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First Quarter Earnings – Black Hills Corporation

Black Hills Corporation · May 2, 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. First Quarter Earnings – Black Hills Corporation – slide 1
    First Quarter Earnings May 2, 2014
  2. First Quarter Earnings – Black Hills Corporation – slide 2
    Discussion Agenda First 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 2014 First…
  3. First Quarter Earnings – Black Hills Corporation – slide 3
    Q1 Review Pueblo Airport Generating Station near Pueblo, Colo. 2014 First Quarter Review - May 2, 2014 4
  4. First Quarter Earnings – Black Hills Corporation – slide 4
    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…
  5. First Quarter Earnings – Black Hills Corporation – slide 5
    Q1 2014 Highlights Utilities continued Cheyenne Light filed requests on Dec. 2 with Wyoming Public Service Commission to increase annual electric and natural gas revenue by 14.1 million to recover increased operating expenses and…
  6. First Quarter Earnings – Black Hills Corporation – slide 6
    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…
  7. First Quarter Earnings – Black Hills Corporation – slide 7
    Q1 2014 Financial Highlights 24% Growth in EPS, as adjusted Earnings, as adjusted* (in millions) (per share) Key Earnings Drivers 48 1.08 Favorable weather for Gas Utilities 38 Improved electric rates and riders 0.87 Increased…
  8. First Quarter Earnings – Black Hills Corporation – slide 8
    Q1 2014 Financial Highlights Change in Net Income, as adjusted*, from Prior Year Q1 2013 38.4 2.2 Electric Utilities 6.2 Gas Utilities 2.3 Power Generation 1.4 Coal Mining (2.0) Oil & Gas (0.4) Corporate Q1 2014 48.1…
  9. First Quarter Earnings – Black Hills Corporation – slide 9
    Financial Update Elmo Bailey & Ebi Kazemi prepare for pole line installation in the mountains near Victor, Colo. 2014 First Quarter Review - May 2, 2014 10
  10. First Quarter Earnings – Black Hills Corporation – slide 10
    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)…
  11. First Quarter Earnings – Black Hills Corporation – slide 11
    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…
  12. First Quarter Earnings – Black Hills Corporation – slide 12
    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)…
  13. First Quarter Earnings – Black Hills Corporation – slide 13
    Q1 Utilities - Revenue/Op Income Electric Utilities (in millions) Gas Utilities (in millions) 182 259 163 Q1 2014 200 Q1 2014 Q1 2013 Q1 2013 36.0 34.9 42.9 36.0 Revenue Operating Income, as Revenue Operating Income, as…
  14. First Quarter Earnings – Black Hills Corporation – slide 14
    Q1 Non-Regulated Energy - Revenue/Op Income Power Generation (in millions) Coal Mining (in millions) 23 21 Q1 2014 16 Q1 2014 Q1 2013 14 Q1 2013 10.7 8.8 2.7 0.6 Revenue* Operating Income, as Revenue Operating Income, as…
  15. First Quarter Earnings – Black Hills Corporation – slide 15
    Q1 Non-Regulated Energy - Revenue/Op Income Oil & Gas (in millions) 15 15 Q1 2014 Q1 2013 (2.9) (0.3) Revenue Operating Income, as adjusted * Higher natural gas and NGL volumes Higher average prices received for crude…
  16. First Quarter Earnings – Black Hills Corporation – slide 16
    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…
  17. First Quarter Earnings – Black Hills Corporation – slide 17
    Earnings Guidance The company raised its expected 2014 net income, as adjusted, to be in the range of 2.65 to 2.85 per share; the increased guidance range is based on first quarter performance and the assumptions listed below: Capital…
  18. First Quarter Earnings – Black Hills Corporation – slide 18
    Operating Income and EPS, as Adjusted (in millions, except per share amounts) 350 3.00 2.75 ** 2009 2014 EPS CAGR = 14.8% 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…
  19. First Quarter Earnings – Black Hills Corporation – slide 19
    Strategic Overview Busch Ranch Wind Farm near Pueblo, Colo. 2014 First Quarter Review - May 2, 2014 20
  20. First Quarter Earnings – Black Hills Corporation – slide 20
    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…
  21. First Quarter Earnings – Black Hills Corporation – slide 21
    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…
  22. First Quarter Earnings – Black Hills Corporation – slide 22
    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…
  23. First Quarter Earnings – Black Hills Corporation – slide 23
    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…
  24. First Quarter Earnings – Black Hills Corporation – slide 24
    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…
  25. First Quarter Earnings – Black Hills Corporation – slide 25
    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…
  26. First Quarter Earnings – Black Hills Corporation – slide 26
    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…
  27. First Quarter Earnings – Black Hills Corporation – slide 27
    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,…
  28. First Quarter Earnings – Black Hills Corporation – slide 28
    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…
  29. First Quarter Earnings – Black Hills Corporation – slide 29
    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…
  30. First Quarter Earnings – Black Hills Corporation – slide 30
    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…
  31. First Quarter Earnings – Black Hills Corporation – slide 31
    Operating Performance Black Hills Exploration & Production Safety Performance 2014 First Quarter Review - May 2, 2014 32
  32. First Quarter Earnings – Black Hills Corporation – slide 32
    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…
  33. First Quarter Earnings – Black Hills Corporation – slide 33
    Questions 2014 First Quarter Review - May 2, 2014 34
  34. First Quarter Earnings – Black Hills Corporation – slide 34
    Appendix Dory Batka and Jerry Likewise monitor the energy supply at our Neil Simpson Complex in Gillette, Wyo. 2014 First Quarter Review - May 2, 2014 35
  35. First Quarter Earnings – Black Hills Corporation – slide 35
    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…
  36. First Quarter Earnings – Black Hills Corporation – slide 36
    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…
  37. First Quarter Earnings – Black Hills Corporation – slide 37
    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…
  38. First Quarter Earnings – Black Hills Corporation – slide 38
    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…
  39. First Quarter Earnings – Black Hills Corporation – slide 39
    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…
  40. First Quarter Earnings – Black Hills Corporation – slide 40
    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…
  41. First Quarter Earnings – Black Hills Corporation – slide 41
    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…
  42. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – Black Hills Corporation – slide 44
    Oil & Gas Exploration & Development Program Note: approximate areas of geologic basins does not reflect BHEP acreage 2014 First Quarter Review - May 2, 2014 45
  45. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – Black Hills Corporation – slide 47
    Southern Piceance Basin Western Colorado 2014 First Quarter Review - May 2, 2014 48
  48. First Quarter Earnings – Black Hills Corporation – slide 48
    Southern Piceance Basin Mancos Drilling Program 2013-2015 WHF DHS 3C-19 WHF DHS 3C-20 2014 First Quarter Review - May 2, 2014 49
  49. First Quarter Earnings – 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. First Quarter Earnings – 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 2014 First Quarter Review - May 2, 2014 51
  51. First Quarter Earnings – 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. First Quarter Earnings – Black Hills Corporation – slide 52
    In Millions 0 100 200 300 400 600 500 2014 2015 275MM Term Loan 2016 2017 75MM 2018 2014 First Quarter Review - May 2, 2014 2019 2020 200MM 5.88% Note Debt Maturities 2021 CLFP Industrial Revenue Bond…
  53. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – 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. First Quarter Earnings – Black Hills Corporation – slide 63
  64. First Quarter Earnings – 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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