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2015 Fourth Quarter and Full Year Review – Black Hills Corporation

Black Hills Corporation · Feb 3, 2016 · 62 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. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 1
    2015 Fourth Quarter and Full Year Review February 3, 2016
  2. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 2
    Q4 2015 Highlights Acquisition Update - SourceGas Holdings LLC Received regulatory approvals for acquisition in Arkansas, Nebraska and Wyoming; closing of the transaction will occur upon receipt of approval in Colorado Completed…
  3. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 3
    Q4 2015 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 Wyoming…
  4. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 4
    Q4 2015 Highlights Non-Regulated Initiated process to explore the sale of minority interest in Colorado IPPs 200- megawatt, combined-cycle, natural gas-fired generating units; process ongoing and decision expected in first quarter…
  5. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 5
    Q4 2015 Financial Highlights Change in Net Income, as adjusted,* from Prior Year Q4 2015 33.5 5.2 Electric Utilities (2.8) Gas Utilities 3.0 Power Generation (0.6) Coal Mining (2.6) Oil & Gas (3.2) Corporate Q4 2014…
  6. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 6
    2015 Financial Highlights Change in Net Income, as adjusted,* from Prior Year 2015 135.0 19.4 Electric Utilities (4.1) Gas Utilities 5.0 Power Generation 1.4 Coal Mining (11.0) Oil & Gas (6.6) Corporate 2014 130.9…
  7. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 7
    Financial Update Elmo Bailey & Ebi Kazemi prepare for pole line installation in the mountains near Victor, Colorado 2015 Fourth Quarter and Full Year Review - Feb. 3, 2016 10
  8. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 8
    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…
  9. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 9
    Q4 Revenue/Op Income Total Revenue, as adjusted* (in millions) Total Operating Income, as adjusted* (in millions) 378.1 318.3 73.5 70.8 Q4 2015 Q4 2014 Q4 2015 Q4 2014 180.5 46.3 Electric Util Electric Util 178.8 39.0…
  10. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 10
    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…
  11. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 11
    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)…
  12. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 12
    Electric Utilities Gross Margin/Op Income Q4 Electric Utilities (in millions) 2015 Electric Utilities (in millions) 427.8 Q4 2015 2015 378.6 Q4 2014 2014 106.8 100.8 182.7 146.6 46.3 39.0 Gross Margin, as adjusted*…
  13. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 13
    Gas Utilities Gross Margin/Op Income Q4 Gas Utilities (in millions) 2015 Gas Utilities (in millions) Q4 2015 2015 Q4 2014 229.6 236.9 2014 59.7 63.3 72.8 77.7 21.3 24.3 Gross Margin* Operating Income Gross Margin* Operating…
  14. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 14
    Power Generation - Revenue/Op Income Q4 Power Generation (in millions) 2015 Power Generation (in millions) 23.2 93.2 89.7 21.7 Q4 2015 2015 Q4 2014 2014 11.2 44.9 39.2 8.0 Revenue, as adjusted* Operating Income, as…
  15. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 15
    Coal Mining - Revenue/Op Income Q4 Coal Mining (in millions) 2015 Coal Mining (in millions) Q4 2015 65.1 2015 17.6 63.4 Q4 2014 2014 15.4 4.0 13.6 2.8 11.9 Revenue Operating Income Revenue Operating Income Lower diesel…
  16. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 16
    Oil & Gas - Revenue/Op Income Q4 Oil & Gas (in millions) 2015 Oil & Gas (in millions) 11.6 55.0 9.8 Q4 2015 2015 43.3 Q4 2014 2014 (5.8) (4.5) (27.5) (11.8) Revenue Operating Income, as Revenue Operating Income, as…
  17. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 17
    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…
  18. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 18
    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…
  19. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 19
    Creating Shareholder Value Operating Income and EPS, as Adjusted 450 3.60 2011 2015 EPS CAGR = 13.6% 400 2.98 3.20 2.93 350 2.80 2.50 300 2.21 2.40 31.0 250 1.79 40.0 39.3 2.00 44.8 200 1.60 11.5 150 1.20 255.6 210.4…
  20. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 20
    2016 Guidance Update Black Hills is revising its guidance for 2016 earnings, as adjusted, to be in the range of 2.40 to 2.60 per share.* The revised 2016 earnings guidance reflects the additional interest expense from the 550 million…
  21. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 21
    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 36 71 40 44 Distribution 44 44 48 87 54 40 42 49 Other 24 13 12 0 46 71 42 41 Subtotal…
  22. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 22
    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…
  23. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 23
    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…
  24. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 24
    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…
  25. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 25
    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…
  26. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 26
    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…
  27. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 27
    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…
  28. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 28
    Dividend Growth Dividend Increased for 46 Consecutive Years Dividend yield 3.4% on Jan. 29, 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…
  29. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 29
    Credit Rating 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 around…
  30. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 30
    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…
  31. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 31
    Capital Expenditures Historical and Forecasted Capital Expenditures (in millions) 600 454 500 449 24 416 369 382 336 344 400 340 177 430 199 22 18 84 118 300 127 326 314 285 272 200 264 217 213 100 0 2011 2012 2013…
  32. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 32
    Electric and Gas Utilities Electric Utilities* Natural Gas Utilities* Generates, transmits and distributes electricity to Distributes natural gas to approximately 586,100** customers approximately 206,000 customers Operations…
  33. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 33
    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…
  34. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 34
    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…
  35. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 35
    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…
  36. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 36
    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…
  37. 2015 Fourth Quarter and Full Year Review – 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. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 38
    Non-Regulated Energy Power Generation* Owns interests in two power generation facilities totaling 269 MW Wygen I - 69 MW of a 90 MW coal-fired facility in Gillette, WY Pueblo Airport - 200 MW natural gas-fired facility in Pueblo, CO…
  39. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 39
    Q4 2015 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…
  40. 2015 Fourth Quarter and Full Year Review – 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. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 41
    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…
  42. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 42
    Oil and Gas Mancos Shale Resource Three successful test wells drilled in 2011 (4,000 5,000 foot horizontal laterals) affirmed potential in San Juan and southern Piceance Basins Two successful wells drilled in southern Piceance Basin in…
  43. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 43
    Current Mancos Well Plan 10-3/4 Surface Casing set 1,008' Measured Depth Basic Frac Design: Frac stage every 200-250 feet of lateral 13,500 bbls or 567,000 gallons of fluid per stage 475,000 lbs proppant (100, 40/70, 30/50, &…
  44. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 44
    Southern Piceance - Mancos Shale Horizontal Well Pad Spacing 1 mile Mancos Formation 660 feet 1,320 feet Schematic Not to scale 2015 Fourth Quarter and Full Year Review - Feb. 3, 2016 56
  45. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 45
    Southern Piceance Basin Western Colorado 2015 Fourth Quarter and Full Year Review - Feb. 3, 2016 57
  46. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 46
    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…
  47. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 47
    Southern Piceance Basin Mancos Type Curves 10,000 10,000' Lateral Type Curve 9.5 Bcf 1,000 GAS, Mcf/D 5,000' Lateral Type Curve 5.4 Bcf 100 1 11 21 31 41 51 61 MONTHS 10,000' Type Curve 5,000' Type Curve WhF…
  48. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 48
    Southern Piceance Mancos Shale Well Production Lateral Lengths 7000' Daily Niobrara / Mancos Production 10,000 Gross Gas, Mcf/D Federal 36-1H7,884' (ECA) WHF 208,712' (BHEP) 1,000 KM DH5A-32 9,787' (ECA) WHF 198,115'…
  49. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 49
    Mancos Shale - Well Optimization Measured Depth versus Capital Cost Before Completion 0 2,000 4,000 6,000 8,000 2011 Depth (MD) 10,000 12,000 2013 14,000 2015 16,000 18,000 20,000 - 0.50 1.00 1.50 2.00…
  50. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 50
    Mancos Shale - Well Optimization Gross Finding and Development Costs (100% Drilling/Completion Costs divided by Estimated Ultimate Recovery in Bcfe) 5.00 4.50 HDU 21-41 (2011) HSC 4-28 9 (2011) 4.00 WhF DHS3C-20 D17 998…
  51. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 51
    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…
  52. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 52
    Debt Maturities Long-term Debt Maturities by Year 600 500 400 BHC 4.25% Notes 300 In Millions BHC 3.95% Notes 200 BHC Term Loan BHC 2.5% Notes BHC RSN* BHC 5.88% Notes BHP FMB CLFP IR Bond CLFP IR…
  53. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 53
    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…
  54. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 54
    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…
  55. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 55
    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…
  56. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 56
    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…
  57. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 57
    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…
  58. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 58
    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…
  59. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 59
    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…
  60. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 60
    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…
  61. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 61
    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…
  62. 2015 Fourth Quarter and Full Year Review – Black Hills Corporation – slide 62
    Use of Non-GAAP Financial Measures EPS, as adjusted 2011 2012 2013 2014 2015 Net income (GAAP) 1.34 2.32 2.64 2.93 (0.71) Discontinued Operations (0.23) 0.16 0.02 - - Income (loss) from continuing operations (GAAP) 1.11 2.48 2.66 2.93…

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