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MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation

Black Hills Corporation · May 5, 2013 · 55 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. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 1
    2013 AGA Financial Forum May 5 - 7, 2013
  2. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 2
    Discussion Agenda Company Overview Financial Review Strategic Objectives Q&A 3 2013 AGA Financial Forum May 5 - 7, 2013
  3. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 3
    Company Overview 4 2013 AGA Financial Forum May 5 - 7, 2013 Pueblo Airport Generating Station
  4. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 4
    Black Hills Corporation Today Black Hills Power & Light incorporated Average 3 - month trading volume 1941 approx. 209,000 shares daily Listed on NYSE since 1980, trading Increased annual dividend for 43 under symbol BKH consecutive…
  5. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 5
    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…
  6. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 6
    Electric and Gas Utilities Regulated Electric and Gas Utilities Serving over 769,000 customers Cheyenne Iowa Black Hills Nebraska Gas Light Power Gas Cheyenne Colorado Light Gas Kansas Gas Colorado Electric Electric…
  7. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 7
    Non-Regulated Energy Power Generation* Coal Mining* Serves as fuel supply to adjacent mine mouth electric power Ownership in three power generation facilities totaling 309 MW generation customers Wygen I - 69 MW of a 90 MW…
  8. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 8
    Q1 2013 Highlights Business Environment Slightly colder-than-normal weather in utility service territories this year compared to substantially warmer-than-normal weather in same period last year Significant rebound in natural gas…
  9. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 9
    Q1 2013 Highlights Utilities continued Black Hills Power request filed with South Dakota Public Utilities Commission in Dec. 2012 for 9.94%, or 13.7 million, increase in annual electric revenue Interim rates, subject to refund,…
  10. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 10
    Q1 2013 Highlights Power Generation Currently reviewing options for CT II, a 40 MW, natural gas-fired turbine located at Gillette Energy Complex; contract with Cheyenne Light expires in Aug. 2014 Oil and Gas Drilling first of two…
  11. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 11
    Financial Review 2013 AGA Financial Forum May 5 - 7, 2013
  12. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 12
    Earnings Per Share Analysis Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Net Income (loss) 0.97 0.70 0.78 (0.31) 0.68 Loss (income) from discontinued operations - - - 0.03 0.12 Income (loss) from continuing ops 0.97 0.70 0.78 (0.28)…
  13. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 13
    Income Statement (in millions, except earnings per share) 1st QTR Comments 2013 2012 Revenue 380.7 365.9 Weather, higher nat gas prices, new rates, financing rider Gross margin 212.5 208.7 Weather, new rates, financing rider…
  14. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 14
    Q1 Revenue/Op Income Summary Total Revenue Electric Util 162.6 (in millions) 159.2 380.7 199.9 365.9 Gas Util 180.5 20.8 Power Gen* 20.0 Q1 2013 13.6 Q1 2012 Coal Mining 15.0 15.3 Oil & Gas 21.6 (31.5) Corporate, including…
  15. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 15
    Growth Operating Income and EPS, as Adjusted* (in millions, except per share amount) 300.0 2.30 2.40 2.09 2009 2013 EPS CAGR = 13.6% 250.0 2.00 36.2 1.67 1.69 200.0 1.60 5.2 1.38 19.0 150.0 1.20 19.9 100.0 210.4 0.80…
  16. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 16
    Capital Structure (In millions, except for ratios) March 31, Dec. 31, Sept. 30, June 30, March 31, 2013 2012 2012 2012 2012 Capitalization Short-term Debt 349.6 381.0 553.3 452.6 234.0 Long-term Debt 936.5 938.9 943.0 1,044.9…
  17. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 17
    Debt Maturities Long-term Debt Maturities by Year 300 250 200 In Millions 150 100 50 0 18 2013 AGA Financial Forum May 5 - 7, 2013
  18. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 18
    Strategic Overview 19 2013 AGA Financial Forum May 5 - 7, 2013 Busch Ranch wind farm south of Pueblo, CO
  19. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 19
    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…
  20. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 20
    Strategic Objective Operating Performance Electric Reliability Safety Performance Total Annual Outage Minutes BHC Represents average outage in minutes per customer, per year - based on 2011 data TCIR is defined as the…
  21. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 21
    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…
  22. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 22
    Strategic Objective Operating Performance Generation Capacity by Fuel Type Generation Capacity by Fuel Type 1,200 80% % of Generation by Fuel type 1,000 70% MW of Generation 60% 800 50% 600 40% 30% 400 20% 200 10% 0…
  23. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 23
    Strategic Objective Earnings Growth Historical and Forecasted Capital Expenditures (in millions)* 490 452 416 384 339 205 340 108 199 95 287 54 127 116 344 285 285 289 217 213 171 2009 2010 2011 2012 2013E 2014E 2015E *…
  24. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 24
    Strategic Objective Earnings Growth Capital Investments by Segment Historical and Forecasted Capital Expenditures (in millions) 2009 2010 2011 2012 2013E* 2014E* 2015E* Generation 168 146 85 72 151 82 30 Transmission 21 28 20 38 36…
  25. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 25
    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…
  26. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 26
    Strategic Objective Earnings Growth Utilities - Regulatory Updates Black Hills Power General rate case filed in South Dakota in Dec. 2012 asking for 13.7 million in annual revenue; public hearing scheduled for Oct. 8-11; interim…
  27. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 27
    Strategic Objective Earnings Upside Oil and Gas Growth Strategy Demonstrate value of existing oil and gas properties Prove up probable and possible reserves Capture value through optionality Participate in limited exploration…
  28. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 28
    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…
  29. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 29
    Strategic Objectives - Credit Rating Standard & Poors and Moodys changed their ratings outlook for Black Hills Corporation from stable to positive in October, 2012 Standard & Poors changed Black Hills Corporations business risk…
  30. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 30
    Strategic Objective - Dividend Growth Increased for 43 consecutive years 1.55 Dividend yield was 3.2% on April 30, 2013 1.52 1.50 1.48 1.46 1.45 1.44 Annual Dividend 1.42 1.40 Per Share 1.40 1.35 1.30 1.25 1.20…
  31. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 31
    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…
  32. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 32
    Questions 33 BHP employees Jared Shear and Derek Silbaugh at Wygen III in Gillette, WY
  33. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 33
    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, income taxes, depreciation and amortization (EBITDA) and EBITDA, as…
  34. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 34
    Use of Non-GAAP Financial Measures Revenue, as Adjusted Power Generation Electric Gas Power Coal Oil and Inter-co Lease Other Inter- Q1 2013 Revenue, as Adjusted Utilities Utilities Generation Mining Gas Corporate Elim co Elims Total…
  35. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 35
    Use of Non-GAAP Financial Measures - EBITDA (in millions) Q1 2013 Q1 2012 Income from continuing operations 43.2 35.3 Depreciation, depletion and amortization 34.8 38.6 Interest expense, net 23.0 28.7 Unrealized gain on certain…
  36. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 36
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Electric Power QTD March 31, 2013 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Operating income (loss) 32,508…
  37. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 37
    Appendix 38 2013 AGA Financial Forum May 5 - 7, 2013 BHP line mechanics Rapid City, SD
  38. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 38
    Black Hills Corporation History Originating company started in Deadwood in 1883 (130 years ago) Company was soon sold to new investors to introduce lights into all the towns and cities of the Hills and the name Black Hills Electric…
  39. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 39
    Black Hills Organizational Structure 40 2013 AGA Financial Forum May 5 - 7, 2013
  40. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 40
    Electric Utility Generation Availability(%) * Excludes KS HDD data since state has weather normalization 98.6 Q1 2013 96.9 3,306 Q1 2013 97.2 (Total for all gas service* areas weighted by Q4 2012 2,345 Q4 2012 95.6…
  41. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 41
    Siting Synergies Multiple generation sites with expansion potential along the Front Range Shared staff, facilities, land, infrastructure Each location has advantageous fuel supply logistics and/or wind potential Reduces asset…
  42. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 42
    Gillette Energy Complex Value proposition through integrated approach Coal production, generation, transmission utility and non-regulated assets Shared staff, facilities, land and infrastructure Wyodak Mine Wyodak Plant…
  43. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 43
    Pueblo Airport Generating Station 2012 Earnings Growth Driven By New Natural Gas-Fired Generation Projects that Started Serving Colorado Utility Customers on Jan. 1, 2012 Colorado Electrics 180 MW Generation Project completed on Dec.…
  44. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 44
    Rate Case Activity Jurisdiction Effective Revenue Return on Cap Status Date Increase Equity Structure BHE-CO Gas 12/10/2012 0.2 million 9.6% 50% debt/ Complete 50% equity CLF&P 7/1/2012 4.3 million 9.6% 46% debt/ Complete Electric…
  45. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 45
    Mitigating Regulatory Recovery Risk Mechanisms reduce regulatory lag and the risk of non-recovery Electric Utility Cost Recovery Mechanisms Jurisdiction Environm DSM/ Trans- Fuel Cost Trans- Purchased Fixed Cost Financing ental Cost…
  46. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 46
    Q1 2013 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…
  47. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 47
    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…
  48. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 48
    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…
  49. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 49
    Oil and Gas Exploration & Development Program Note: approximate areas of geologic basins does not reflect BHEP acreage 50 2013 AGA Financial Forum May 5 - 7, 2013
  50. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 50
    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…
  51. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 51
    Piceance Basin Mancos Shale Map Legend Horizontal Mancos Producing Well BHEP Piceance Basin Acreage 52 2013 AGA Financial Forum May 5 - 7, 2013
  52. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 52
    Piceance Basin Mancos Production Piceance Basin 100,000 10,000 GAS FLOW in Mcf/D 1,000 100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45…
  53. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 53
    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. 2013 AGA Financial Forum May 5 - 7, 2013
  54. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 54
    San Juan Basin Mancos Production Rosa Units are Williams wells 55 2013 AGA Financial Forum May 5 - 7, 2013
  55. MAY 2013 AMERICAN GAS ASSOCIATION FINANCIAL FORUM – Black Hills Corporation – slide 55
    Vision: Be the energy partner of choice. Mission: Improving life with energy.

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