BLACK HILLS IN BRIEF - November 2007
 We are an integrated
energy Company.
Retail operations include
Black Hills Power, our
electric utility serving
western South Dakota
and parts of Wyoming
and Montana; and
Cheyenne Light, Fuel & Power, our electric
and gas distribution
utility serving the
Cheyenne, Wyoming
vicinity. Wholesale
nonregulated energy
activity is conducted
through our Black Hills Energy subsidiary. It consists
of power generation, coal mining, natural gas and oil
production, and energy marketing.
* 9 months ended September 30
** Includes 21¢ from discontinued operations, including a gain on sale of operating oil marketing assets
*** Includes 98¢ asset impairment charge and other special items
netting to a 29¢ loss
Q3 2007 EPS from continuing operations |
- 46¢ in Q2 ’07 vs. 66¢ in Q3 ’06.
- Higher electric and gas utility earnings due to
AFUDC effect and lower bad debt allowance.
- Flat earnings at electric utility as higher retail sales
were offset by lower off-system sales.
- Increased earnings at energy marketing due to
continued market volatility.
- Oil and gas production up 13% on Mcfe basis, offset
by lower average gas price including hedges and
higher depletion expense.
- Power generation performance was normal; lower
earnings due primarily to asset impairment; 2006
positively affected by insurance proceeds and tax
benefit.
- See 11/01/07 news release for more information
on earnings results and earnings guidance
- EPS from continuing operations range of $2.35-
$2.55,
not including Aquila transaction costs.
- Estimate takes into account:
- Oil and gas production growth of 2-4% with
prices reflecting market conditions and hedges
as of October 31, 2007;
- Increased earnings at Cheyenne Light;
- Mid-year startup for Valencia (NM) power plant,
with final and partial payment from Harbor plant
termination contract;
- A return to normal energy marketing results
after a strong year in 2007;
- Decreased earnings at coal mine;
- Other factors, as described in 11/01/07 news release.
|
Black Hills to purchase Aquila utility properties |
- We seek to purchase an electric utility and gas utility
in CO and gas utilities in KS, NE and IA for
$940 million cash. Completion expected in Q1 2008.
- The deal will add more than 600,000 retail utility
customers.
- Deal is subject to various state and federal
regulatory approvals, all of which have been filed.
- Bridge financing commitment obtained from
bank syndicate.
- Permanent financing to come from new equity,
mandatory convertible securities, corporate debt
and internally generated cash.
|
Cheyenne Light, Fuel & Power |
- Construction of 90 MW Wygen II power plant
on schedule for 1/1/08 commercial operations.
- Rate case filed in March 2007, including request
to place Wygen II in rate base.
|
Additional power generation sought: |
- Air permit obtained and Industrial Siting Permit
filed for 100 MW Wygen III goal of starting
construction by early 2008.
- Black Hills Power has
steady customer growth
and strong cash flows.
- BHP has ~64,000 customers
in western SD, parts
of WY and MT; provides wholesale power to
the cities of Gillette and Sheridan, WY.
- BHP has the ability to sell surplus energy on the
open wholesale market, with unique access to
both eastern and western power grids.
- 435 MW capacity plus 50 MW purchased power;
295 MW of low-cost coal fired generation resources;
430 MW peak load; ~249 MW average system load.
- Rate increase of $7.9 million, or 7.8%, went into
effect January 1, 2007.
- Cheyenne Light, Fuel & Power is an electric and
natural gas distribution company serving ~39,000
electric and ~33,000 gas customers.
- Cheyenne Light has an electric peak of 163 MW,
annual gas delivery of 4.4 Bcf plus commercial
transportation of ~8.3 Bcf.
- Cheyenne Light construction of Wygen II, a
90 MW base-load coal-fired power plant on
schedule and expected to serve customers
beginning January 1, 2008.
- Rate case filed in March 2007 requests an increase
of $4.6 million in gas rates and $8.6 million in
electric rates, effective January 1, 2008.
Black Hills Energy, our wholesale energy subsidiary, is headquartered
near Denver. It oversees our power generation, oil and gas production,
coal mining and energy marketing, which extend to 12 states.
Black
Hills Energy’s strategy is to provide energy related services
in the West.
- 978 MW of capacity in five states: Wyoming,
Colorado, Nevada, California and Idaho.
- 888 MW of gas-fired generation;
- 90 MW of coal-fired generation.
- New 149 MW peaking power plant to be built
and operated for Public Service Co. of NM
under a 20-year tolling arrangement.
- A review of strategic alternatives of select IPP
assets initiated in October 2007.
- Our strategy utilizes long-term contracts in
western markets with load growth potential.
- Nearly all of our non-regulated power is under
long-term tolling contracts with electric utilities.
- Long-term contracts generate consistent,
predictable cash flows and provide earnings
stability. Tolling arrangements eliminate
most fuel price risk.
 Nine years of record gas
and oil production.- 2006 production increased 5%
to 14.4 Bcfe.
- Strong cash flows stabilized by
partial hedging strategy.
- 199 Bcfe of proved reserves
at year-end 2006, concentrated
in NM, CO and WY.
- Q3 ’07 production up 13% with
gas up 18% and oil down 8%.
- YTD*07 production up 4%.
- Reserves of 285 million tons (YE 2006) at our
mine in the Powder River Basin of Wyoming:
- a 50+ year supply at current production levels.
- Production can expand to accommodate additional
mine-mouth power generation or exports.
- Supports low-cost generation of our electric utility
and non-regulated power fleet.
 Strong YTD*’07 earnings capitalize on increased
natural gas volumes and continued volatility- We provide producer and end-use origination
services with a regional wholesale marketing
strategy. Operational headquarters in Golden,
Colorado with a branch office in Calgary, Alberta.
- Oil marketing producer services began in May 2006.
- Energy marketing focuses on storage and
transportation plays that move Rockies and
Canadian natural gas and regional power
primarily to western markets.
- Disciplined business practices minimize credit
and market risk.
- Black Hills Corporation is listed on the
New York Stock Exchange and traded
under the symbol BKH
- Component of the S&P Midcap 400 Index
and Russell 2000 Index
- Shares outstanding 10/31/07: 37.8 million
- 4.17 million additional shares issued
in February 2007 in a private placement
transaction
- 1H 2007 average daily trading volume: 315,000
- Quarterly dividend increased to 35¢ per share
in November; 2007 annual rate = $1.37;
2008 will have the 38th consecutive dividend
increase with an annual rate of $1.40
- 2006 year-end stock price: $36.94
- 2006 dividend yield on year-end
stock price: 3.6%
Mark T. Thies, Executive Vice President & CFO
Dale Jahr, Director of Investor Relations
625 Ninth Street, Rapid City, SD 57701
605-721-2326
djahr@bh-corp.com
|
