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Q3 2011 EARNINGS CALL – Black Hills Corporation

Black Hills Corporation · Nov 4, 2011 · 47 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. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 1
    Q3 2011 Earnings Presentation November 4, 2011
  2. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 2
    Discussion Agenda 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. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 3
    Quarter Review 4
  4. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 4
    Q3 2011 Summary Net Income, as adjusted, 14.4 million or 0.37 per share compared to 14.8 million or 0.38 per share in Q3 2010 Utilities Non-Regulated Energy Net income, as adjusted, was 16.4 million compared Net income, as adjusted,…
  5. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 5
    Q3 2011 Highlights Ongoing Utility and IPP generation construction projects for estimated 487 million nearly complete and on schedule to begin serving Colorado Electric customers on Jan. 1, 2012 Applicable Colorado Electric rate case…
  6. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 6
    Financial Update 7
  7. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 7
    EPS Analysis Earnings Per Share (EPS) Q3 Q4 Q1 Q2 Q3 2010 2010 2011 2011 2011 Wtd Avg Shares Outstanding (in thousands) 39,133 39,437 39,761 39,823 39,145 Net Income (loss) 0.32 0.85 0.68 0.19 ( 0.27) Adjustments for special…
  8. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 8
    Q3 2011 Income Statement In millions, except per share amounts 2011 2010 Comments 2011 vs. 2010 Revenue 256.5 249.5 Rate case settlements Gross Margin 170.3 162.6 Strength in Electric Utilities Operating expenses (128.9) (120.9)…
  9. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 9
    Q3 2011 Revenue/Operating Income Roll-Up Revenue Operating In millions Income (Loss) 2011 2010 2011 2010 Comments Utilities Electric Utilities 153.7 141.6 32.5 27.5 Rate case settlements Gas Utilities 72.7 72.3 5.1 6.1 Higher O&M…
  10. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 10
    Capital Structure Dec. 31, June 30, Sept. 30, In millions 2010 2011 2011 Short term debt Current maturities 5.2 3.6 2.9 Notes payable 249.0 380.0 359.0 254.2 383.6 361.9 Long term debt 1,186.0 1,183.6 1,282.2 Total Debt 1,440.2…
  11. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 11
    Earnings Guidance 12
  12. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 12
    Updated 2011 Earnings Guidance 1.70 to 1.85 Narrowing 2011 net income, as adjusted, from a range of 1.70 to 1.95 per share to 1.70 to 1.85 per share, based on four primary assumptions: Normal operations and weather within our utility…
  13. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 13
    Initial 2012 Earnings Guidance 2.15 to 2.40 2012 net income, as adjusted, expected to be in the range of 2.15 to 2.40 per share, based on the following primary assumptions: Capital spending of 420 - 440 million including oil and gas…
  14. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 14
    Strategic Overview 15
  15. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 15
    Diversified Earnings Business portfolio mix reflects primarily regulated electric and gas utilities versus 2007 mix of mostly non-regulated energy segments Operating Income Assets 57% 28% 16% 50% 27% 34% 2% 1% Trailing 9%…
  16. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 16
    Strategic Initiatives Timeline 2009 2010 2011 anticipated 2012 anticipated Strategic Development Enserco portfolio Coal added to Power & Environ diversification portfolio added to portfolio Oil & Gas strategic Oil & Gas review…
  17. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 17
    Defined Investment Program Drives Earnings Growth Historical and Forecasted Capital Expenditures including Transmission (in millions) 497 468** 441 428 1 4 5 1 348 3 90 148 336 96 50 21 97 21 41 5 79 43 52 46 205 89 48 19…
  18. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 18
    Long-term Growth Opportunities 2012-2015 Capital Expenditures Expected In- Announced Future Total Excludes routine capital expenditures for maintenance of assets (in millions) Service Date Utility Colorado Electric will own 42 MW of 3rd…
  19. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 19
    BHE Colorado Electric Regulatory Update 2011 Rate Case In-Progress Jurisdiction Date Filed Proposed Proposed Proposed Cap Proposed Rate Status Revenue Return on Structure Base Increase Equity BHE Colorado 4/28/2011 40.2 million; 11.0%…
  20. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 20
    Colorado Generation Projects 2012 Earnings Growth Driven By New Natural Gas-Fired Generation Projects Overview: Electric Utility and Power Generation projects ready to serve Black Hills Energy Colorado Electric utility customers starting…
  21. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 21
    Colorado Electric - Wind Energy Project New Wind Project Helps Meet Renewable Energy Standards In Colorado Overview: Project consists of sixteen 1.8 MW Vestas turbines for total 29 MW; ready to serve Colorado Electric s utility customers…
  22. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 22
    Other Utility Regulatory Updates Cheyenne Light and Black Hills Power New Joint Project Announced On Nov. 1 Black Hills Power filed Integrated Resource Plan and Cheyenne Light amended previous Integrated Resource Plan filed on Aug. 1…
  23. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 23
    Environmental Policy Impact Assessment RICE (Recipricating National Ambient Regional Haze Hazardous Air Rules (MACT) Internal Air Quality Clean Water Act Coal Ash Rule Greenhouse Gas Rules Standards Combustion Standards Engine)…
  24. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 24
    Oil & Gas - Mancos Shale Update Held By Production legacy assets San Juan Basin - 19,400 net acres (average royalty 20%) Jicarilla 464-30 724 initial test well drilled on Sept. 28, 2011 Initial potential - flowed 6.2 MMCF and 475…
  25. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 25
    Oil & Gas Strategy Review Review Commenced in May 2010 Mancos shale has potential to be extremely valuable asset Encouraged by early results of drilling and testing Leasehold acreage held by production Oil & Gas segment to pursue…
  26. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 26
    2011 Scorecard Strategy 2011 Progress & Future Initiatives UTILITIES R File CPCN for another utility owned natural gas-fired turbine to replace retirement of coal + Acquire regulated utility properties in our geographic focus fired…
  27. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 27
    Q3 2011 Summary Steady utility performance and strategic growth initiatives on track Continued improvement in utility performance reflecting reasonable return on substantial utility investments made over past several years Ongoing…
  28. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 28
    Questions and Answers 29
  29. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 29
    Appendix 30
  30. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 30
    Black Hills Corporation 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 company…
  31. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 31
    Electric and Natural Gas Utilities Regulated Electric and Natural Gas Utilities Serving over 762,000 customers MT MT SD SD WY Black Hills Power WY Cheyenne NE IA Light NE Nebraska Iowa Gas Gas CO CO KS KS Colorado…
  32. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 32
    Electric Utilities Q3 2011 Update Q3 Comparison of Net Income, as Adjusted Total MWh Sales Regulatory Update (in millions) (in millions) Cheyenne Light and BHP filed joint Utility Customers application on Nov. 1 for new 237 million…
  33. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 33
    Gas Utilities Q3 2011 Update Q3 Comparison of Net Income, as Adjusted Total Dth Sales Regulatory Update (in millions) (in millions) Kansas Gas evaluating need to file rate case Colorado Gas granted extension until July 0.6 43.9…
  34. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 34
    Efficient Cost Recovery Electric Utility Jurisdiction Cost Recovery Mechanisms * DSM/ Energy Fuel Cost Trans- Purchased Power Fixed Cost Efficiency mission Recovery BHP - South Dakota R R R R BHP - Wyoming R R R BHP - Montana R R…
  35. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 35
    Oil & Gas and Energy Marketing Non-regulated Group Generates Electricity, Produces Natural Gas, Coal and Crude Oil, and Markets Energy & Related Products Oil and Gas Energy Marketing Operated wells in San Juan, Powder River, and…
  36. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 36
    Oil & Gas Q3 2011Update Q3 Comparison of Net Income, as Adjusted Bcf Equivalent Sales (in millions) 3.4 3.5 2.9 3.5 3.1 3.2 2.9 2.8 2.9 3.3 2.9 2.9 2.8 2.7 0.4 Q2 2008 Q3 2008 Q4 2008 Q1…
  37. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 37
    Energy Marketing Operational Summary Realized and Unrealized Gross Margin Gross Margin by Strategy * (Total, Realized and Unrealized) (Combined Realized and Unrealized) Two primary offices located in Denver, CO 50.0 17.5 50.0 and…
  38. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 38
    Energy Marketing Q3 2011Update Q3 Comparison of Net Income, as Adjusted Avg. Daily Natural Gas Volumes Avg. Daily Crude Oil Volumes (in millions) (physical Bcf per day) (barrels per day) Prior Year Current Year 20,935 21,243…
  39. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 39
    Power Generation and Coal Mining Power Generation Coal Mining Smaller plant approach to incremental growth - facilitates Includes approximately 262 million tons of low-sulfur Powder technology implementation River Basin coal…
  40. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 40
    Power Generation Q3 2011Update Q3 Comparison of Net Income, as Adjusted Generation Availability (%) Megawatts of Generation Capacity (in millions) Prior Year - Current Year 100 100 99.7 100 99.7 100 98.9 96.9…
  41. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 41
    Coal Q3 2011Update Q3 Comparison of Net Income, as Adjusted Coal Production (in millions) (Coal in million tons Overburden in million cubic yards) Overburden Removed Coal Production 4.5 Prior Year Current Year 4.2…
  42. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 42
    Credit Facilities and Debt Primary Credit Facilities Capacity Utilized Available As of 9/30/2011 Corporate Revolver - Matures April 2013 500 million 209 million 249 million 42 million (LC) Term Loan Due June 2012 -- 150 million --…
  43. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 43
    Credit Ratings Black Hills Corporation S&P Moody s Fitch Long-Term Issuer BBB- Baa3 BBB- Senior Unsecured BBB- Baa3 BBB- Outlook Stable Stable Stable Black Hills Power S&P Moody s Fitch Long-Term Issuer BBB- Baa2 BBB Senior…
  44. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 44
    COE Wind Project Location COE Wind Project Located within the County s Preferred Wind Development Area, County Comprehensive Plan COE Wind Site 45
  45. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 45
    COE Wind Energy Project Overview Legend: Green & purple dots: proposed future turbine locations Red dots: proposed wind turbine locations for COE wind project 46
  46. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 46
    COE Network Transmission Project Overview COE wind generation via Southern Transmission connector to Pueblo 47
  47. Q3 2011 EARNINGS CALL – Black Hills Corporation – slide 47
    Vision: Be the energy partner of choice. Mission: Improving life with energy. 48

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