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February 2016 Investor Meetings – Black Hills Corporation

Black Hills Corporation · Feb 12, 2016 · 58 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. February 2016 Investor Meetings – Black Hills Corporation – slide 1
    Investor Meetings February 2016
  2. February 2016 Investor Meetings – Black Hills Corporation – slide 2
    Black Hills Corporation Today Legacy company started serving electric customers in Deadwood, South Dakota in 1883 Black Hills Power & Light incorporated 1941 BHC listed on NYSE in 1980 under symbol BKH Market capitalization of…
  3. February 2016 Investor Meetings – Black Hills Corporation – slide 3
    Company Overview Cheyenne Prairie Generating Station Cheyenne, Wyoming Investor Meetings February 2016 5
  4. February 2016 Investor Meetings – Black Hills Corporation – slide 4
    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, South Dakota, the company serves…
  5. February 2016 Investor Meetings – Black Hills Corporation – slide 5
    Recent Company Highlights Utilities Black Hills Power received final approval from the Wyoming Public Service Commission to begin construction on first segment of new 144-mile, 54 million electric transmission line from northeastern…
  6. February 2016 Investor Meetings – Black Hills Corporation – slide 6
    Recent Company Highlights Non-Regulated On Feb 12, 2016, announced 215 million sale of a 49.9% member equity interest in Black Hills Colorado IPP, which owns a 200-megawatt, combined-cycle, natural gas-fired generating plant; sale to…
  7. February 2016 Investor Meetings – Black Hills Corporation – slide 7
    Acquisition Closed in First Quarter 2016 Transaction Summary Closed acquisition of SourceGas Holdings LLC on Feb. 12, 2016 Total purchase price of 1.89 billion, subject to customary closing adjustments Obtained settlement agreements…
  8. February 2016 Investor Meetings – Black Hills Corporation – slide 8
    Acquisition Financing Equity and Equity-linked Securities Issued 6.325 million common shares for net proceeds of 246 million issued on Nov. 23, 2015 5.98 million in three-year mandatory convertible equity units for net proceeds of…
  9. February 2016 Investor Meetings – Black Hills Corporation – slide 9
    Sale of Minority Interest in Black Hills Colorado IPP Transaction Summary On Feb. 12, 2016, announced sale of a 49.9 percent member equity interest in Colorado IPP for 215 million; closing expected around April 1 pending FERC approval…
  10. February 2016 Investor Meetings – Black Hills Corporation – slide 10
    Strategic Overview Busch Ranch Wind Farm near Pueblo, Colorado Investor Meetings February 2016 16
  11. February 2016 Investor Meetings – Black Hills Corporation – slide 11
    Capital Expenditures Historical and Forecasted Capital Expenditures (includes SourceGas 2016-2018) (in millions) 561 600 24 442 422 500 449 537 23 382 18 400 340 369 177 419 404 84 118 300 127 285 272 200 264 213 100 0…
  12. February 2016 Investor Meetings – Black Hills Corporation – slide 12
    Capital Investment by Segment (in millions) 2011 2012 2013 2014 2015A 2016F 2017F 2018F Generation 85 72 130 75 67 142 17 14 Transmission 20 38 32 31 35 71 40 44 Distribution 44 44 48 87 54 40 42 49 Other 24 13 12 0 46 71 42 41 Subtotal…
  13. February 2016 Investor Meetings – Black Hills Corporation – slide 13
    Pueblo Airport Generating Station Overview: New 65 million, 40-megawatt, natural gas-fired combustion turbine for Colorado Electric at existing Pueblo Airport Generating Station; expect turbine to be in service by end of 2016…
  14. February 2016 Investor Meetings – Black Hills Corporation – slide 14
    Peak View Wind Project Overview: New 109 million, 60-megawatt wind generating project for Colorado Electric adjacent Existing BHCOE to existing Busch Ranch Wind Project Busch Ranch Wind Project Milestones: Executed Build Transfer…
  15. February 2016 Investor Meetings – Black Hills Corporation – slide 15
    Resource Planning Update Load Growth Strong Industrial Load Growth of 15 Percent for Electric Utilities in 2015 Cheyenne Light, Fuel & Power up 30 percent, Black Hills Power up 7 percent and Colorado Electric up 9 percent Cheyenne…
  16. February 2016 Investor Meetings – Black Hills Corporation – slide 16
    Utility Growth Opportunity COSG* Cost of service gas program - potential for direct investment in natural gas reserves provides long-term price stability for customers, while providing opportunities for increased earnings Submitted…
  17. February 2016 Investor Meetings – Black Hills Corporation – slide 17
    Oil and Gas Strategy In July 2015, announced strategy to transition Oil and Gas to primarily support cost of service gas (COSG) program to provide stable-priced, low cost fuel to utility customers. Completed 2014/2015 Mancos shale…
  18. February 2016 Investor Meetings – Black Hills Corporation – slide 18
    Dividend Growth Dividend Increased for 46 Consecutive Years Dividend yield 3.2% on Feb. 10, 2016 1.70 1.68* 1.65 1.62 1.60 1.56 Annual Dividend 1.55 1.52 Per Share 1.50 1.48 1.46 1.45 1.44 1.42 1.40 1.35 1.30…
  19. February 2016 Investor Meetings – Black Hills Corporation – slide 19
    Credit Rating In July 2015, following announcement of SourceGas acquisition, all three credit rating agencies reaffirmed their ratings; Moodys and Fitch adjusted outlook to negative Change to negative outlook reflects uncertainties…
  20. February 2016 Investor Meetings – Black Hills Corporation – slide 20
    Earnings Per Share Analysis Q4 2015* Q3 2015 Q2 2015 Q1 2015 Q4 2014 2015* 2014 Net Income (loss) (GAAP) (0.30) (0.22) (0.94) 0.76 0.77 (0.71) 2.93 Add back unique loss/subtract (gain) items (non-GAAP) Asset impairment (Oil & Gas…
  21. February 2016 Investor Meetings – Black Hills Corporation – slide 21
    Income Statement (in millions, except earnings per share) 4th Qtr Full Year 2015 2014 2015 2014 Revenue 318.3 378.1 1,304.6 1,393.6 Gross Margin 212.1 212.8 847.7 811.8 Operating Expenses (100.0) (105.0) (409.3) (403.3) DD&A (38.6)…
  22. February 2016 Investor Meetings – Black Hills Corporation – slide 22
    2015 Revenue/Op Income Total Revenue, as adjusted* (in millions) Total Operating Income, as adjusted* (in millions) 1,394 1,305 283.0 263.8 2015 2014 2015 2014 724 182.7 Electric Util Electric Util 697 146.6 507 72.8…
  23. February 2016 Investor Meetings – Black Hills Corporation – slide 23
    Commodity Price Impacts on Ceiling Test Crude Oil Natural Gas Nat Gas Prices (HH per Million Btu) 110 6 Crude Oil Price (WTI - per barrel) 100 5 90 80 4 70 60 3 50 2 40 30 1 Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec…
  24. February 2016 Investor Meetings – Black Hills Corporation – slide 24
    2016 Earnings Guidance Black Hills revised its guidance range for 2016 earnings, as adjusted, to 2.90 to 3.10 per share from the range of 2.40 to 2.60 per share* most recently announced on Feb. 3, 2016. The revised guidance range reflects…
  25. February 2016 Investor Meetings – Black Hills Corporation – slide 25
    2017 Earnings Guidance Black Hills initiates guidance for 2017 earnings, as adjusted, of 3.35 to 3.65 per share* based on the following key assumptions: Includes a full year of the SourceGas acquisition; Includes full year impact of…
  26. February 2016 Investor Meetings – Black Hills Corporation – slide 26
    Creating Shareholder Value Operating Income and EPS, as Adjusted 450 ** 3.50 3.70 2009 2017 EPS CAGR = 12.3% 3.30 400 ** 3.00 2.93 2.98 2.90 350 2.50 2.50 300 2.21 31.0 2.10 250 1.78 1.79 40.0 39.3 44.8 1.70 1.38 200…
  27. February 2016 Investor Meetings – Black Hills Corporation – slide 27
    Capital Structure (In millions, except for ratios) Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, 2015 2015 2015 2015 2014 Capitalization Short-term Debt 77 118 106 103 350 Long-term Debt 1,867 1,568 1,568 1,543 1,268 Total Debt 1,944…
  28. February 2016 Investor Meetings – Black Hills Corporation – slide 28
    Future Financing Overview Debt 1.3 billion of long term debt maturing by 2019 Entered into 400 million in 10-year interest rate swaps during current low-rate environment to mitigate interest rate risk of future refinancing Currently…
  29. February 2016 Investor Meetings – Black Hills Corporation – slide 29
    Future Financing Overview Long-term Debt Maturities by Year 1,000 900 5.9% Notes 800 700 600 3.98% Notes Term Loan In Millions 500 400 4.25% Notes BHP FMB CLFP FMB 300 CLFP FMB CLFP IR Bond…
  30. February 2016 Investor Meetings – Black Hills Corporation – slide 30
    2016 Scorecard Strategy Construct cost effective rate-base Construct additional utility Achieve top-tier operational Be the safest company in the generation and transmission to serve infrastructure that supports growing performance…
  31. February 2016 Investor Meetings – Black Hills Corporation – slide 31
    Questions Pueblo Airport Generating Station near Pueblo, Colorado Investor Meetings February 2016 40
  32. February 2016 Investor Meetings – Black Hills Corporation – slide 32
    Appendix Dory Batka and Jerry Likewise monitor the energy supply at our Neil Simpson Complex in Gillette, Wyoming Investor Meetings February 2016 41
  33. February 2016 Investor Meetings – Black Hills Corporation – slide 33
    Appendix Table of Contents* Utilities Regulatory Non-Regulated Non-GAAP Financial Measures * Items in the appendix do not include SourceGas utilities Investor Meetings February 2016 42
  34. February 2016 Investor Meetings – Black Hills Corporation – slide 34
    Electric Utility Generation Availability(%) * Excludes KS HDD data since state has weather normalization 95.8 Q4 2015 Q4 2015 1,951 89.2 96.4 (Total for all gas service* areas weighted by Q3 2015 54 Q3 2015 89.0 Gas…
  35. February 2016 Investor Meetings – Black Hills Corporation – slide 35
    Select Major Utility Projects Forecasted Capital Expenditures * Projected Excludes routine capital for maintenance of 2017 - In-service Pre-2016 2016F Total assets 2020F Date (in millions) Utilities Black Hills Power Rapid City…
  36. February 2016 Investor Meetings – Black Hills Corporation – slide 36
    Estimated Utility Rate Base Estimated Rate Base* 2011 2012 2013 2014 2015 by Utility Segment (in millions) Electric Utilities 1,007 1,272 1,248 1,487 1,515 Gas Utilities 443 450 454 489 493 Total 1,450 1,722 1,702 1,976…
  37. February 2016 Investor Meetings – Black Hills Corporation – slide 37
    Optimizing Regulatory Recovery Cost Recovery Mechanisms Electric Utility Environmental DSM/ Trans- Fuel Cost Trans- Purchased Fixed Cost Financing Jurisdiction Cost Energy mission mission Power Recovery* Cost Rider Efficiency Cap-Ex…
  38. February 2016 Investor Meetings – Black Hills Corporation – slide 38
    Utility Regulatory Results Authorized Electric Effective Return on Rate Base Jurisdiction Or Gas Date Equity Capital Structure (in millions) BHP-SD Electric 10/01/2014 Global Settlement Global Settlement 543.9 BHP-WY Electric…
  39. February 2016 Investor Meetings – Black Hills Corporation – slide 39
    per ton 0.82 1.69 Q4 2015 18 16 14 12 10 Exp/Ton 8 6 4 2 0 (Units = tons sold plus cubic yards of overburden Revenue and Expense per Ton Sold Q4 2015 Q3 2015 Average Nat Gas Price Received Q3 2015 Q2…
  40. February 2016 Investor Meetings – Black Hills Corporation – slide 40
    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 Interstate 90…
  41. February 2016 Investor Meetings – Black Hills Corporation – slide 41
    EPA Clean Power Plan U.S. Supreme Court May Impact Rule EPAs goal: Reduce CO2 emissions from electric generating sector through increased natural gas and renewable generation Requires states to develop compliance plans by September…
  42. February 2016 Investor Meetings – Black Hills Corporation – slide 42
    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…
  43. February 2016 Investor Meetings – Black Hills Corporation – slide 43
    Southern Piceance Basin Mancos Drilling Program 2013-2016 Questar White River Hub 1800 MMCF/day capacity 51 miles to the north 9-11 9-41 7-23 Questar White River Hub 21-41H D-17 4-28 Whittaker Flats Unit…
  44. February 2016 Investor Meetings – Black Hills Corporation – slide 44
    Southern Piceance - Mancos Shale 2013-2015 Drilling Program Status Piceance Mancos Well Status As Of: January 22, 2016 First 30-days' Production Lateral Sand per Completed Recoverable F&D Date of First Depth Frac Well Status…
  45. February 2016 Investor Meetings – Black Hills Corporation – slide 45
    Reserve Data and Net Present Value Reserve calculation at Dec. 31, 2015 Average Net Net Average Price Nat Average Net Oil Gas Net NGL Equiv PV10 Price Oil Gas Price NGL (MMBO)** (BCF)** (MMB) (BCFE)** (MM) Per BBL per MCF Per BBL…
  46. February 2016 Investor Meetings – Black Hills Corporation – slide 46
    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…
  47. February 2016 Investor Meetings – Black Hills Corporation – slide 47
    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…
  48. February 2016 Investor Meetings – Black Hills Corporation – slide 48
    Use of Non-GAAP Financial Measures Revenue / Gross Margin, as adjusted (in thousands) Utilities Non-Regulated Energy Electric Power Corporate - I/C QTD - December 31, 2015 Utilities Gas Utilities Generation Coal Mining Oil and Gas Elim…
  49. February 2016 Investor Meetings – Black Hills Corporation – slide 49
    Use of Non-GAAP Financial Measures YTD Revenue / Gross Margin, as adjusted (in thousands) Utilities Non-Regulated Energy Electric Power Corporate - I/C YTD - December 31, 2015 Utilities Gas Utilities Generation Coal Mining Oil and Gas…
  50. February 2016 Investor Meetings – Black Hills Corporation – slide 50
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Utilities Non-Regulated Energy Electric Power QTD - December 31, 2015 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total…
  51. February 2016 Investor Meetings – Black Hills Corporation – slide 51
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Utilities Non-Regulated Energy Electric Power YTD Dec. 31, 2015 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total…
  52. February 2016 Investor Meetings – Black Hills Corporation – slide 52
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Utilities Non-Regulated Energy Electric Power YTD Dec. 31, 2012 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total…
  53. February 2016 Investor Meetings – Black Hills Corporation – slide 53
    Use of Non-GAAP Financial Measures Operating Income, as adjusted (in thousands, pre-tax) Utilities Non-Regulated Energy Electric Power YTD Dec. 31, 2010 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total…
  54. February 2016 Investor Meetings – Black Hills Corporation – slide 54
    Use of Non-GAAP Financial Measures Net Income, as adjusted (in thousands, after-tax) Utilities Non-Regulated Energy Electric Power QTD - December 31, 2015 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Net…
  55. February 2016 Investor Meetings – Black Hills Corporation – slide 55
    Use of Non-GAAP Financial Measures Net Income, as adjusted (in thousands, after-tax) Utilities Non-Regulated Energy Electric Power YTD - December 31, 2015 Utilities Gas Utilities Generation Coal Mining Oil and Gas Corporate Total Net…
  56. February 2016 Investor Meetings – Black Hills Corporation – slide 56
    Use of Non-GAAP Financial Measures Depreciation, Depletion & Amortization, adjusted for Intercompany Capital Lease* (in thousands, pre-tax) Electric Gas Total Power Total Non- YTD Dec. 31, 2015 Utilities Utilities Utilities…
  57. February 2016 Investor Meetings – Black Hills Corporation – slide 57
    Use of Non-GAAP Financial Measures EBITDA For the Three Months Ended December 31, For the Twelve Months Ended December 31, (in thousands) 2015 2014 2015 2014 Net Income (14,176) 34,534 (32,111) 130,889 Depreciation, depletion and…
  58. February 2016 Investor Meetings – Black Hills Corporation – slide 58
    Use of Non-GAAP Financial Measures EPS, as adjusted 2009 2010 2011 2012 2013 2014 2015 Net income (GAAP) 2.11 1.87 1.34 2.32 2.64 2.93 (0.71) Discontinued Operations (0.11) (0.14) (0.23) 0.16 0.02 - - Income (loss) from continuing…

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