Discussion Agenda Third Quarter Review David Emery Chairman, President and CEO Financial Update Tony Cleberg Executive Vice President and CFO Strategic Overview David Emery Chairman, President and CEO Q&A 3 Third…
Third Quarter Review 4 Third Quarter Review November 2012
Q3 2012 Highlights Business Environment July was warmest month in continental U.S. in recorded history while service territories reported higher cooling degree days, significantly lower humidity tempered demand Continued low natural…
Q3 2012 Highlights Coal Mining Improved results due to productivity and efficiency gains combined with expiration of unprofitable contract Oil and Gas Closed the Williston Basin oil and gas asset sale on Sept. 27 for net cash…
Q3 2012 Highlights Williston Basin Transaction On Sept. 27, Black Hills Exploration & Production, Inc. closed on the sale of approximately 85% of its Williston Basin oil and gas assets Sale monetized our projected full potential…
Q3 2012 Financial Highlights Income from Continuing Operations, as adjusted* (in millions) (per share) Key Earnings Drivers 18.7 0.42 New COE generation in service Jan. 1 New IPP generation in service Jan. 1 0.35 Improved coal…
Q3 2012 Financial Highlights Change in Income from Continuing Operations, as adjusted*, from Prior Year (in millions) 13.7 Q3 2011 0.4 Electric Utilities* (0.6) Gas Utilities 3.2 Power Generation* 1.1 Coal Mining (0.6)…
Financial Update 10 Third Quarter Review November 2012
Earnings Per Share Analysis Q3-2011 Q4-2011 Q1-2012 Q2-2012 Q3-2012 Net Income (loss) (0.27) 0.60 0.68 (0.31) 0.78 Loss (gain) from discontinued operations (0.02) (0.16) 0.12 0.03 - Income (loss) from continuing ops (0.29) 0.44 0.80…
Income Statement Q3 2012 Q3 2011 Comments Revenue 246.8 249.5 Gross Margin 184.2 163.4 New Colorado generation, production increases Operating Expenses (89.0) (90.5) Major maint accrual reduction; new generation DD&A (41.4) (33.3)…
Q3 Revenue/Op Income Summary 155.0 Total Revenue Electric Util 153.7 (in millions) 249.5 63.4 246.8 Gas Util 72.7 21.0 Power Gen 8.1 Q3 2012 14.7 Q3 2011 Coal Mining 17.8 24.7 Oil & Gas 19.2 (32.0) Corporate, net of I/C…
Q3 Utilities Revenue/Op Income Electric Utilities (in millions) Change Q3 Key Performance Drivers 155.0 153.7 Q3 2012 New Colorado generation and rates Q3 2011 Reduction in major maintenance accrual for plants to be retired 37.6…
Q3 Non-Regulated Energy Revenue/Op Income Power Generation (in millions) 21.0 Q3 2012 Change Q3 Key Performance Drivers Q3 2011 New Colorado generation in service with high availability 9.4 8.1 2.4 Revenue Operating Income,…
Q3 Non-Regulated Energy Revenue/Op Income Oil & Gas Change Q3 Key Performance Drivers (in millions) 24.7 23% increase in total production volumes 19.2 5.93 per barrel increase in Q3 2012 average price received for Q3 2011 crude…
Capital Structure (In millions except for ratios) Sep. 30, Dec. 31, Sep. 30, 2011 2011 2012 Capitalization Short-term Debt 361.9 347.5 553.3 Long-term Debt 1,282.2 1,280.4 943.0 Total Debt 1,644.1 1,627.9 1,496.3 Equity 1,087.9…
Earnings Guidance 2012 Earnings Guidance 2013 Earnings Guidance Black Hills reaffirms its expected 2012 Black Hills expects its 2013 earnings from earnings per share from continuing continuing operations, as adjusted, to be in…
2013 Earnings Guidance Assumptions Capital spending of 440 million to 470 million, including oil and gas capital expenditures of 90 million to 105 million; Normal operations and weather conditions within our utility service territories…
Strategic Overview 20 Third Quarter Review November 2012
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 DataSource 2012 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 Posting…
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 Historical and Forecasted Capital Expenditures (in millions) 490 449 205 418 371 339 339 108 201 54 97 123 342 285 285 274 217 216 2009 2010 2011 2012 E 2013 E 2014E Regulated…
Strategic Objective Earnings Growth Colorado Electric Wind Project New Wind Generation Helps Meet Renewable Portfolio Standards In Colorado Overview: Project consists of sixteen 1.8 MW turbines for total 29 MW; site is expandable…
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 42 consecutive years 1.50 Dividend yield was 4.2% on Nov. 2, 2012 1.48 1.46 1.45 1.44 1.42 1.40 Annual Dividend 1.40 1.37 Per Share 1.35 1.32 1.30 1.25 1.20…
Strategic Objectives - Credit Rating Standard and Poors and Moodys changed their credit rating outlooks for Black Hills Corporation and Black Hills Power from stable to positive during October Standard & Poors changed Black Hills…
2012 Scorecard Strategy 2012 Progress and Future Initiatives UTILITIES R Complete construction of Colorado Electric 29 MW wind project (Q4) + Acquire regulated utility properties in our geographic region T Complete CPCN process for…
Questions 32 Third Quarter Review November 2012
Appendix 33 Third Quarter Review November 2012
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 - EBITDA (in thousands) Q3 2012 Q3 2011 Income (loss) from continuing operations 34,623 (11,163) Depreciation, depletion and amortization 41,408 33,278 Interest Expense, net 25,809 22,266…
Use of Non-GAAP Financial Measures Income from Continuing Operations, as adjusted (in thousands, after-tax) Electric Gas Power Coal Oil and QTD Sept. 30, 2012 Utilities Utilities Generation Mining Gas Corporate Total Income (loss)…
Use of Non-GAAP Financial Measures Operating Income, as adjusted (in millions) Electric Gas Power Coal Oil and QTD Sept. 30, 2012 Utilities Utilities Generation Mining Gas Corporate Total Operating Income 35.1 4.6 12.0 1.0 27.4 (2.3)…
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 Natural Gas Utilities Regulated Electric and Natural Gas Utilities Serving over 765,000 customers Cheyenne Iowa Black Hills Nebraska Gas Light Power Gas Cheyenne Colorado Light Gas Kansas Gas Colorado…
Electric Utility Generation Availability(%) * Excludes KS HDD data since state has weather normalization 98.5 95.4 Q3 2012 150 Q3 2012 96.4 (Total for all gas service* areas weighted by 81.0 Q2 2012 490 Q2 2012 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 coal-fired…
Q3 2012 Non-Regulated Update IPP Generation Contract Availability (%) Coal Production Mining Cost Per Ton of Coal * Coal-fired plants (Coal in millions of tons and overburden in millions Gas-fired plants of cubic yards) Coal…
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 Most of the remaining 50% of coal production sold under contracts where sales price changes…
Oil and Gas Exploration & Development Program Note: approximate areas of geologic basins does not reflect BHEP acreage 46 Third Quarter Review November 2012
Reserve Data and Net Present Value Reserve calculations at Dec. 31, 2011 Average Average Net Oil Net Gas Net Equiv PV10 Price Oil Price Nat Gas (MBO) (BCF) (BCFE) (MM) Per BBL per MCF PDP* 4.5 68.7 95.8 220.2 89.67 3.57 PNP* 0.3…
Piceance Basin Mancos Shale Map Legend Horizontal Mancos Producing Well BHEP Piceance Basin Acreage 48 Third Quarter Review November 2012
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. Third Quarter Review November 2012
San Juan Basin Mancos Production Rosa Units are Williams wells 51 Third Quarter Review November 2012
Vision: Be the energy partner of choice. Mission: Improving life with energy. 52
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