourth Quarter Colder than normal…
  6. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 6
    Non-Regulated Energy Highlights Low commodity prices continue to impact Energy Marketing and Oil & Gas businesses 2009 Full Year 2009 Fourth Quarter Enserco completed a 300 million committed BHE-COE new generation construction team…
  7. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 7
    Corporate Highlights Growth projects and integration efforts on track; successful completion of long term financings 2009 Full Year 2009 Fourth Quarter Completed public debt offering of 250 million in 11.6 million or 0.30 per share…
  8. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 8
    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 &…
  9. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 9
    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…
  10. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 10
    Financial Update Tony Cleberg Executive Vice President & CFO 11
  11. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 11
    Q4 Earnings Drivers Solid performance by Utilities; low natural gas prices impacted Oil & Gas, Energy Marketing and off-system electricity sales Utilities Non-Regulated Energy Strong gas utility performance due to colder Oil & Gas…
  12. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 12
    Q4 EPS Analysis Earnings Per Share (EPS) 4th Quarter 2009 2008 Income (Loss) from Continuing Operations 0.84 (2.52) Exclude unique gain items: Unrealized gain on Interest Rate Swap (0.30) -- Add-back unique loss items:…
  13. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 13
    EPS 2009 Guidance vs. Actual Guidance Actual Income from Continuing Operations 1.75 to 1.85 2.04 Significant differences from guidance: Unrealized gain on Interest Rate Swaps 0.30 Loss on Energy Marketing (0.04) Oil and gas…
  14. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 14
    Q4 Income Statement In millions, except per share amounts 2009 2008 QTD EPS QTD EPS Comments 2009 vs. 2008 Revenue 348.5 407.8 Low natural gas prices Operating expense (297.9) (353.9) Operating income before impairment 50.6 1.30 53.9…
  15. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 15
    Q4 Revenue/Operating Income Roll-Up In millions Revenue Operating Income (Loss) 2009 2008 2009 2008 QTD QTD QTD QTD Comments Electric Utilities 135.3 142.7 19.1 19.4 Lower off-system sales margins Gas Utilities 167.9 193.1 22.0…
  16. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 16
    2009 YTD EPS Analysis Earnings Per Share (EPS) Q1 2009 Q2 2009 Q3 2009 Q4 2009 Income (Loss) from Continuing Operations 0.66 0.64 (0.10) 0.84 Exclude notable gain items: Wygen I Sale Completed 1/2009 (0.44) -- -- -- Unrealized…
  17. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 17
    2009 YTD Income Statement In millions, except per share amounts 2009 Per Share 2008 Per Share Comments to 2009 Revenue 1,269.6 1,005.8 Acquisition/cost recovery Operating expense (1,125.50) (858.1) Op income before gain and…
  18. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 18
    YTD Revenue / Operating Income Roll-Up In millions Revenue Operating Income (Loss) 2009 2008 2009 2008 YTD YTD YTD YTD Comments Electric Utilities* 519.9 472.2 71.0 77.9 Lower off-system sales margins Gas Utilities** 580.3 277.1…
  19. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 19
    Statement of Capitalization In millions Dec. 31, Mar. 31, Jun. 30, Sept. 30, Dec. 31, 2008 2009 2009 2009 2009 Short term debt: Current maturities 2.1 32.1 32.1 32.1 35.2 Notes Payable 703.8 479.8 270.5 350.5 164.5 705.9 511.9…
  20. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 20
    Credit Facilities & Debt Proactively managing cash flows, capital expenditures and financing needs Primary Credit Facilities Capacity Utilized Available As of 12/31/2009 Bridge Loan (BHE acquisition) Retired June 2009 0 0 0 Enserco…
  21. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 21
    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…
  22. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 22
    Strategic Overview David Emery Chairman, President & CEO 23
  23. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 23
    Positioned For Growth Diversified platform for growth based on stable cash flows, more predictable earnings and increased efficiencies Asset Mix By Business Focus (approx) 2010 Forecasted Capex By Segment R e g ulate d Utility 70%…
  24. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 24
    Growth Opportunities Capital investments grow earnings and build shareholder value Excludes routine capital expenditures, such as maintenance and new customer growth capital (millions) 2008 2009 2010 2011 Project Total Wygen III 99…
  25. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 25
    Wygen III Update Power plant to begin commercial operation April 1, 2010 Ahead of schedule and under budget Construction 98% complete Commissioning 70% complete Project milestones include 5 Connection to 230kV transmission…
  26. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 26
    BHE-COE Generation Customers served by utility owned generation and BH IPP Power Purchase Agreement Utility 180 MW IPP 200 MW August 2008: BHE - CO Electric Resource Plan Proposal selected by BHE-COE working with an Filed…
  27. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 27
    Rate Cases Approved Regulatory Update Jurisdiction Effective Date Revenue Return on Cap Structure Rate Base Status Increase Equity BHP -FERC 1/1/2009 3.8 million 10.8% 43% debt/ 57% 41.0 million z Complete equity BHE-CO Gas…
  28. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 28
    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…
  29. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 29
    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 BHECOE: 6.1 million BHP: 5.6 million CLFP: 5 million Funds used to install…
  30. Q4 2009 & FULL YEAR EARNINGS CALL – 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. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 31
    Earnings Guidance Reaffirmed 32
  32. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 32
    2010 EPS Guidance 1.80 to 2.05 Reaffirmed* 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…
  33. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 33
    Summary Strategy on track; 2009 results impacted by low commodity prices; dividend increase for the 40th consecutive year 2009 Accomplished strategic objectives, managed risk, improved operational performance, cost control and…
  34. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 34
    Q&A 35
  35. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 35
    Appendix 36
  36. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 36
    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 Denver, CO, and Omaha, NE, the company…
  37. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 37
    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 *…
  38. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 38
    Electric Utilities Operational Summary Service Areas Revenue by Customer Class Of f -syst em 11% Our electric utilities generate, transmit MT Cont ract Other and distribute electricity to Wholesale 5% Resident ial 5%…
  39. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 39
    Electric Utilities Q4 Update Quarter Income Comparison Total MWh Sales Capital Expenditures (from continuing operations in millions) (in millions) (in millions) 277.4 Utility Customers 242.0 228.9 Off-system Sales 0.62…
  40. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 40
    Gas Utilities Operational Summary Service Areas Revenue by Customer Class MT Distributes natural gas to Industrial approximately 528,300 customers in SD 3% Transportation 4% Commercial CO, IA, KS, and NE WY 23% Other Gas…
  41. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 41
    Gas Utilities Q4 Update Quarter Income Comparison Total Dth Sales Capital Expenditures (from continuing operations in millions) (in millions) (in millions) 10.1 56.5 56.1 43.2 6.1 19.3 32.5 Prior Year * Current Year 39.2…
  42. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 42
    Power Generation Operational Summary Generation Locations Owned Capacity 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)…
  43. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 43
    Power Generation Q4 Update Quarter Income Comparison Generation Availability (%) Capital Expenditures (from continuing operations in millions) (in millions) 99.9 99.4 99.1 99.7 150.4 98.5 98.7 98.0…
  44. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 44
    Coal Operational Summary Facility Location Coal Production (millions of tons) Includes approximately 268 million tons of low-sulfur Powder River Basin coal for low-cost, mine-mouth generation: a 41 year supply at 6.6…
  45. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 45
    Coal Q4 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…
  46. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 46
    Energy Marketing Operational Summary Four Primary Business Strategies Updated 2009 information will be available in the 2009 10K (by approximate % gross margin rounded to nearest 5%) Producer Services 10% Doing business under the…
  47. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 47
    Energy Marketing Q4 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) 13,500 13,332 2.3 2.2 2.2…
  48. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 48
    Oil & Gas Operational Summary 2009 YE Production 2009 YE Reserves Gas 73% Gas 82% Includes operated wells in San Juan Basin, Powder River Basin, Big Horn Basin, Piceance Basin and Denver Julesberg Basin Includes non-operated…
  49. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 49
    Oil & Gas Q4 Update Quarter Income Comparison Bcf Equivalent Sales Capital Expenditures** (from continuing operations in millions) (in millions) -0.1 3.9 3.8 3.8 3.6 3.5 3.5 3.4 3.3 3.3 3.2 3.2…
  50. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 50
    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 -…
  51. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 51
    Vision: Be the energy partner of choice. Mission: Improving life with energy. 52
  52. Q4 2009 & FULL YEAR EARNINGS CALL – Black Hills Corporation – slide 52
    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 53

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