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2013 BKH Analyst Day – Black Hills Corporation

Black Hills Corporation · Oct 3, 2013 · 110 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. 2013 BKH Analyst Day – Black Hills Corporation – slide 1
    Nathan Woods, Black Hills Power 2013 BKH Analyst Day October 3, 2013
  2. 2013 BKH Analyst Day – Black Hills Corporation – slide 2
    Agenda Welcome Jerome Nichols Director of Investor Relations Introductions David Emery 2:00 2:15 p.m. Chairman, President & CEO Segment Linn Evans President & COO Utilities Presentations Stuart Wevik VP Utility Operations…
  3. 2013 BKH Analyst Day – Black Hills Corporation – slide 3
    Introduction Pueblo Airport Generating Station near Pueblo, Colo. BKH Analyst Day Oct. 3, 2013 4
  4. 2013 BKH Analyst Day – Black Hills Corporation – slide 4
    Todays Objectives Engage with the leadership team Understand Black Hills value proposition and track record Discuss Black Hills strategy, objectives and operations Black Hills Corporation is a utility-centered energy company…
  5. 2013 BKH Analyst Day – Black Hills Corporation – slide 5
    Todays Presenters David Emery Chairman, President and CEO Sr. Management Segment Vice Presidents Linn Evans Tony Cleberg Stuart Wevik Ivan Vancas Mark Lux John Benton President and EVP and Chief VP Utility VP Operations VP…
  6. 2013 BKH Analyst Day – Black Hills Corporation – slide 6
    Investment Proposition Focus on operational excellence and continuous improvement Earnings growth rate above industry average Value upside from shale gas assets 43 consecutive years of dividend increases Excellent business risk…
  7. 2013 BKH Analyst Day – Black Hills Corporation – slide 7
    Focusing the Business Today, Black Hills is focused on its vertically integrated utilities and oil and gas businesses Beginning 2004, Black Hills was engaged in electric utility, power generation, coal mining, oil and gas,…
  8. 2013 BKH Analyst Day – Black Hills Corporation – slide 8
    Focusing the Business Assets, as adjusted * Op. Inc, as adjusted * 2.4B 3.6B 196 M 246 M 2007 2012 2007 2012 Non-Regulated Utilities Portion of Non-Regulated Integrated into Utilities Utility Customer Count BHC Total…
  9. 2013 BKH Analyst Day – Black Hills Corporation – slide 9
    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 769,000…
  10. 2013 BKH Analyst Day – Black Hills Corporation – slide 10
    Business Environment Changing energy environment offers opportunities and challenges Macro Economic New Regulations and Technological and Market Trends Public Policy Advances Sluggish economic Greenhouse Gas and Energy…
  11. 2013 BKH Analyst Day – Black Hills Corporation – slide 11
    Delivering for Shareholders BKH Weekly Closing Stock Price * Total Shareholder Return % ** 60 160 50 120 40 80 30 40 20 10 0 0 -40 BKH S&P 500 BKH Peers 2013 S&P Utilities Annualized Total Shareholder Return 50%…
  12. 2013 BKH Analyst Day – Black Hills Corporation – slide 12
    Delivering for Shareholders Total Shareholder Return Annual Dividend EPS, as adjusted * 2009- 9/20/13 1.38 1.67 1.69 2.09 1.46 1.42 1.44 1.48 1.52 128% 110% 109% 59% 2009 2010 2011 2012…
  13. 2013 BKH Analyst Day – Black Hills Corporation – slide 13
    Strategy Framework BKH Analyst Day Oct. 3, 2013 14
  14. 2013 BKH Analyst Day – Black Hills Corporation – slide 14
    Strategic Objectives Utility-centered energy company well positioned to build upon a track record of successful utility growth Profitable Growth Better Every Day Valued Service Great Workplace Achieve top-tier operational…
  15. 2013 BKH Analyst Day – Black Hills Corporation – slide 15
    Utilities Linn Evans President & COO Utilities Stuart Wevik VP Utility Operations Ivan Vancas VP Operations Services
  16. 2013 BKH Analyst Day – Black Hills Corporation – slide 16
    Utilities Leadership Team Linn Evans President and COO Utilities Stuart Wevik Ivan Vancas Steve Pella Mark Lux VP Utility VP Operations VP Corporate VP & GM Operations Services Affairs Power Delivery BKH Analyst Day…
  17. 2013 BKH Analyst Day – Black Hills Corporation – slide 17
    Overview 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 Generate,…
  18. 2013 BKH Analyst Day – Black Hills Corporation – slide 18
    Overview Utility Customers and Usage Electric Utilities* Natural Gas Utilities* 205 1,900 570 115 No. Retail Customers in 000s No. Retail Customers in 000s Avg Monthly Usage in KWh 1,850 560 110 200 Avg. Annual Usage in…
  19. 2013 BKH Analyst Day – Black Hills Corporation – slide 19
    Electric Transmission System Rapid City DC TIE (Tie to Eastern Interconnect) WYODAK Black Hills Power Common Use Transmission System STEGALL DAVE JOHNSTON Cheyenne Light WAPA ARCHER Fuel & Power Transmission AULT Map…
  20. 2013 BKH Analyst Day – Black Hills Corporation – slide 20
    Regional Unemployment August 2013 Unemployment Rates by State (U.S. Bureau of Labor Statistics ) Rank State Rate 2 South Dakota 3.8 Unemployment Rate 3 Nebraska 4.2 < 6.0% 5 Wyoming 4.6 6.1% - 8.0% 8 Iowa 4.9 11 Montana…
  21. 2013 BKH Analyst Day – Black Hills Corporation – slide 21
    Recent Accomplishments Strong operational performance Safety Reliability Customer service Plant availability Cheyenne Prairie Generating Station (CPGS) - construction on schedule and on budget BHP base rates and CPGS financing…
  22. 2013 BKH Analyst Day – Black Hills Corporation – slide 22
    Safety Statistics 4.5 Rolling Twelve Month Incident Rates 4.2 4.0 U.S. Utility Industry Average 3.5 3.0 2.9 Incident Rate 2.5 2.2 2.0 1.8 1.9 1.8 1.7 1.5 2013 TCIR Target: 1.3 1.3 1.1 1.0 1.0 0.9 2013 DART…
  23. 2013 BKH Analyst Day – Black Hills Corporation – slide 23
    Electric Reliability 2012 EEI Reliability Benchmarking Study 350 Total Annual Outage Minutes 300 1st Quartile = 83.96 minutes 250 BHC 2012 SAIDI = 68.6 200 150 BHC Electric Reliability 2012 IEEE Reliability…
  24. 2013 BKH Analyst Day – Black Hills Corporation – slide 24
    Customer Satisfaction JD Power Customer Survey Annual JD Power Results Comparison Residential Gas and Electric 700 600 500 400 300 200 100 0 2011 2012 YTD 2013 Midwest Gas Average BHC-Gas BHC-Electric Midwest…
  25. 2013 BKH Analyst Day – Black Hills Corporation – slide 25
    Electric Generation Performance Asset Optimization Benefits Customer Power Plant Fleet Availability by Fuel Type Natural Gas Turbine Starting Reliability 104% 100% BHC 3 Industry BHC 3 Industry 100% 96% 96% 92% 92% 88%…
  26. 2013 BKH Analyst Day – Black Hills Corporation – slide 26
    Gas Utilities Efficiencies eBill Metrics 16.6% Saturation 40.0% improvement over 2012 AGA Energy Analysis 2011 Performance Benchmarks for Gas Utilities Benchmark BHC Rank Customers per Employee Top Quartile O & M Net of…
  27. 2013 BKH Analyst Day – Black Hills Corporation – slide 27
    Utility Strategy Profitable Growth Leverage vertically integrated generation assets Deploy capital to comply with environmental requirements Invest in transmission and distribution growth and integrity projects Deploy capital to…
  28. 2013 BKH Analyst Day – Black Hills Corporation – slide 28
    Profitable Growth Resource Planning Update Colorado Electric Electric Resource Plan filed April 2013 recommended construction of 40 MW natural gas-fired combustion turbine in 2016 as proposed replacement for W.N. Clark retirement…
  29. 2013 BKH Analyst Day – Black Hills Corporation – slide 29
    Profitable Growth Capital Investment - Utilities (in millions) 2009 2010 2011 2012 2013E* 2014E* 2015E* Generation 168 146 85 72 151 82 30 Transmission 21 28 20 38 36 40 21 Other 53 59 68 57 97 109 77 Subtotal Electric…
  30. 2013 BKH Analyst Day – Black Hills Corporation – slide 30
    Profitable Growth Select Major Utility Projects Estimated Capital Expenditures * Projected Excludes routine capital expenditures for maintenance of assets In-service 2016E (in millions) Date 2013E 2014E 2015E - 2018E Total**…
  31. 2013 BKH Analyst Day – Black Hills Corporation – slide 31
    Profitable Growth Capital Tracker Example BHP Transmission System Estimated Capital Expenditures 2014 2015 Total In-service (in millions) Date Osage-Lange 230 kV Line 27 21 48 Nov 1, 2015 BKH Analyst Day Oct. 3, 2013 32
  32. 2013 BKH Analyst Day – Black Hills Corporation – slide 32
    Profitable Growth Regulatory Update Black Hills Power General rate case filed in South Dakota in Dec. 2012 asking for 9.94%, or 13.7 million, in increased annual revenue; settlement approved Sept. 17 for 6.40%, or 8.8 million, in…
  33. 2013 BKH Analyst Day – Black Hills Corporation – slide 33
    Profitable Growth 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…
  34. 2013 BKH Analyst Day – Black Hills Corporation – slide 34
    Better Every Day Technology Integration BKH Analyst Day Oct. 3, 2013 35
  35. 2013 BKH Analyst Day – Black Hills Corporation – slide 35
    Valued Service Industry Leading Generation Fleet Modern fleet provides long term value to customers Average Age of Generation Fleet PacifiCorp 33.9 years old BHC Xcel PSCO 14.3 years 28.4 years old old in Ottertail 2014 34.5…
  36. 2013 BKH Analyst Day – Black Hills Corporation – slide 36
    Valued Service Regional Rates Electricity Rate Comparison 1,000/kWh Residential (cents/kWh) Current Black Hills Colorado Electric CO 14.2 Xcel CO 12.5 Black Hills Power SD 12.6 Xcel - SD 12.1 Northwestern - SD Only 9.3…
  37. 2013 BKH Analyst Day – Black Hills Corporation – slide 37
    Valued Service Emphasis on customer service reduces regulatory risk Deliver high levels of service that customers expect by: Focusing on continuous process improvements to increase customer satisfaction eBill Technology based…
  38. 2013 BKH Analyst Day – Black Hills Corporation – slide 38
    Great Workplace DuPont Sustainable Solutions Safety Survey DuPont Safety Perception Survey Total Recordable Rate 8 6 4 DuPont Utility Average Black Hills 2 Corporation Benchmark Best 0 (all industries) 40 60 80…
  39. 2013 BKH Analyst Day – Black Hills Corporation – slide 39
    Great Workplace Preparing for the Workforce of the Future BHC Utilities Strategic Workforce Planning Initiatives Effectively market Black Hills and energy career opportunities to high school and junior high students Strengthen…
  40. 2013 BKH Analyst Day – Black Hills Corporation – slide 40
    Power Generation and Coal Mining Mark Lux VP & GM Power Delivery
  41. 2013 BKH Analyst Day – Black Hills Corporation – slide 41
    Power Generation Ownership in three power generation facilities Smaller plant approach to incremental growth totaling 309 MW facilitates technology implementation Wygen I - 69 MW of a 90 MW coal-fired Operate generation assets…
  42. 2013 BKH Analyst Day – Black Hills Corporation – slide 42
    Power Generation Strategy Profitable Growth Sell power plant capacity under long-term tolling arrangements to affiliate load serving electric utilities Develop opportunities to sell power plant capacity under long-term tolling…
  43. 2013 BKH Analyst Day – Black Hills Corporation – slide 43
    Profitable Growth Generation Services and Growth Strategy Generation Services for Affiliate Electric Utilities Constructing new 132 MW, 222 million natural gas-fired Cheyenne Prairie Generating Station; estimated in-service October…
  44. 2013 BKH Analyst Day – Black Hills Corporation – slide 44
    Profitable Growth Cheyenne Prairie Generating Station New Generation Helps Meet Growing Demand and New Environmental Regulations Overview: New 132 MW, 222 million generating plant jointly owned by Cheyenne Light and Black Hills Power…
  45. 2013 BKH Analyst Day – Black Hills Corporation – slide 45
    Profitable Growth Asset Optimization Construct Energy Management Site selection Generation dispatch Permitting Power marketing services Procurement NERC compliance Engineering Reserve capacity Construction Spinning reserves…
  46. 2013 BKH Analyst Day – Black Hills Corporation – slide 46
    Better Everyday Plant Construction Expertise On Time and On Budget Operating 1,165 MW of generation (adding 132 MW natural gas-fired generation and planning 30 MW of wind generation in Q4 of 2014) Achieving above industry average…
  47. 2013 BKH Analyst Day – Black Hills Corporation – slide 47
    Better Everyday Plant Construction Expertise Black Hills Electric Generation Projects Managed Power Plant Name Fuel Size Project Cost Utility or IPP In-Service Date Neil Simpson II (WY) Coal 90 MW 119 million Utility 9/1995 Neil…
  48. 2013 BKH Analyst Day – Black Hills Corporation – slide 48
    Valued Service Competitive Advantages Plant Asset Construction Optimization Expertise Creating Value Infrastructure Operations Efficiencies Excellence BKH Analyst Day Oct. 3, 2013 49
  49. 2013 BKH Analyst Day – Black Hills Corporation – slide 49
    Valued Service Infrastructure Efficiencies Develop multiple generation sites with expansion potential Co-locate facilities owned by multiple parties to increase efficiencies and reduce costs Shared staff, facilities, land and…
  50. 2013 BKH Analyst Day – Black Hills Corporation – slide 50
    Valued Service Environmental Stewardship Tested successfully Neil Simpson II, Wygen I, Wygen II, and Wygen III coal- fired power plants to meet compliance with new Environmental Protection Agency MATS rules effective 2015 Wygen…
  51. 2013 BKH Analyst Day – Black Hills Corporation – slide 51
    Better Every Day Operations Excellence Power Plant Fleet Availability by Fuel Type Natural Gas Turbine Starting Reliability 104% 100% BHC 3 Industry BHC 3 Industry 100% 96% 96% 92% 92% 88% 88% 84% 84% 80% 80% Coal…
  52. 2013 BKH Analyst Day – Black Hills Corporation – slide 52
    Great Workplace Industry Leading Safety Performance Black Hills Major Construction Projects Project Man Hours OSHA Total Case Incident Rate (TCIR) Wygen III 900,000 man hours 6 Pueblo Airport 1.2 million man hours BHC Industry 5…
  53. 2013 BKH Analyst Day – Black Hills Corporation – slide 53
    Coal Mining Serve as fuel supply to adjacent mine mouth Current mine plan sequence will reduce electric power generation customers reclamation liability and optimize strip-ratio Includes approximately 46-year supply of low-sulfur…
  54. 2013 BKH Analyst Day – Black Hills Corporation – slide 54
    Coal Mining Strategy Profitable Growth Provide low-cost fuel supply to adjacent mine-mouth electric power plant customers while maintaining sufficient coal reserves to meet life-of-plant needs Maximize sale margins from existing…
  55. 2013 BKH Analyst Day – Black Hills Corporation – slide 55
    Profitable Growth Opportunities PacifiCorp coal sale agreement coal price reopener will adjust in Q3 2014 1.6 to 1.8 million tons estimated annual coal sales Long-term contract price opener in 2014 allows us to retain full location…
  56. 2013 BKH Analyst Day – Black Hills Corporation – slide 56
    Profitable Growth Actual and Forecasted Tons Sold 5,000,000 Ben French Neil Simpson I Operations Ceased Retired 4,000,000 Tons of Coal Sold 3,000,000 2,000,000 1,000,000 Potential Wygen I Transfer to CLFP 0…
  57. 2013 BKH Analyst Day – Black Hills Corporation – slide 57
    Profitable Growth Operating Metrics Revenue and Expense per Ton Sold (Units in millions*) (/ton) 25 14 12 20 10 15 8 6 10 4 5 2 0 0 2008 2009 2010 2011 2012 2013 (6 months) Coal Tons OB Yards Rev/Ton Exp/Ton *…
  58. 2013 BKH Analyst Day – Black Hills Corporation – slide 58
    Better Every Day Focus on Low Costs and Efficiencies Current mine plan yields lower stripping ratios; key driver in reducing mining costs; plan better aligns stripping ratios with coal contract margins Productivity Enhancements and…
  59. 2013 BKH Analyst Day – Black Hills Corporation – slide 59
    Better Every Day Mine Sequence 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 removed to the…
  60. 2013 BKH Analyst Day – Black Hills Corporation – slide 60
    Valued Service Competitive Delivered Fuel Cost 2012 Delivered Coal Cost Wyodak Mine Affiliate Pricing versus Regional Power Plants 2.50 2.38 2.00 1.91 1.63 1.50 1.42 /MMBtu 1.08 1.00 1.02 1.00 0.50 0.00 BHC…
  61. 2013 BKH Analyst Day – Black Hills Corporation – slide 61
    Valued Service Mine Mouth Coal Quality 8,500 Contract Coal Quality Targets: 0.60% BTU: 7,700-8,000 Sulfur: 0.55% BTU Sulfur 8,000 0.55% BTU per pound Sulfur % by weight 7,500 0.50% 7,000 0.45% 6,500 0.40% 2008…
  62. 2013 BKH Analyst Day – Black Hills Corporation – slide 62
    Great Workplace Industry Leading Safety Performance Completed four years without a lost-time-accident Completed 17 months without an MSHA reportable incident Completed three years with lower quartile MSHA results compared to…
  63. 2013 BKH Analyst Day – Black Hills Corporation – slide 63
    Oil and Gas John Benton VP & GM Oil & Gas
  64. 2013 BKH Analyst Day – Black Hills Corporation – slide 64
    Oil & Gas Exploration & Development Program Note: approximate areas of geologic basins does not reflect BHEP acreage BKH Analyst Day Oct. 3, 2013 65
  65. 2013 BKH Analyst Day – Black Hills Corporation – slide 65
    Oil and Gas Exploration Development Operated wells in San Juan, Piceance and Powder River Basins Non-operated wells in Williston Basin in North Dakota and Montana (Bakken Shale), and in California, Montana, North Dakota,…
  66. 2013 BKH Analyst Day – Black Hills Corporation – slide 66
    Reserve Data and Net Present Value Reserve calculation 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* 3.9 54.1 77.5 140.7 85.39 2.25…
  67. 2013 BKH Analyst Day – Black Hills Corporation – slide 67
    Oil and Gas Strategy Profitable Growth Prove up the potential upside value of existing oil and gas properties Pursue a disciplined oil exploration, appraisal and development program Capture value of oil and gas assets through…
  68. 2013 BKH Analyst Day – Black Hills Corporation – slide 68
    Profitable Growth Oil & Gas Drilling Program 2012 Program Deferred Mancos Shale drilling program due to low natural gas prices Realized significant value from monetizing Williston Basin oil and gas assets Acquired exploration…
  69. 2013 BKH Analyst Day – Black Hills Corporation – slide 69
    Profitable Growth Mancos Shale Cretaceous Age sediment averaging 1,400 feet of gas-saturated rock Legacy assets 90% of leases held by units or held by production Southern Piceance Basin - control oil and gas leases covering 55,000…
  70. 2013 BKH Analyst Day – Black Hills Corporation – slide 70
    Profitable Growth Mancos Shale Complete and test 2013 Mancos wells by Q1 2014 Drill 12-14 appraisal wells during 2013-2015 Optimize well design lateral lengths, spacing, completion Implement infrastructure improvements…
  71. 2013 BKH Analyst Day – Black Hills Corporation – slide 71
    Profitable Growth Mancos Shale Opportunity Gross Resource Net Resource Net Potential Average Test Wells Potential Potential Basin Acreage Wells * Royalty Completed (BCF)** (BCF)*** San Juan Potential 19,000 120 20% 1 720 576…
  72. 2013 BKH Analyst Day – Black Hills Corporation – slide 72
    Profitable Growth Southern Piceance Basin - Western Colorado BKH Analyst Day Oct. 3, 2013 73
  73. 2013 BKH Analyst Day – Black Hills Corporation – slide 73
    Profitable Growth Southern Piceance - Mancos Drilling Program 2013-2015 BKH Analyst Day Oct. 3, 2013 74
  74. 2013 BKH Analyst Day – Black Hills Corporation – slide 74
    Profitable Growth 2013 Southern Piceance - Mancos Wells BKH Analyst Day Oct. 3, 2013 75
  75. 2013 BKH Analyst Day – Black Hills Corporation – slide 75
    Profitable Growth Current Mancos Well Plan 10-3/4 Surface Casing set 1,008' Measured Depth Basic Frac Design: Frac stage every 200 feet of lateral 11,000 bbls or 462,000 gallons of fluid per stage 250,000 lbs proppant (100 &…
  76. 2013 BKH Analyst Day – Black Hills Corporation – slide 76
    Profitable Growth Mancos Well Optimization 0 Depth versus Days Capital Cost through Casing Point 2,000 4,000 2011 6,000 Wells Measured Depth 8,000 10,000 5.64MM 6.78MM 12,000 2013 6.60MM Wells 14,000 3.54MM…
  77. 2013 BKH Analyst Day – Black Hills Corporation – slide 77
    Profitable Growth 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…
  78. 2013 BKH Analyst Day – Black Hills Corporation – slide 78
    Profitable Growth 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 BKH Analyst Day Oct. 3, 2013…
  79. 2013 BKH Analyst Day – Black Hills Corporation – slide 79
    Profitable Growth San Juan Basin - Mancos Production Production Rates in Mcf/D 10,000 EUR 6.9 BCFE 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…
  80. 2013 BKH Analyst Day – Black Hills Corporation – slide 80
    Profitable Growth Disciplined Oil Exploration Strategy Oil Exploration Target Criteria Known oil producing basin Multiple-zone production potential Thermally mature Normal to over pressured system Resource plays Growth potential…
  81. 2013 BKH Analyst Day – Black Hills Corporation – slide 81
    Better Every Day Currently implementing a continuous improvement project to establish a unified, scalable process for collecting tank gauges (production data) from the field using any type of mobile device Project created by…
  82. 2013 BKH Analyst Day – Black Hills Corporation – slide 82
    Oil and Gas Creating Shareholder Value Execute current Southern Piceance program Disciplined exploration Focus on adding to oil portfolio Invest capital of 5 to 10 million per year Utilize consistent criteria Capture value…
  83. 2013 BKH Analyst Day – Black Hills Corporation – slide 83
    Wygen II and Wygen III power plants at the Gillette Energy Complex in Gillette, Wyo. Financial Strategy Tony Cleberg - Executive Vice President and CFO
  84. 2013 BKH Analyst Day – Black Hills Corporation – slide 84
    Financial Profile NYSE Stock Ticker BKH Utility-Centered Focus Stock Price * 49.04 Assets, as adjusted Outstanding Number Shares 44.5 M 6% Market Capitalization * 2.2 B Net Debt 1.3 B 3.6 B Total Enterprise Value * 3.5 B…
  85. 2013 BKH Analyst Day – Black Hills Corporation – slide 85
    Financial Strategy Achieve top quartile total shareholder returns relative to our peer group for each rolling three-year period Profitable Growth Better Every Day Valued Service Great Workplace Grow utility rate base Deploy…
  86. 2013 BKH Analyst Day – Black Hills Corporation – slide 86
    Strategic Objective Earnings Growth Capital Expenditures by Segment (in millions) 2009 2010 2011 2012 2013F* 2014F* 2015F* Generation 168 146 85 72 151 82 30 Transmission 21 28 20 38 36 40 21 Other 53 59 68 57 97 109 77…
  87. 2013 BKH Analyst Day – Black Hills Corporation – slide 87
    Strategic Objective Earnings Growth Historical and Forecasted Capital Expenditures (in millions)* 500 2010-2012 capex - 1.25 Billion 2013E-2015E capex - 1.13 Billion 400 300 200 100 0 2009 2010 2011 2012 2013E 2014E 2015E *…
  88. 2013 BKH Analyst Day – Black Hills Corporation – slide 88
    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…
  89. 2013 BKH Analyst Day – Black Hills Corporation – slide 89
    Estimated Utility Rate Base Estimated Rate Base* by Utility Segment 2010 2011 2012 (in millions) Electric Utilities 901 1,007 1,272 Gas Utilities 425 443 450 Total 1,326 1,450 1,722 * Estimated rate base determined at year-end…
  90. 2013 BKH Analyst Day – Black Hills Corporation – slide 90
    Pension Strategy Objective manage pension expense volatility to enhance regulatory recovery; reduce exposure to unfunded pension liability and costs to shareholders Actions taken: Moved from defined benefit to defined contribution…
  91. 2013 BKH Analyst Day – Black Hills Corporation – slide 91
    Pension Funding Comparison* 95% Pension Summary Information 90% Pension Plan Assets 269 million 85% Accumulated Benefit Obligation 327 million 80% Projected Benefit Obligation 363 million 75% 70% 65% 60% 55% 50%…
  92. 2013 BKH Analyst Day – Black Hills Corporation – slide 92
    Key Financial Metrics Earnings Metrics Return Metrics 500 4.00 10% 8.5% 8.2% 400 8% 3.00 Earnings per Share EBITDA in millions 300 5.9% 5.9% 6% 5.0% 2.00 200 4% 1.00 100 2% 2.8% 2.4% 1.6% 1.8% 1.7% 0 0.00…
  93. 2013 BKH Analyst Day – Black Hills Corporation – slide 93
    Key Financial Metrics Debt Ratios FFO Ratios 70% 5.0x 5.0x 40% 5.0x 4.7x 4.3x 4.3x 4.0x 4.0x 3.9x 3.7x 4.0x 60% 3.6x 30% 3.3x 3.3x 57% 57% 3.0x 3.0x 26% 53% 50% 24% 52% 20% 51% 2.0x 21% 2.0x 17% 16% 40% 10% 1.0x…
  94. 2013 BKH Analyst Day – Black Hills Corporation – slide 94
    Credit Rating Recent Upgrades Moodys raised its senior unsecured credit ratings of Black Hills Corp. to Baa2 from Baa3 and Black Hills Power to Baa1 from Baa2 in Sept. 2013; both upgrades issued with positive ratings outlooks…
  95. 2013 BKH Analyst Day – Black Hills Corporation – slide 95
    In Millions 50 0 100 150 200 250 300 2013 BHW Proj. Fin. 2014 250MM 9% Note BHW Proj. Fin. 2015 275MM Term Loan BHW Proj. Fin. BKH Analyst Day Oct. 3, 2013 2016 75MM BHW Proj. Fin. 2017 2018 2019 2020…
  96. 2013 BKH Analyst Day – Black Hills Corporation – slide 96
    Dividend Growth Dividend Increased for 43 Consecutive Years 1.55 Dividend yield 3.1% on Sept. 20, 2013 1.52 1.50 1.48 1.46 1.45 1.44 1.42 Annual Dividend Per Share 1.40 1.35 1.30 1.25 1.20 2009 2010 2011 2012…
  97. 2013 BKH Analyst Day – Black Hills Corporation – slide 97
    Operating Income and EPS, as adjusted* 350 2.40 2.09 300 2.00 250 1.67 1.69 36.2 1.60 1.38 200 5.2 19.0 1.20 150 19.9 0.80 100 210.4 185.0 159.3 126.2 0.40 50 0 0.00 2009 2010 2011 2012 Operating Income, as…
  98. 2013 BKH Analyst Day – Black Hills Corporation – slide 98
    Total Cumulative Shareholder Returns* 150% 125% 100% 75% 50% 25% 0% -25% -50% BKH S&P 500 BKH Peers S&P Utilities * Returns through 9-20-13; information from SNL Financial BKH Analyst Day Oct. 3, 2013 99
  99. 2013 BKH Analyst Day – Black Hills Corporation – slide 99
    Questions Harney Peak , Black Hills, SD BKH Analyst Day Oct. 3, 2013 100
  100. 2013 BKH Analyst Day – Black Hills Corporation – slide 100
    2014 BKH Analyst Day Northern Denver, Colorado We hope you enjoyed the 2013 BKH Analyst Day Start thinking about next year when we'll be touring the new Cheyenne Prairie Generating Station New Generation Helps Meet Growing Demand…

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