For Information Contact: Mark T. Thies,
Executive Vice President and Chief Financial Officer; Dale T. Jahr, Director,
Investor Relations
RAPID CITY, SD—August 30, 2006—Black Hills Corporation (NYSE: BKH) today announced the completion of the acquisition of additional ownership interests and leasehold in the Piceance Basin of Colorado. The purchase price for the transactions was approximately $24.1 million.
The Company recently completed its acquisition from a third party of most of the remaining working interests associated with the property acquired in March 2006 from Koch Exploration Company. The acquisition included approximately 22.4 billion cubic feet equivalent (Bcfe) of proven reserves, of which 17.9 Bcfe are proved undeveloped reserves. Current annual net production from the assets is slightly less than 0.5 Bcfe.
As part of the transaction, the Company also acquired rights to more than 15,000 net acres of undeveloped leasehold adjacent or near existing operations in the Piceance Basin of Colorado. The Company's leasehold position in the Piceance Basin totals approximately 73,000 net acres.
David R. Emery, Chairman and CEO of Black Hills Corporation, said, "In 2006, we have acquired about
62 billion cubic feet of natural gas reserves and 46,000 net acres of leasehold in Colorado, much of which is undeveloped. The most recent acquisition permits us to further consolidate our exploration and production activity in the Piceance Basin," Emery continued. "The expansion and concentration of assets is expected to improve our operating efficiency and management of capital deployment. We continue to make progress on planning a multi-year drilling and development program. Currently, we are focusing on recompletions and reworks of existing wells to boost near-term production and expect to commence drilling new wells next year."
ABOUT BLACK HILLS CORPORATION
Black Hills Corporation is a diversified energy company. Black Hills Energy, the wholesale energy business unit, generates electricity, produces natural gas, oil and coal, and markets energy. Our retail businesses are Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Cheyenne Light, Fuel & Power, an electric and gas distribution utility serving the Cheyenne, Wyoming vicinity. More information is available at our Internet web site: www.blackhillscorp.com.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This news release includes "forward-looking statements" as defined by the Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including the risk factors described in Item 1A of Part I of our 2005 Annual Report on Form 10-K and in Item 1A of Part II of our quarterly reports on Form 10-Q filed with the SEC, and the following:
- Obtaining adequate cost recovery for our retail operations through regulatory proceedings;
- The amount and timing of capital deployment in new investment opportunities or for the repurchase of debt or stock;
- The completion of acquisitions or divestitures for which definitive agreements have been executed could be delayed or may not occur or may not receive regulatory approval if required;
- The volumes of our production from oil and gas development properties, which may be dependent upon issuance by federal, state, and tribal governments, or agencies thereof, of drilling, environmental and other permits, and the availability of specialized contractors, work force, and equipment;
- The extent of our success in connecting natural gas supplies to gathering, processing and pipeline systems;
- The timing and extent of scheduled and unscheduled outages of power generation facilities;
- Our ability to successfully combine with and profitably operate any future acquisitions;
- Unfavorable rulings in the periodic applications to recover costs for fuel and purchased power in our regulated utilities;
- The possibility that we may be required to take impairment charges to reduce the carrying value of some of our long-lived assets when indicators of impairment emerge;
- Numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and actual future production rates and associated costs;
- Changes in business and financial reporting practices arising from the repeal of the Public Utility Holding Company Act of 1935 and other provisions of the recently enacted Energy Policy Act of 2005.
- Our ability to remedy any deficiencies that may be identified in the periodic review of our internal controls;
- The timing and extent of changes in energy-related and commodity prices, interest rates, energy and commodity supply or volume, the cost and availability of transportation of commodities, and demand for our services, all of which can affect our earnings, liquidity position and the underlying value of our assets;
- General economic and political conditions, including tax rates or policies and inflation rates;
- Our effective use of derivative financial instruments to hedge commodity, currency exchange rate and interest rate risks;
- The creditworthiness of counterparties to trading and other transactions, and defaults on amounts due from counterparties;
- The amount of collateral required to be posted from time to time in our transactions;
- Changes in or compliance with laws and regulations, particularly those relating to taxation, safety and protection of the environment;
- Changes in state laws or regulations that could cause us to curtail our independent power production;
- Weather and other natural phenomena;
- Industry and market changes, including the impact of consolidations and changes in competition;
- The effect of accounting policies issued periodically by accounting standard-setting bodies;
- The cost and effects on our business, including insurance, resulting from terrorist actions and natural disasters or responses to such actions and events;
- The outcome of any ongoing or future litigation or similar disputes and the impact on any such outcome or related settlements;
- Capital market conditions, which may affect our ability to raise capital on favorable terms;
- Price risk due to marketable securities held as investments in benefit plans; and
- Other factors discussed from time to time in our other filings with the SEC.
New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise.
