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Investor Meetings – Black Hills Corporation

Black Hills Corporation · Jun 1, 2014 · 64 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. Investor Meetings – Black Hills Corporation – slide 1
    Investor Meetings May / June 2014
  2. Investor Meetings – Black Hills Corporation – slide 2
    Black Hills Corp. Investment Highlights Utility-centered energy company with strong earnings growth Oil and Gas provides upside growth and value creation (potential funding source for utility growth opportunities) Operational…
  3. Investor Meetings – Black Hills Corporation – slide 3
    Company Overview Pueblo Airport Generating Station near Pueblo, Colo. Investor Meetings May / June 2014 4
  4. Investor Meetings – Black Hills Corporation – slide 4
    Black Hills Corporation Today Started serving electric customers in Deadwood, SD in 1883 Incorporated Black Hills Power in 1941 Listed on NYSE in 1980 under BKH Market capitalization of approximately 2.6 billion Annual Period…
  5. Investor Meetings – Black Hills Corporation – slide 5
    Black Hills Corporation Overview A growth-oriented, vertically-integrated energy company with a tradition of exemplary service and a vision to be the energy partner of choice. Based in Rapid City, SD, the company serves 777,000 electric…
  6. Investor Meetings – Black Hills Corporation – slide 6
    Electric and Gas Utilities Black Hills Power Cheyenne Nebraska Light Gas Iowa Cheyenne Black Hills Gas Light Power Colorado Gas Kansas Colorado Gas Electric Electric Utilities* Natural Gas Utilities* Generates, transmits…
  7. Investor Meetings – Black Hills Corporation – slide 7
    Non-Regulated Energy Power Generation* Owns interests in three power generation facilities totaling 309 MW Wygen I - 69 MW of a 90 MW coal-fired facility in Gillette, WY CT II - 40 MW combustion turbine in Gillette, WY (will be sold…
  8. Investor Meetings – Black Hills Corporation – slide 8
    Q1 2014 Highlights Business Environment Colder weather in utility service territories compared to same period last year and to normal Utilities Cheyenne Prairie Generating Station construction for the 222 million natural gas- fired…
  9. Investor Meetings – Black Hills Corporation – slide 9
    Q1 2014 Highlights Utilities continued Black Hills Power retired on March 21 the Ben French, Neil Simpson I and Osage coal- fired power plants due to federal environmental regulations Colorado Electric filed request on April 30 with…
  10. Investor Meetings – Black Hills Corporation – slide 10
    Q1 2014 Highlights Oil and Gas New third party cryogenic gas processing plant with a capacity of 20 million cubic feet per day started serving our production in southern Piceance Basin on March 6 Two Mancos Shale horizontal wells in…
  11. Investor Meetings – Black Hills Corporation – slide 11
    Strategic Overview Busch Ranch Wind Farm near Pueblo, Colo. Investor Meetings May / June 2014 12
  12. Investor Meetings – Black Hills Corporation – slide 12
    Strategic Objectives Utility-centered energy company well positioned to build upon a track record of successful utility growth EARNINGS: Lead industry peers in CUSTOMER: Provide quality OPERATIONAL PERFORMANCE: ENGAGEMENT: Achieve…
  13. Investor Meetings – Black Hills Corporation – slide 13
    Capital Expenditures Historical and Forecasted Capital Expenditures (in millions)* 490 441 416 369 385 205 340 127 341 199 84 134 127 133 285 285 314 217 213 251 208 2010 2011 2012 2013 2014F 2015F 2016F Regulated…
  14. Investor Meetings – Black Hills Corporation – slide 14
    Capital Investment by Segment (in millions) 2009 2010 2011 2012 2013 2014F 2015F 2016F Generation 168 146 85 72 130 92 42 58 Transmission 21 28 20 38 32 64 38 14 Other 53 59 68 57 60 95 109 89 Subtotal Electric Utilities 242 233…
  15. Investor Meetings – Black Hills Corporation – slide 15
    Select Major Utility Projects Forecasted Capital Expenditures * Projected Excludes routine capital expenditures for maintenance of assets In-service 2016F (in millions) Date 2013 2014F 2015F - 2018F Total** Utilities Cheyenne Light…
  16. Investor Meetings – Black Hills Corporation – slide 16
    Cheyenne Prairie Generating Station New Generation Helps Meet Growing Demand and New Environmental Regulations Overview: New 222 million, 132 MW generating plant jointly owned by Cheyenne Light and Black Hills Power being built in…
  17. Investor Meetings – Black Hills Corporation – slide 17
    Oil and Gas Strategy Prove up and capture value of existing oil and gas properties Prove up probable and possible reserves Capture value through optionality Pursue disciplined oil exploration, appraisal and development program…
  18. Investor Meetings – Black Hills Corporation – slide 18
    Dividend Growth Dividend Increased for 44 Consecutive Years 1.60 Dividend yield was 2.7% on March 31, 2014* 1.56 1.55 1.52 1.50 1.48 1.46 Annual Dividend 1.45 1.44 Per Share 1.42 1.40 1.35 1.30 1.25 1.20 2009…
  19. Investor Meetings – Black Hills Corporation – slide 19
    Credit Rating Moodys Investors Service on Jan. 30, 2014, upgraded its corporate credit rating on Black Hills Corp. to Baa1 from Baa2 and Black Hills Powers corporate credit rating and senior secured debt rating to A3 and A1,…
  20. Investor Meetings – Black Hills Corporation – slide 20
    Operating Performance Power Plant Fleet Availability by Fuel Type Natural Gas Turbine Starting Reliability 100% 100% BHC Industry BHC Industry 95% 96% 90% 85% 92% 80% 88% 75% 70% 84% 65% 60% 80% Coal Gas Diesel Wind…
  21. Investor Meetings – Black Hills Corporation – slide 21
    Utilities Regulatory Update Filing Utility & Filing Description* 2013 2014 2015 Status Date CPGS - 2.8MM BHP request, 53%/47%, Q1 2014 Approval before Q4 2014 Rate case WY 10.25% ROE CPGS - 14.6MM BHP Interim rates in Q4 2014…
  22. Investor Meetings – Black Hills Corporation – slide 22
    Operating Performance 2012 IEEE Reliability Benchmarking Study Total Annual Outage Minutes AGA Energy Analysis 2012 Performance Benchmarks for Gas Utilities Represents average outage in minutes per customer, per year based on…
  23. Investor Meetings – Black Hills Corporation – slide 23
    Operating Performance Black Hills Exploration & Production Safety Performance Investor Meetings May / June 2014 24
  24. Investor Meetings – Black Hills Corporation – slide 24
    Financial Update Elmo Bailey & Ebi Kazemi prepare for pole line installation in the mountains near Victor, Colo. Investor Meetings May / June 2014 25
  25. Investor Meetings – Black Hills Corporation – slide 25
    Earnings Per Share Analysis Q1-2014 Q4-2013 Q3-2013 Q2-2013 Q1-2013 Net Income (loss) (GAAP) 1.08 0.41 0.52 0.69 0.97 Loss (income) from discontinued operations (GAAP) - 0.02 - - - Income (loss) from continuing operations (GAAP)…
  26. Investor Meetings – Black Hills Corporation – slide 26
    Income Statement (in millions, except earnings per share) 1st Qtr 2014 2013 Revenue 460.2 380.7 Gross margin* 229.7 212.5 Operating expense (104.0) (97.9) DD&A (36.1) (34.8) Operating Income 89.6 79.8 Interest expense (16.9)…
  27. Investor Meetings – Black Hills Corporation – slide 27
    Q1 Revenue/Op Income Total Revenue, as adjusted* (in millions) Total Operating Income, as adjusted* (in millions) 460 89.6 381 79.8 Q1 2014 Q1 2013 Q1 2014 Q1 2013 182 36.0 Electric Util Electric Util 163 34.9 259 42.9…
  28. Investor Meetings – Black Hills Corporation – slide 28
    Operating Income and EPS, as Adjusted (in millions, except per share amounts) 350 3.00 2009 2013 EPS CAGR = 15.4% 300 2.45 2.50 2.09 250 36.1 2.00 36.2 1.67 1.69 200 1.38 5.2 1.50 19.0 150 19.9 1.00 210.4 219.8 100…
  29. Investor Meetings – Black Hills Corporation – slide 29
    Capital Structure (In millions, except for ratios) March 31, Dec. 31, Sept. 30, June 30, March 31, 2014 2013 2013 2013 2013 Capitalization Short-term Debt 100 83 394 356 350 Long-term Debt 1,397 1,397 956 959 937 Total Debt 1,497…
  30. Investor Meetings – Black Hills Corporation – slide 30
    2014 Scorecard Strategy Construct cost effective rate-base Construct additional utility Achieve top-tier operational Be the safest company in the energy generation and transmission to serve infrastructure that supports growing…
  31. Investor Meetings – Black Hills Corporation – slide 31
    Questions Investor Meetings May / June 2014 32
  32. Investor Meetings – Black Hills Corporation – slide 32
    Appendix Dory Batka and Jerry Likewise monitor the energy supply at our Neil Simpson Complex in Gillette, Wyo. Investor Meetings May / June 2014 33
  33. Investor Meetings – Black Hills Corporation – slide 33
    Black Hills Corporation History Originating company started in Deadwood in 1883 (131 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…
  34. Investor Meetings – Black Hills Corporation – slide 34
    Black Hills Organizational Structure Investor Meetings May / June 2014 35
  35. Investor Meetings – Black Hills Corporation – slide 35
    Electric Utility Generation Availability(%) * Excludes KS HDD data since state has weather normalization 78.1 Q1 2014 95.5 3,524 Q1 2014 96.1 Q4 2013 (Total for all gas service* areas weighted by 96.4 2,695 Q4 2013 Gas…
  36. Investor Meetings – Black Hills Corporation – slide 36
    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…
  37. Investor Meetings – Black Hills Corporation – slide 37
    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…
  38. Investor Meetings – Black Hills Corporation – slide 38
    Pueblo Airport Generating Station Colorado Electrics 180 MW Generation Project completed on Dec. 31, 2011 Two 90 MW simple cycle natural gas-fired turbines Colorado IPPs Non-Regulated 200 MW Generation Project completed on Dec. 31,…
  39. Investor Meetings – Black Hills Corporation – slide 39
    Estimated Utility Rate Base Estimated Rate Base* by Utility Segment 2010 2011 2012 2013 (in millions) Electric Utilities 901 1,007 1,272 1,248 Gas Utilities 425 443 450 454 Total 1,326 1,450 1,722 1,702 * Estimated rate base…
  40. Investor Meetings – Black Hills Corporation – slide 40
    Mitigating Regulatory Recovery Risk Mechanisms reduce regulatory lag and the risk of non-recovery Electric Utility Cost Recovery Mechanisms Jurisdiction Environmental DSM/ Trans- Fuel Cost Trans- Purchased Fixed Cost Financing Cost…
  41. Investor Meetings – Black Hills Corporation – slide 41
    Utility Regulatory Results Authorized Electric Effective Return on Rate Base Jurisdiction Or Gas Date Equity Capital Structure (in millions) BHP-SD Electric 6/16/2013 Global Settlement Global Settlement 440.2 BHP-WY Electric…
  42. Investor Meetings – Black Hills Corporation – slide 42
    Q1 2014 Non-Regulated Update IPP Generation Contract Availability (%) Coal Production Revenue and Expense per Ton Sold (Coal in millions of tons and overburden in millions (Units = tons sold plus cubic yards of overburden Coal-fired…
  43. Investor Meetings – Black Hills Corporation – slide 43
    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…
  44. Investor Meetings – Black Hills Corporation – slide 44
    Oil & Gas Exploration & Development Program Note: approximate areas of geologic basins does not reflect BHEP acreage Investor Meetings May / June 2014 45
  45. Investor Meetings – Black Hills Corporation – slide 45
    Reserve Data and Net Present Value Reserve calculation at Dec. 31, 2013 Average Average Net Oil Net Gas Net Equiv PV10 Price Oil Price Nat Gas (MMBO)** (BCF)** (BCFE)** (MM) Per BBL per MCF PDP* 3.7 55.1 77.1 163.5 89.88 3.26 PNP*…
  46. Investor Meetings – Black Hills Corporation – slide 46
    Oil and Gas Mancos Shale Strategy Three successful test wells drilled in 2011 affirmed potential in San Juan and southern Piceance Basins; Further delineation drilling required to fully assess value Two wells drilled and completed in…
  47. Investor Meetings – Black Hills Corporation – slide 47
    Southern Piceance Basin Western Colorado Investor Meetings May / June 2014 48
  48. Investor Meetings – Black Hills Corporation – slide 48
    Southern Piceance Basin Mancos Drilling Program 2013-2015 WHF DHS 3C-19 WHF DHS 3C-20 Investor Meetings May / June 2014 49
  49. Investor Meetings – Black Hills Corporation – slide 49
    Southern Piceance Basin Mancos Production Piceance Basin Type Curve 10,000 10,000' Lateral Type Curve 9.5 BCFE GAS, Mcf/D 5,000' Lateral Type Curve 5.4 BCFE 1,000 100 1 11 21 31 41 51 61 MONTHS Note: Predicted…
  50. Investor Meetings – Black Hills Corporation – slide 50
    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 Investor Meetings May / June 2014 51
  51. Investor Meetings – Black Hills Corporation – slide 51
    San Juan Basin Mancos Production Production Rates in Mcf/D 100,000 10,000 Gas Flow in Mcf/D EUR 6.9 BCFE 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…
  52. Investor Meetings – Black Hills Corporation – slide 52
    In Millions 0 100 200 300 400 600 500 2014 2015 275MM Term Loan 2016 2017 75MM Investor Meetings May / June 2014 2018 2019 2020 200MM 5.88% Note Debt Maturities 2021 CLFP Industrial Revenue Bond…
  53. Investor Meetings – Black Hills Corporation – slide 53
    Use of Non-GAAP Financial Measures Gross Margin Our financial information includes the financial measure Gross Margin, which is considered a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a…
  54. Investor Meetings – Black Hills Corporation – slide 54
    Use of Non-GAAP Financial Measures Segment Revenue, Operating Income, Income from Continuing Operations and EPS, as adjusted We have provided non-GAAP earnings data reflecting adjustments for special items as specified in the GAAP to…
  55. Investor Meetings – Black Hills Corporation – slide 55
    Use of Non-GAAP Financial Measures Revenue, as adjusted Electric Power QTD March 31, 2014 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Revenue 178,095 259,337 1,269 6,618 14,850 - 460,169…
  56. Investor Meetings – Black Hills Corporation – slide 56
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Electric Power QTD March 31, 2014 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Operating income (loss) (GAAP)…
  57. Investor Meetings – Black Hills Corporation – slide 57
    Use of Non-GAAP Financial Measures Operating Income, as adjusted Electric Power YTD Dec. 31, 2013 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Operating income (loss) (GAAP) 133,595 76,772 47,760 5,586…
  58. Investor Meetings – Black Hills Corporation – slide 58
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Electric Power YTD Dec. 31, 2011 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Operating income (loss) (GAAP)…
  59. Investor Meetings – Black Hills Corporation – slide 59
    Use of Non-GAAP Financial Measures Income from Continuing Operations, as adjusted (in thousands, after-tax) Electric Power QTD March 31, 2014 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Income (Loss)…
  60. Investor Meetings – Black Hills Corporation – slide 60
    Use of Non-GAAP Financial Measures EBITDA For the Three Months Ended Mar. 31, (in thousands) 2014 2013 Income from continuing operations 48,118 43,197 Depreciation, depletion and amortization 36,083 34,781 Interest expense,…
  61. Investor Meetings – Black Hills Corporation – slide 61
    Use of Non-GAAP Financial Measures Depreciation, Depletion & Amortization, adjusted for Intercompany Capital Lease* (in thousands, pre-tax) Regulated Non-Regulated Corporate Electric Total Power Total Non- YTD Dec. 31, 2013…
  62. Investor Meetings – Black Hills Corporation – slide 62
    Use of Non-GAAP Financial Measures EPS, as adjusted 2009 2010 2011 2012 2013 Net income (GAAP) 2.11 1.76 1.24 1.85 2.59 Discontinued Operations (0.11) (0.14) (0.23) 0.16 0.02 Income from continuing operations (GAAP) 2.00 1.62 1.01…
  63. Investor Meetings – Black Hills Corporation – slide 63
  64. Investor Meetings – Black Hills Corporation – slide 64
    To see more ways we are improving life with energy visit us at www.blackhillscorp.com.

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