2012 Fourth Quarter and Full Year Review February 1, 2013
Discussion Agenda Fourth Quarter and David Emery Full Year Review Chairman, President and CEO Financial Update Tony Cleberg Executive Vice President and CFO Strategic Overview David Emery Chairman, President and CEO…
Q4 and Full Year Review 4 Fourth Quarter and Full Year Review February 2013 Pueblo Airport Generating Station
Q4 2012 Highlights Business Environment Slightly colder than normal weather in utility service territories Continued low natural gas prices - average Henry Hub cash prices below 3.50 per MMBtu Utilities Black Hills Power filed a…
Q4 2012 Highlights Utilities continued Colorado Electric 29 MW Busch Ranch wind project and associated 16.9 million Southern Connector electric transmission line project was completed and placed into service on Oct. 16 Colorado…
Q4 2012 Highlights Coal Mining Revised mine plan, with operations in lower overburden ratios, reduced mining costs and improved overall profitability Improved results also reflect productivity and efficiency gains combined with…
Q4 2012 Financial Highlights 48% Improvement in EPS, as adjusted Income from Continuing Operations, as adjusted* (in millions) (per share) Key Earnings Drivers 30.0 0.68 New COE generation in service Jan. 1 New IPP generation in…
2012 Financial Highlights 24% Improvement in EPS, as adjusted Income from Continuing Operations, as adjusted* (in millions) (per share) Key Earnings Drivers 92.2 2.09 New COE generation in service Jan. 1 New IPP generation in…
Q4 2012 Financial Highlights Change in Income from Continuing Operations, as adjusted*, from Prior Year (in millions) Q4 2011 19.7 3.6 Electric Utilities 2.4 Gas Utilities 2.9 Power Generation 1.2 Coal Mining 0.6 Oil &…
2012 Financial Highlights Change in Income from Continuing Operations, as adjusted*, from Prior Year (in millions) YTD 2011 67.7 11.3 Electric Utilities (4.9) Gas Utilities 12.5 Power Generation 6.2 Coal Mining (1.3) Oil &…
Financial Update 12 Fourth Quarter and Full Year Review February 2013 Lyn Wright of Kansas Gas
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)…
Q4 Revenue/Op Income Summary 163.0 Total Revenue Electric Util 172.8 (in millions) 139.7 356.0 Gas Util 151.7 318.9 20.1 Power Gen* 8.2 Q4 2012 15.0 Q4 2011 Coal Mining 18.0 12.1 Oil & Gas 23.9 (31.1) Corporate,…
2012 Revenue/Op Income Summary 626.9 Total Revenue Electric Util 614.3 (in millions) 1,272.2 454.1 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) Corporate,…
Electric Utilities - Revenue/Op Income QTD Change Q4 Key Performance Drivers (in millions) 172.8 163.0 Q4 2012 Revenue Q4 2011 New Colorado generation and rates COE Power Marketing settlement recorded in Dec. 2011 40.6 Operating…
Gas Utilities - Revenue/Op Income QTD Change Q4 Key Performance Drivers (in millions) 151.7 139.7 Revenue Q4 2012 Lower average natural gas prices received Q4 2011 Operating Income Cost reduction initiatives Improved…
Power Generation - Revenue/Op Income QTD Change Q4 Key Performance Drivers (in millions) Revenue and Operating Income 20.5 New Colorado generation Q4 2012 High IPP contract availability Q4 2011 9.0 8.2 3.5 Revenue* Operating…
Coal Mining -Revenue/Op Income QTD Change Q4 Key Performance Drivers (in millions) 18.0 15.0 Revenue Q4 2012 Price adjustments on coal contracts Q4 2011 Expiration of train load-out contract Operating Income 1.3 (1.1) Lower mining…
Oil & Gas -Revenue/Op Income QTD (in millions) Change Q4 Key Performance Drivers 23.9 Revenue Higher average hedged prices received for Q4 2012 crude oil Sale of Williston Basin assets 12.1 Q4 2011 Lower average hedged prices…
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…
2013 Earnings Guidance Black Hills Corp. reaffirms its guidance for 2013 earnings from continuing operations, as adjusted, to be in the range of 2.20 to 2.40 per share as previously issued on Nov. 13, 2012, based on the following…
Strategic Overview 24 Fourth Quarter and Full Year Review February 2013 Busch Ranch wind farm south of Pueblo, CO
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…
Strategic Objective Operating Performance 2012 Customer Service O&M Expense per Customer 70.00 Safety 60.00 50.00 BHC Other CIS IT 40.00 Collection Revenue Protection 30.00 Business Offices Call Center Cash…
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…
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…
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…
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…
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…
Strategic Objective - Dividend Growth Increased for 43 consecutive years 1.55 Dividend yield was 3.9% on Jan. 23, 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…
Strategic Objectives - Credit Rating 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…
2012 Scorecard Strategy 2012 Progress and Future Initiatives UTILITIES Complete construction of Colorado Electric 29 MW wind project (Q4) + Acquire regulated utility properties in our geographic region Complete CPCN process for third…
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…
Questions 37 BHP employees Jared Shear and Derek Silbaugh at Wygen III in Gillette, WY
Appendix 38 Fourth Quarter and Full Year Review February 2013 BHP lineman Rapid City, SD
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…
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 Total…
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…
Use of Non-GAAP Financial Measures Income from Continuing Operations, as adjusted (in thousands after-tax) Electric Gas Power Coal Oil and QTD Dec 31, 2012 Utilities Utilities Generation Mining Gas Corporate Total Income (loss) from…
Use of Non-GAAP Financial Measures Operating Income, as adjusted (in millions) Electric Gas Power Coal Oil and QTD Dec 31, 2012 Utilities Utilities Generation Mining Gas Corporate Total Operating Income (loss) 36.6 23.3 11.4 1.1 0.3…
Use of Non-GAAP Financial Measures Income from Continuing Operations, as adjusted (in thousands after-tax) Electric Gas Power Coal Oil and YTD Dec 31, 2012 Utilities Utilities Generation Mining Gas Corporate Total Income (loss) from…
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 (0.4)…
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…
Electric and Gas Utilities Regulated Electric and Gas Utilities Serving over 765,000 customers Cheyenne Iowa Black Hills Nebraska Gas Light Power Gas Cheyenne Colorado Light Gas Kansas Gas Colorado Electric Electric…
Electric Utility Generation Availability(%) * Excludes KS HDD data since state has weather normalization 97.2 Q4 2012 2,345 Q4 2012 95.6 98.5 Q3 2012 (Total for all gas service* areas weighted by Q3 2012 150 95.4 Gas…
Mitigating Regulatory Recovery Risk Electric Utility Cost Recovery Mechanisms Jurisdiction Environment DSM/ Energy Fuel Cost Trans- Purchased Fixed Cost Financing al Cost Efficiency mission Power Recovery* Costs Rider BHP - South…
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…
Q4 2012 Non-Regulated Update 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…
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…
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…
Oil and Gas Exploration & Development Program Note: approximate areas of geologic basins does not reflect BHEP acreage 54 Fourth Quarter and Full Year Review February 2013
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…
Piceance Basin Mancos Shale Map Legend Horizontal Mancos Producing Well BHEP Piceance Basin Acreage 56 Fourth Quarter and Full Year Review February 2013
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. Fourth Quarter and Full Year Review February 2013
San Juan Basin Mancos Production Rosa Units are Williams wells 59 Fourth Quarter and Full Year Review February 2013
Vision: Be the energy partner of choice. Mission: Improving life with energy. 60
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