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EEI FINANCIAL CONFERENCE – Black Hills Corporation

Black Hills Corporation · Nov 2, 2010 · 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. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 1
    November 2, 2010 EEI Financial Conference David Emery Chairman, President & CEO Linn Evans President and Chief Operating Officer Tony Cleberg Executive Vice President & CFO
  2. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 2
    Discussion Agenda Company Overview David Emery Chairman, President & CEO Operations Update Linn Evans President and Chief Operating Officer Financial Update Tony Cleberg Executive Vice President & CFO Strategic Overview…
  3. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 3
    Company Overview David Emery Chairman, President & CEO
  4. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 4
    Black Hills Corporation 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…
  5. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 5
    Business Highlights Strong Q3 financial results Efficient cost recovery and increased off-system sales Defined long-term investment plan Identified growth opportunities through 2020 with a proven track record of successful…
  6. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 6
    Operations Update Linn Evans President and Chief Operating Officer
  7. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 7
    Regulated Electric and Natural Gas Utilities Provides 70% of earnings and significant growth opportunities Electric Utilities Natural Gas Utilities Generate, transmit and distribute electricity Distribute natural gas to…
  8. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 8
    BHE-COE Generation - 180 MW Two GE LMS100 natural gas-fired turbines Capital Expenditure and Schedule Progress as of 9/30/2010 Expenditures Procurement Construction (250 -260 mill budget) contracts awarded contracts awarded…
  9. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 9
    Pueblo Airport Generation Station Construction well underway; procurement and construction contracts awarded; major equipment purchased Cooling Tower LMS100 Foundation Pueblo Airport Generating Station Site Circulating Water…
  10. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 10
    BHCI Generation 200 MW Four 40 MW General Electric LM6000 natural gas-fired turbines and two 20 MW steam turbines (combined cycle) Capital Expenditure and Schedule Progress as of 9/30/2010 Expenditures Procurement Construction (240…
  11. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 11
    Effective and Proactive Regulatory Strategies Completed 4 utility rate cases in 2010 (3 settlements) 45 million increase in annual revenues approved in CO, NE, SD and WY (received 71% of original request compared to 59% average for…
  12. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 12
    Policy Update Evaluating capital investment opportunities Renewable Standard to Clean Air - Clean Jobs Act Pending EPA Emission 30% by 2020 (CO HB 10 1001) (CO HB 10 1365) Rules Summary: Summary: Summary: Requires investor-owned…
  13. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 13
    Non-regulated Energy Provides 30% of earnings and significant upside potential Power Generation Coal Mining 120 MW power generation capacity under Coal mine located in Powder River Basin; mid-to-long term contracts 268 million…
  14. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 14
    Non-regulated Energy Provides 30% of earnings and significant upside potential Oil and Gas Energy Marketing 119 Bcfe of reserves at year-end 2009 with Energy management services and trading majority of reserves in San Juan,…
  15. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 15
    BHEP Development Program Williston Basin Production from Middle Bakken and Three Forks formations Piceance Basin Planned Operations: BHEP does not operate and co-ventures Current production from Dakota 1st Qtr 2011 1 Vertical…
  16. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 16
    Financial Update Tony Cleberg Executive Vice President & CFO
  17. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 17
    Quarterly EPS Analysis Earnings Per Share (EPS) Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Income (Loss) from Continuing Operations (0.10) 0.84 0.81 (0.22) 0.32 Add-back special loss/(gain) items: Undesignated interest rate…
  18. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 18
    Q3 Income Statement In millions, except per share amounts 2010 2009 Comments 2010 vs. 2009 Revenue 264.4 225.8 Improved electric utility revenues Operating expense (222.7) (208.9) Gain on sale of Wygen III 6.2 -- Operating income…
  19. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 19
    Q3 Revenue/Operating Income Roll-Up In millions Revenue Operating Income (Loss) 2010 2009 2010 2009 Comments Utilities Electric Utilities 142.6 128.9 27.5 18.8 Rate Cases Gain on sale of Wygen III -- -- 6.2 -- Gas Utilities 72.3…
  20. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 20
    Capital Structure In millions Sept. 30, Dec. 31, Mar. 31, Jun. 30, Sept. 30, 2009 2009 2010 2010 2010 Short term debt: Current maturities 32.1 35.2 24.4 4.5 5.3 Notes Payable 350.5 164.5 223.0 225.0 145.0 382.6 199.7 247.4 229.5…
  21. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 21
    Strategic Overview David Emery Chairman, President & CEO
  22. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 22
    Positioned For Continued Growth Diversified platform based on stable cash flows, more predictable earnings and increased efficiencies Asset Mix By Business Focus (approx) 2010 Forecasted Capex By Segment 2010 Total of 512…
  23. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 23
    Growth Capital Investments Excludes routine capital investments for maintenance of assets Excludes routine capital expenditures for maintenance of assets (millions) 2008 - 2009 2010 2011 Project Total Wygen III 175 -47 -- 128 52%…
  24. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 24
    Timeline of Events 2008 2009 2010 2011 anticipated Strategic Development Unified In-house bill Unified Unified inventory print/lock PeopleSoft work mgt systems box system system Unified performance Unified Unified Unified Unified…
  25. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 25
    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 &…
  26. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 26
    2010 BKH Strategy Scorecard Strategy 2010 Progress & Future Initiatives UTILITIES Complete BHE-CO Electric rate case (settlement agreement approved 8/5/2010) + Acquire regulated utility properties in our geographic focus Complete Wygen…
  27. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 27
    2010 Adjusted Earnings Per Share Guidance 1.80 to 1.95 Updated 2010 Earnings Guidance Assumptions Adjusted earnings guidance primarily impacted by low natural gas prices Increased capital expenditures in 2010 expected to be 512…
  28. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 28
    2011 Earnings Per Share Guidance 1.90 to 2.15 2011 Earnings Guidance Assumptions Planned capital expenditures in 2011 estimated to be 430 million to 475 million; including oil and gas capital expenditures of 35 million to 45…
  29. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 29
    Summary Capital growth projects on-track Construction well underway on utility and IPP gas- fired power generation facilities in CO AMI and AMR meter installations on schedule Completed additional financings Providing liquidity for…
  30. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 30
    Q&A
  31. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 31
    Appendix
  32. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 32
    Electric Utilities Operational Summary Service Areas BHC electric utilities generate, Black Hills Power MT transmit and distribute electricity to Serving 66,900 electric customers approximately 202,025 customers Peak load of 430 MW…
  33. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 33
    Electric Utilities Q3 Update Quarter Income Comparison Total MWh Sales Regulatory Update (in millions) (from continuing operations in millions) SD PUC approved settlement agreement Utility Customers 7/7/2010 for 15.2 million…
  34. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 34
    Gas Utilities Operational Summary Service Areas BHE CO Gas Distributes natural gas to MT serving 69,400 customers approximately 526,900 customers in 2009 volume 8,870,768 Dth BHE IA Gas CO, IA, KS, and NE SD Serving 149,700…
  35. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 35
    Gas Utilities Q3 Update Quarter Income Comparison Total Dth Sales Regulatory Update (from continuing operations in millions) (in millions) Prior Year On 8/18/2010, NE PSC approved rate request for 8.3 million annual revenue…
  36. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 36
    Power Generation Operational Summary Generation Locations: 120 MW capacity Construction Projects Managed Name Fuel Size In-Service Date Neil Simpson II (WY) Coal 90MW 9/1995 Smaller plant approach to Neil Simpson CT (WY) Gas 40MW…
  37. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 37
    Power Generation Q3 Update Quarter Income Comparison Generation Availability (%) MW of Generation Capacity (in millions) (from continuing operations in millions) Coal-fired plants Other plants Overview Capital Expenditure…
  38. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 38
    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 expected…
  39. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 39
    Coal Q3 Update Quarter Income Comparison Coal Production (from continuing operations in millions) (Coal in million tons Overburden in million cubic yards) Overburden Removed Coal Production Overview Mining Cost Per Ton of Coal *…
  40. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 40
    Energy Marketing Operational Summary Producer Services: Marketing services for Proprietary Trading: Utilize knowledge of the independent natural gas and crude oil producers energy marketplace and customer relationships to create…
  41. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 41
    Energy Marketing Q3 Update Quarter Income Comparison Avg. Daily Natural Gas Volumes Avg. Daily Crude Oil Volumes (physical Bcf per day) (barrels per day) (from continuing operations in millions) Prior Year Current Year…
  42. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 42
    Oil & Gas Operational Summary 2009 YE Reserves and Production* Capital Expenditures** (in millions) Includes operated wells in San Juan, Powder River, Big Horn and Reserve Production Piceance Basins s Includes non-operated wells…
  43. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 43
    Oil & Gas Q3 Update Quarter Income Comparison Bcf Equivalent Sales (from continuing operations in millions) Overview Revenues improved due to an increase in Lease Operating Expenses Average Nat Gas Price Received average hedged…
  44. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 44
    Regulatory Update 2010 Rate Cases Implemented Jurisdiction Effective Revenue Return on Cap Rate Base Status Date Increase Equity Structure BHP WY 6/1/2010 3.1 million 10.5% 48% debt / 27 million Implemented 52% equity BHP SD…
  45. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 45
    Utility Energy Efficiency & Renewable Programs Expanding our renewable energy portfolio at reasonable rates for customers Black Hills Power Partnered with South Dakota School of Mines & Technology in Rapid City, SD to construct a…
  46. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 46
    Efficient Cost Recovery Electric Utility Regulated Cost Recovery Mechanisms * Jurisdiction DSM/ Energy Fuel Cost Trans- Purchased Power Fixed Cost Efficiency mission Recovery BHP - South Dakota BHP - Wyoming BHP - Montana BHP -…
  47. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 47
    Credit Facilities & Debt Proactively managing cash flows, capital expenditures and financing needs Primary Credit Facilities Capacity Utilized Available As of 9/30/2010 Corporate Revolver - Matures April 2013 500 million 145 million…
  48. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 48
    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…
  49. EEI FINANCIAL CONFERENCE – Black Hills Corporation – slide 49
    Vision: Be the energy partner of choice. Mission: Improving life with energy. 50
  50. EEI FINANCIAL CONFERENCE – 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

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