CURRENT REPORT | |
PURSUANT TO SECTION 13 OR 15(d) OF THE | |
SECURITIES EXCHANGE ACT OF 1934 | |
Date of Report (Date of earliest event reported) November 7, 2012 |
Black Hills Corporation | |
(Exact name of registrant as specified in its charter) | |
South Dakota | |
(State or other jurisdiction of incorporation) | |
001-31303 | 46-0458824 | |
(Commission File Number) | (IRS Employer Identification No.) | |
625 Ninth Street | ||
Rapid City, South Dakota | 57709-1400 | |
(Address of principal executive offices) | (Zip Code) | |
605.721-1700 | ||
(Registrants telephone number, indicating area code) | ||
Not Applicable | ||
(Former name or former address, if changed since last report) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
Soliciting materials pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(d)) | ||
Pre-commencement communications pursuant to Rule 13e-e(c) under the Exchange Act (17 CFR 240.13e-4(c) | ||
Exhibit No. | Description | ||
99 | Press release dated | November 7, 2012 |
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||
(in millions, except per share amounts) | 2012 | 2011 | 2012 | 2011 | ||||||||
Non-GAAP *: | ||||||||||||
Income from continuing operations, as adjusted | $ | 18.7 | $ | 13.7 | $ | 62.3 | $ | 48.0 | ||||
Income (loss) from discontinued operations, net of tax | (0.2 | ) | 0.6 | (6.8 | ) | 2.5 | ||||||
Net income, as adjusted (non-GAAP) | $ | 18.5 | $ | 14.3 | $ | 55.5 | $ | 50.5 | ||||
Earnings per share from continuing operations, as adjusted, diluted | $ | 0.42 | $ | 0.35 | $ | 1.41 | $ | 1.21 | ||||
Earnings (loss) per share, discontinued operations, net of tax | — | 0.02 | (0.16 | ) | 0.07 | |||||||
Earnings per share, as adjusted, diluted (non-GAAP) | $ | 0.42 | $ | 0.37 | $ | 1.25 | $ | 1.28 | ||||
GAAP: | ||||||||||||
Income from continuing operations | $ | 34.6 | $ | (11.2 | ) | $ | 57.6 | $ | 21.6 | |||
Income (loss) from discontinued operations, net of tax | (0.2 | ) | 0.6 | (6.8 | ) | 2.5 | ||||||
Net income | $ | 34.5 | $ | (10.5 | ) | $ | 50.8 | $ | 24.1 | |||
Earnings per share from continuing operations, diluted | $ | 0.78 | $ | (0.29 | ) | $ | 1.31 | $ | 0.54 | |||
Income (loss) from discontinued operations, net of tax | — | 0.02 | (0.16 | ) | 0.07 | |||||||
Earnings per share, diluted | $ | 0.78 | $ | (0.27 | ) | $ | 1.15 | $ | 0.61 |
* | This is a Non-GAAP measure, and an accompanying schedule for the GAAP to Non-GAAP adjustment reconciliation is provided below. |
• | Cheyenne Light and Black Hills Power received final approvals and permits for the Cheyenne Prairie Generating Station. The Wyoming Public Service Commission approved the certificate of public convenience and necessity on July 31 authorizing the construction, operation and maintenance of a new 132 megawatt, $237 million natural gas-fired electric generating facility in Cheyenne, Wyo. The state of Wyoming issued the air permit for the project on Aug. 31, and the U.S. Environmental Protection Agency issued the greenhouse gas air permit on Sept. 27. Upon receipt of this final permit, the major equipment for the project was ordered. Commencement of construction is expected in spring 2013. Project costs for plant construction and associated transmission are estimated at $222 million, with up to $15 million of construction financing costs, for a total of $237 million. |
• | On Oct. 30, Cheyenne Light and Black Hills Power received approval from the Wyoming Public Service Commission to use a construction financing rider for Cheyenne Prairie Generating Station in lieu of the traditional allowance for funds used during construction. The rider allows Cheyenne Light and Black Hills Power to earn and collect a rate of return during the construction period on the approximately 60 percent of the project cost related to serving Wyoming customers. The company is evaluating filing for a similar rider in South Dakota. |
• | On Oct. 16, Colorado Electric’s 29 megawatt Busch Ranch wind project south of Pueblo, Colo., commenced commercial operation. Colorado Electric’s share of the project’s cost is approximately $26 million. On Sept. 18, the company completed the sale of a 50 percent undivided ownership interest in the project to the co-owner. |
• | On Aug. 6, Black Hills Power and Colorado Electric announced plans to suspend plant operations at some of their older coal-fired and natural gas-fired facilities. In addition, the companies identified retirement dates for the older coal-fired power plants because of state and federal environmental regulations. The affected plants are listed in the table below with their operations suspension date (if applicable) and their ultimate retirement date (if identified). |
Plant | Company | Megawatts | Type of Plant | Suspend Date | Retirement Date | Age of Plant (in years) |
Osage | Black Hills Power | 34.5 | Coal | Oct. 1, 2010 | March 21, 2014 | 64 |
Ben French | Black Hills Power | 25.0 | Coal | Aug. 31, 2012 | March 21, 2014 | 52 |
Neil Simpson I | Black Hills Power | 21.8 | Coal | NA | March 21, 2014 | 43 |
W.N. Clark | Colorado Electric | 40.0 | Coal | Dec. 31, 2012 | Dec. 31, 2013 | 57 |
Pueblo Unit #5 | Colorado Electric | 9.0 | Gas | Dec. 31, 2012 | to be determined | 71 |
Pueblo Unit #6 | Colorado Electric | 20.0 | Gas | Dec. 31, 2012 | to be determined | 63 |
• | On July 30, Colorado Electric filed its electric resource plan with the Colorado Public Utilities Commission seeking to develop and own replacement capacity for the retirement of the coal-fired W.N. Clark power plant, which was previously ordered to be retired by the commission to comply with the Colorado Clean Air – Clean Jobs Act. The commission dismissed the initial filing and directed Colorado Electric to refile the ERP by Jan. 18, 2013 in order to address alternatives for the replacement capacity for its coal-fired W.N. Clark power plant, as well as the retirement of Pueblo No. 5 and No. 6. The commission also directed Colorado Electric to request certificates of public convenience and necessity for any replacement capacity that Colorado Electric seeks to develop and own. |
• | On June 4, Colorado Gas filed a request with the Colorado Public Utilities Commission for an increase in annual gas revenues to recover capital investments and increased operation and maintenance expenses. The commission required this rate case filing as part of a previous settlement agreement when Black Hills Corp. purchased Colorado Gas. All parties reached a rate case settlement, and the settlement hearing was held on Oct. 12, 2012. A decision is expected in the first quarter of 2013. The settlement, if approved, includes a $0.2 million revenue increase, a return on equity of 9.6 percent, a cost of debt of 7.2 percent, and a capital structure of 50 percent equity and 50 percent debt. |
• | Weather was a contributing factor for utility results in the third quarter. Our service territories reported warmer weather, as measured by degree days, compared with the 30-year average and the same period last year. Although temperatures were above normal, weather-related demand was tempered by significantly lower humidity in the company’s service territories in 2012 compared with 2011. |
• | On Sept. 27, the company’s oil and gas business segment sold approximately 85 percent of its Williston Basin assets for net cash proceeds of approximately $227 million. |
• | On Oct. 31, the company redeemed $225 million of senior unsecured, 6.5 percent notes which were originally scheduled to mature on May 15, 2013. |
• | On Oct. 30, Black Hills Corp. declared a quarterly dividend of $0.37 per share, equivalent to an annual dividend rate of $1.48 per share. Through 2012, the company has increased its dividend for 42 consecutive years. |
• | On Oct. 16, Standard & Poor’s Ratings Services changed its credit ratings outlook for Black Hills Corp. and Black Hills Power from stable to positive. On Oct. 18, Moody’s Investors Service also changed its credit ratings outlook for Black Hills Corp. and Black Hills Power from stable to positive. |
(in millions) | Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||
Net income (loss): | |||||||||||||
Utilities: | |||||||||||||
Electric | $ | 14.6 | $ | 15.8 | $ | 37.5 | $ | 34.6 | |||||
Gas | — | 0.6 | 16.4 | 24.3 | |||||||||
Total Utilities Group | 14.6 | 16.4 | 53.9 | 58.9 | |||||||||
Non-regulated Energy: | |||||||||||||
Power generation | 5.1 | 0.3 | 16.0 | 2.1 | |||||||||
Coal mining | 1.7 | 0.5 | 3.9 | (1.1 | ) | ||||||||
Oil and gas (a) | 17.4 | 0.2 | (2.2 | ) | (0.6 | ) | |||||||
Total Non-regulated Energy Group | 24.2 | 1.0 | 17.7 | 0.4 | |||||||||
Corporate and Eliminations (b) (c) | (4.2 | ) | (28.6 | ) | (14.0 | ) | (37.7 | ) | |||||
Income from continuing operations | 34.6 | (11.2 | ) | 57.6 | 21.6 | ||||||||
Income (loss) from discontinued operations, net of tax (c) | (0.2 | ) | 0.6 | (6.8 | ) | 2.5 | |||||||
Net income (loss) | $ | 34.5 | $ | (10.5 | ) | $ | 50.8 | $ | 24.1 |
(a) | Financial results for the three and nine months ended Sept. 30, 2012 include a $17.7 million after-tax gain on sale of our Williston Basin assets and the nine months ended Sept. 30, 2012 include a non-cash after-tax ceiling test impairment of $17.3 million. |
(b) | Financial results include a $0.4 million net after-tax non-cash mark-to-market gain and a $1.9 million net after-tax non-cash mark-to-market loss on interest rate swaps for the three and nine months ended Sept. 30, 2012, respectively, and a $24.9 million and $26.4 million net after-tax non-cash mark-to-market loss on interest rate swaps for the three and nine months ended Sept. 30, 2011, respectively. |
(c) | Certain indirect corporate costs and inter-segment interest expense previously charged to our Energy Marketing segment could not be reclassified to discontinued operations and accordingly have been presented within Corporate in the after-tax amount of $0.5 million for the three months ended Sept. 30, 2011, while after-tax indirect corporate costs and inter-segment interest expense not reclassified to discontinued operations for the nine months ended Sept. 30, 2012 and 2011 totaled $1.6 million and $1.5 million, respectively. |
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | ||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||
Weighted average common shares outstanding (in thousands): | |||||||||||||
Basic | 43,847 | 39,145 | 43,792 | 39,105 | |||||||||
Diluted | 44,108 | 39,145 | 44,026 | 39,792 | |||||||||
Earnings per share: | |||||||||||||
Basic - | |||||||||||||
Continuing Operations | $ | 0.79 | $ | (0.29 | ) | $ | 1.31 | $ | 0.55 | ||||
Discontinued Operations | — | 0.02 | (0.16 | ) | 0.07 | ||||||||
Total Basic Earnings Per Share | $ | 0.79 | $ | (0.27 | ) | $ | 1.15 | $ | 0.62 | ||||
Diluted - | |||||||||||||
Continuing Operations | $ | 0.78 | $ | (0.29 | ) | $ | 1.31 | $ | 0.54 | ||||
Discontinued Operations | — | 0.02 | (0.16 | ) | 0.07 | ||||||||
Total Diluted Earnings Per Share | $ | 0.78 | $ | (0.27 | ) | $ | 1.15 | $ | 0.61 |
• | Capital spending of $440 million to $470 million, including oil and gas capital expenditures of $90 million to $105 million; |
• | Normal operations and weather conditions within our utility service territories that impact customer usage, and planned construction, maintenance and/or capital investment projects; |
• | Successful completion of rate cases for electric and gas utilities; |
• | No significant unplanned outages at any of our power generation facilities; |
• | Oil and natural gas production in the range of 9.3 to 10.3 Bcf equivalent; |
• | Oil and natural gas annual average NYMEX prices of $3.62 per MMBtu for natural gas and $91.78 per Bbl for oil; production-weighted average well-head prices of $2.56 per MMBtu and $81.61 per Bbl of oil, and average hedged prices received of $2.69 per MMBtu and $84.92 per Bbl; |
• | Oil and natural gas depletion expense in the range of $1.35 to $1.55 per Mcfe; |
• | Exclusion of mark-to-market changes on certain interest rate swaps; |
• | No equity financing in 2013 except for approximately $3 million from the dividend reinvestment program; and |
• | No significant acquisitions or divestitures. |
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | ||||||||||||||||||||||||||||||
(In millions, except per share amounts) | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||
(after-tax) | Income | EPS | Income | EPS | Income | EPS | Income | EPS | |||||||||||||||||||||||
Income (loss) from continuing operations (GAAP) | $ | 34.6 | $ | 0.78 | $ | (11.2 | ) | $ | (0.29 | ) | $ | 57.6 | $ | 1.31 | $ | 21.6 | $ | 0.54 | |||||||||||||
Adjustments, after-tax: | |||||||||||||||||||||||||||||||
Unrealized (gain) loss on certain interest rate swaps | (0.4 | ) | (0.01 | ) | 24.9 | 0.63 | 1.9 | 0.04 | 26.4 | 0.66 | |||||||||||||||||||||
Ceiling test impairment | — | — | — | — | 17.3 | 0.39 | — | — | |||||||||||||||||||||||
Gain on sale of Williston Basin assets | (17.7 | ) | (0.40 | ) | — | — | (17.7 | ) | (0.40 | ) | — | — | |||||||||||||||||||
Incentive compensation - Williston Basin sale | 2.2 | 0.05 | — | — | 2.2 | 0.05 | — | — | |||||||||||||||||||||||
Credit facility fee write off | — | — | — | — | 1.0 | 0.02 | — | — | |||||||||||||||||||||||
Rounding | — | — | — | 0.01 | — | — | — | 0.01 | |||||||||||||||||||||||
Total adjustments | (15.9 | ) | (0.36 | ) | 24.9 | 0.64 | 4.7 | 0.10 | 26.4 | 0.67 | |||||||||||||||||||||
Income (loss) from continuing operations, as adjusted (non-GAAP) | 18.7 | 0.42 | 13.7 | 0.35 | 62.3 | 1.41 | 48.0 | 1.21 | |||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | (0.2 | ) | — | 0.6 | 0.02 | (6.8 | ) | (0.16 | ) | 2.5 | 0.07 | ||||||||||||||||||||
Net income (loss), as adjusted (non-GAAP) | $ | 18.5 | $ | 0.42 | $ | 14.3 | $ | 0.37 | $ | 55.5 | $ | 1.25 | $ | 50.5 | $ | 1.28 |
Three Months Ended Sept. 30, | Variance | Nine Months Ended Sept. 30, | Variance | ||||||||||||||||
2012 | 2011 | 2012 vs. 2011 | 2012 | 2011 | 2012 vs. 2011 | ||||||||||||||
(in millions) | |||||||||||||||||||
Gross margin | $ | 88.0 | $ | 80.6 | $ | 7.4 | $ | 261.7 | $ | 224.6 | $ | 37.1 | |||||||
Operations and maintenance | 34.1 | 34.8 | (0.7 | ) | 110.2 | 106.1 | 4.1 | ||||||||||||
Gain on sale of operating asset | — | (0.8 | ) | 0.8 | — | (0.8 | ) | 0.8 | |||||||||||
Depreciation and amortization | 18.8 | 13.2 | 5.6 | 56.4 | 39.1 | 17.3 | |||||||||||||
Operating income | 35.1 | 33.3 | 1.8 | 95.1 | 80.2 | 14.9 | |||||||||||||
Interest expense, net | (12.5 | ) | (9.7 | ) | (2.8 | ) | (38.1 | ) | (29.8 | ) | (8.3 | ) | |||||||
Other (income) expense, net | 0.2 | 0.2 | — | 1.2 | 0.6 | 0.6 | |||||||||||||
Income tax benefit (expense) | (8.2 | ) | (8.0 | ) | (0.2 | ) | (20.8 | ) | (16.4 | ) | (4.4 | ) | |||||||
Income (loss) from continuing operations | $ | 14.6 | $ | 15.8 | $ | (1.2 | ) | $ | 37.5 | $ | 34.7 | $ | 2.8 |
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
Operating Statistics: | |||||||||
Retail sales - MWh | 1,230,266 | 1,232,679 | 3,475,472 | 3,456,841 | |||||
Contracted wholesale sales - MWh | 88,334 | 84,346 | 249,388 | 256,558 | |||||
Off-system sales - MWh | 288,528 | 395,769 | 1,171,198 | 1,253,385 | |||||
Total electric sales - MWh | 1,607,128 | 1,712,794 | 4,896,058 | 4,966,784 | |||||
Total gas sales - Cheyenne Light - Dth | 352,294 | 368,702 | 2,783,273 | 3,257,335 | |||||
Regulated power plant availability: | |||||||||
Coal-fired plants (a) | 95.4 | % | 95.1 | % | 89.1 | % | 91.6 | % | |
Other plants | 98.5 | % | 98.6 | % | 96.6 | % | 95.7 | % | |
Total availability | 97.0 | % | 96.4 | % | 93.0 | % | 93.1 | % |
(a) | Nine months ended Sept. 30, 2012 reflects an unplanned outage due to a transformer failure and a planned outage at Neil Simpson II and a planned overhaul at Wygen II. |
Three Months Ended Sept. 30, | Variance | Nine Months Ended Sept. 30, | Variance | ||||||||||||||||
2012 | 2011 | 2012 vs. 2011 | 2012 | 2011 | 2012 vs. 2011 | ||||||||||||||
(in millions) | |||||||||||||||||||
Gross margin | $ | 39.3 | $ | 39.5 | $ | (0.2 | ) | $ | 149.7 | $ | 163.4 | $ | (13.7 | ) | |||||
Operations and maintenance | 28.3 | 28.3 | — | 88.1 | 91.1 | (3.0 | ) | ||||||||||||
Depreciation and amortization | 6.3 | 6.1 | 0.2 | 18.7 | 18.0 | 0.7 | |||||||||||||
Operating income | 4.6 | 5.1 | (0.5 | ) | 42.9 | 54.3 | (11.4 | ) | |||||||||||
Interest expense, net | (5.4 | ) | (6.3 | ) | 0.9 | (17.7 | ) | (19.6 | ) | 1.9 | |||||||||
Other expense (income), net | — | — | — | 0.1 | 0.2 | (0.1 | ) | ||||||||||||
Income tax (expense) | 0.8 | 1.8 | (1.0 | ) | (8.9 | ) | (10.5 | ) | 1.6 | ||||||||||
Income (loss) from continuing operations | $ | — | $ | 0.6 | $ | (0.6 | ) | $ | 16.4 | $ | 24.3 | $ | (7.9 | ) |
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | ||||||||
Operating Statistics: | 2012 | 2011 | 2012 | 2011 | |||||
Total gas sales - Dth | 5,448,719 | 5,753,975 | 31,419,468 | 39,958,801 | |||||
Total transport volumes - Dth | 14,584,979 | 14,385,819 | 46,009,382 | 44,510,873 |
Three Months Ended Sept. 30, | Variance | Nine Months Ended Sept. 30, | Variance | ||||||||||||||||
2012 | 2011 | 2012 vs. 2011 | 2012 | 2011 | 2012 vs. 2011 | ||||||||||||||
(in millions) | |||||||||||||||||||
Revenue | $ | 21.0 | $ | 8.1 | $ | 12.9 | $ | 59.3 | $ | 23.5 | $ | 35.8 | |||||||
Operations and maintenance | 7.8 | 4.6 | 3.2 | 22.5 | 12.9 | 9.6 | |||||||||||||
Depreciation and amortization | 1.2 | 1.1 | 0.1 | 3.4 | 3.2 | 0.2 | |||||||||||||
Operating income | 12.0 | 2.4 | 9.6 | 33.4 | 7.5 | 25.9 | |||||||||||||
Interest expense, net | (3.1 | ) | (1.8 | ) | (1.3 | ) | (11.8 | ) | (5.5 | ) | (6.3 | ) | |||||||
Other (income) expense, net | — | — | — | — | 1.2 | (1.2 | ) | ||||||||||||
Income tax benefit (expense) | (3.8 | ) | (0.3 | ) | (3.5 | ) | (5.7 | ) | (1.1 | ) | (4.6 | ) | |||||||
Income (loss) from continuing operations | $ | 5.1 | $ | 0.3 | $ | 4.8 | $ | 16.0 | $ | 2.1 | $ | 13.9 |
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
Operating Statistics: | |||||||||
Contracted fleet power plant availability - | |||||||||
Coal-fired plants | 99.4 | % | 97.1 | % | 99.5 | % | 98.9 | % | |
Gas-fired plants | 99.4 | % | 100.0 | % | 99.3 | % | 100.0 | % | |
Total availability | 99.4 | % | 98.1 | % | 99.4 | % | 99.3 | % |
Three Months Ended Sept. 30, | Variance | Nine Months Ended Sept. 30, | Variance | ||||||||||||||||
2012 | 2011 | 2012 vs. 2011 | 2012 | 2011 | 2012 vs. 2011 | ||||||||||||||
(in millions) | |||||||||||||||||||
Revenue | $ | 14.7 | $ | 17.8 | $ | (3.1 | ) | $ | 42.8 | $ | 48.9 | $ | (6.1 | ) | |||||
Operations and maintenance | 10.8 | 14.2 | (3.4 | ) | 32.1 | 41.8 | (9.7 | ) | |||||||||||
Depreciation, depletion and amortization | 2.9 | 5.2 | (2.3 | ) | 9.6 | 14.4 | (4.8 | ) | |||||||||||
Operating income (loss) | 1.0 | (1.5 | ) | 2.5 | 1.1 | (7.2 | ) | 8.3 | |||||||||||
Interest income, net | — | 1.0 | (1.0 | ) | 1.2 | 2.9 | (1.7 | ) | |||||||||||
Other income (expense) | 0.5 | 0.5 | — | 2.1 | 1.7 | 0.4 | |||||||||||||
Income tax benefit (expense) | 0.2 | 0.5 | (0.3 | ) | (0.4 | ) | 1.6 | (2.0 | ) | ||||||||||
Income (loss) from continuing operations | $ | 1.7 | $ | 0.6 | $ | 1.1 | $ | 3.9 | $ | (1.1 | ) | $ | 5.0 |
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
Operating Statistics: | (in thousands) | ||||||||
Tons of coal sold | 1,105 | 1,550 | 3,191 | 4,155 | |||||
Cubic yards of overburden moved | 1,827 | 3,873 | 6,749 | 10,261 |
Three Months Ended Sept. 30, | Variance | Nine Months Ended Sept. 30, | Variance | ||||||||||||||||
2012 | 2011 | 2012 vs. 2011 | 2012 | 2011 | 2012 vs. 2011 | ||||||||||||||
(in millions) | |||||||||||||||||||
Revenue | $ | 24.7 | $ | 19.2 | $ | 5.5 | $ | 67.0 | $ | 55.9 | $ | 11.1 | |||||||
Operations and maintenance | 12.1 | 9.6 | 2.5 | 33.3 | 30.3 | 3.0 | |||||||||||||
Depreciation, depletion and amortization | 12.5 | 7.7 | 4.8 | 34.8 | 22.6 | 12.2 | |||||||||||||
Gain on sale of operating assets | (27.3 | ) | — | (27.3 | ) | (27.3 | ) | — | (27.3 | ) | |||||||||
Impairment of long-lived assets | — | — | — | 26.9 | — | 26.9 | |||||||||||||
Operating income | 27.4 | 1.9 | 25.5 | (0.7 | ) | 2.9 | (3.6 | ) | |||||||||||
Interest expense, net | (1.1 | ) | (1.5 | ) | 0.4 | (3.9 | ) | (4.2 | ) | 0.3 | |||||||||
Other (income) expense | 0.1 | 0.1 | — | 0.2 | — | 0.2 | |||||||||||||
Income tax benefit (expense), net | (9.0 | ) | (0.2 | ) | (8.8 | ) | 2.2 | 0.8 | 1.4 | ||||||||||
Income (loss) from continuing operations | $ | 17.4 | $ | 0.2 | $ | 17.2 | $ | (2.2 | ) | $ | (0.6 | ) | $ | (1.6 | ) |
Three Months Ended Sept. 30, | Percentage Increase | Nine Months Ended Sept. 30, | Percentage Increase | |||||||||||||
Operating Statistics: | 2012 | 2011 | (Decrease) | 2012 | 2011 | (Decrease) | ||||||||||
Bbls of crude oil sold | 184,423 | 98,950 | 86 | % | 485,262 | 303,401 | 60 | % | ||||||||
Mcf of natural gas sold | 2,278,801 | 2,147,172 | 6 | % | 7,119,087 | 6,264,460 | 14 | % | ||||||||
Gallons of NGL sold | 1,099,198 | 993,752 | 11 | % | 2,751,409 | 2,847,011 | (3 | )% | ||||||||
Mcf equivalent sales | 3,542,367 | 2,882,837 | 23 | % | 10,423,717 | 8,491,582 | 23 | % | ||||||||
Depletion expense/Mcfe | $ | 3.26 | $ | 2.38 | 37 | % | $ | 3.07 | $ | 2.38 | 29 | % |
Three Months Ended Sept. 30, 2012 | Three Months Ended Sept. 30, 2011 | ||||||||||||||||||
Average Prices | Crude Oil | Natural Gas | Natural Gas Liquids | Crude Oil | Natural Gas | Natural Gas Liquids | |||||||||||||
(Bbl) | (MMcf) | (gallons) | (Bbl) | (MMcf) | (gallons) | ||||||||||||||
Average hedged price received | $ | 88.69 | $ | 3.07 | $ | 0.65 | $ | 82.76 | $ | 4.24 | $ | 0.88 | |||||||
Average well-head price | $ | 88.83 | $ | 1.87 | $ | 85.07 | $ | 3.00 |
Nine Months Ended Sept. 30, 2012 | Nine Months Ended Sept. 30, 2011 | ||||||||||||||||||
Average Prices | Crude Oil | Natural Gas | Natural Gas Liquids | Crude Oil | Natural Gas | Natural Gas Liquids | |||||||||||||
(Bbl) | (MMcf) | (gallons) | (Bbl) | (MMcf) | (gallons) | ||||||||||||||
Average hedged price received | $ | 81.65 | $ | 3.27 | $ | 0.77 | $ | 76.25 | $ | 4.39 | $ | 0.94 | |||||||
Average well-head price | $ | 84.33 | $ | 1.61 | $ | 88.12 | $ | 2.87 |
• | The accuracy of our assumptions on which our earnings guidance is based; |
• | Our ability to continue our continuous improvement program and cost-reduction efforts to mitigate the impacts of earnings challenges in the first quarter through the remainder of 2012; |
• | Our ability to obtain adequate cost recovery for our utility operations through regulatory proceedings and favorable rulings in periodic applications to recover costs for capital additions, fuel, transmission and purchased power and the timing in which the new rates would go into effect; |
• | Our ability to complete our capital program in a cost-effective and timely manner; |
• | Our ability to successfully resolve the purchase price adjustments relating to the sale of Enserco Energy Inc.; and |
• | Other factors discussed from time to time in our filings with the SEC. |
Consolidating Income Statement | ||||||||||||||||||||||||||||||
Three Months Ended Sept. 30, 2012 | Electric Utilities | Gas Utilities | Power Generation | Coal Mining | Oil and Gas | Corporate | Electric Utility Inter-Co Lease Elim* | Power Generation Inter-Co Lease Elim* | Other Inter-Co Eliminations | Total | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
Revenue | $ | 151.3 | $ | 63.4 | $ | 1.3 | $ | 6.1 | $ | 24.7 | $ | — | $ | — | $ | — | $ | — | $ | 246.8 | ||||||||||
Intercompany revenue | 3.7 | — | 19.7 | 8.6 | — | 47.3 | — | 0.4 | (79.7 | ) | — | |||||||||||||||||||
Fuel, purchased power and cost of gas sold | 67.0 | 24.2 | — | — | — | — | 0.8 | — | (29.4 | ) | 62.6 | |||||||||||||||||||
Gross Margin | 88.0 | 39.2 | 21.0 | 14.7 | 24.7 | 47.3 | (0.8 | ) | 0.4 | (50.3 | ) | 184.2 | ||||||||||||||||||
Operations and maintenance | 34.1 | 28.3 | 7.8 | 10.8 | 12.1 | 46.8 | — | — | (47.6 | ) | 92.3 | |||||||||||||||||||
Gain on sale of operating asset | — | — | — | — | (27.3 | ) | — | — | — | — | (27.3 | ) | ||||||||||||||||||
Depreciation, depletion and amortization | 18.8 | 6.3 | 1.2 | 2.9 | 12.5 | 2.8 | (3.3 | ) | 3.0 | (2.8 | ) | 41.4 | ||||||||||||||||||
Impairment of long-lived assets | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Operating income | 35.1 | 4.6 | 12.0 | 1.0 | 27.4 | (2.3 | ) | 2.5 | (2.6 | ) | 0.1 | 77.8 | ||||||||||||||||||
Interest expense, net | (13.6 | ) | (5.9 | ) | (3.2 | ) | — | (1.1 | ) | (20.5 | ) | — | — | 18.1 | (26.2 | ) | ||||||||||||||
Interest rate swaps - unrealized (loss) gain | — | — | — | — | — | 0.6 | — | — | — | 0.6 | ||||||||||||||||||||
Interest income | 1.1 | 0.5 | 0.1 | — | — | 16.2 | — | — | (17.5 | ) | 0.4 | |||||||||||||||||||
Other income (expense) | 0.2 | — | — | 0.5 | 0.1 | 6.6 | — | — | (7.4 | ) | — | |||||||||||||||||||
Income tax benefit (expense) | (8.2 | ) | 0.8 | (3.8 | ) | 0.2 | (9.0 | ) | 2.0 | (0.9 | ) | 0.9 | — | (18.0 | ) | |||||||||||||||
Income (loss) from continuing operations | $ | 14.6 | $ | — | $ | 5.1 | $ | 1.7 | $ | 17.4 | $ | 2.6 | $ | 1.6 | $ | (1.7 | ) | $ | (6.7 | ) | $ | 34.6 |
Consolidating Income Statement | ||||||||||||||||||||||||||||||
Nine Months Ended Sept. 30, 2012 | Electric Utilities | Gas Utilities | Power Generation | Coal Mining | Oil and Gas | Corporate | Electric Utility Inter-Co Lease Elim* | Power Generation Inter-Co Lease Elim* | Other Inter-Co Eliminations | Total | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
Revenue | $ | 452.0 | $ | 314.3 | $ | 3.2 | $ | 18.5 | $ | 67.0 | $ | — | $ | — | $ | — | $ | — | $ | 855.0 | ||||||||||
Intercompany revenue | 11.9 | — | 56.1 | 24.3 | — | 143.9 | — | 1.2 | (237.4 | ) | — | |||||||||||||||||||
Fuel, purchased power and cost of gas sold | 202.2 | 164.6 | — | — | — | 0.1 | 2.4 | — | (86.1 | ) | 283.2 | |||||||||||||||||||
Gross margin | 261.7 | 149.7 | 59.3 | 42.8 | 67.0 | 143.8 | (2.4 | ) | 1.2 | (151.3 | ) | 571.8 | ||||||||||||||||||
Operations and maintenance | 110.2 | 88.1 | 22.5 | 32.1 | 33.3 | 135.2 | — | — | (139.0 | ) | 282.4 | |||||||||||||||||||
Gain on sale of operating asset | — | — | — | (27.3 | ) | — | — | — | — | (27.3 | ) | |||||||||||||||||||
Depreciation, depletion and amortization | 56.4 | 18.7 | 3.4 | 9.6 | 34.8 | 8.1 | (9.8 | ) | 8.2 | (8.0 | ) | 121.4 | ||||||||||||||||||
Impairment of long-lived assets | — | — | — | — | 26.9 | — | — | — | — | 26.9 | ||||||||||||||||||||
Operating income | 95.1 | 42.9 | 33.4 | 1.1 | (0.7 | ) | 0.5 | 7.4 | (7.0 | ) | (4.3 | ) | 168.4 | |||||||||||||||||
Interest expense, net | (44.8 | ) | (20.1 | ) | (12.3 | ) | — | (3.9 | ) | (64.0 | ) | — | — | 63.0 | (82.1 | ) | ||||||||||||||
Interest rate swaps - unrealized (loss) gain | — | — | — | — | — | (2.9 | ) | — | — | — | (2.9 | ) | ||||||||||||||||||
Interest income | 6.8 | 2.4 | 0.5 | 1.2 | — | 48.0 | — | — | (57.5 | ) | 1.4 | |||||||||||||||||||
Other income (expense) | 1.2 | 0.1 | — | 2.0 | 0.2 | 30.3 | — | — | (31.1 | ) | 2.7 | |||||||||||||||||||
Income tax benefit (expense) | (20.8 | ) | (8.9 | ) | (5.6 | ) | (0.4 | ) | 2.2 | 3.6 | (2.7 | ) | 2.5 | 0.2 | (29.9 | ) | ||||||||||||||
Income (loss) from continuing operations | $ | 37.5 | $ | 16.4 | $ | 16.0 | $ | 3.9 | $ | (2.2 | ) | $ | 15.5 | $ | 4.7 | $ | (4.5 | ) | $ | (29.7 | ) | $ | 57.6 |
Consolidating Income Statement | ||||||||||||||||||||||||
Three Months Ended Sept. 30, 2011 | Electric Utilities | Gas Utilities | Power Generation | Coal Mining | Oil and Gas | Corporate (a) | Intercompany Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Revenue | $ | 151.0 | $ | 72.7 | $ | 1.0 | $ | 9.2 | $ | 19.2 | $ | — | $ | — | $ | 253.1 | ||||||||
Intercompany revenue | 2.7 | — | 7.1 | 8.6 | — | 46.2 | (68.2 | ) | (3.6 | ) | ||||||||||||||
Fuel, purchased power and cost of gas sold | 73.1 | 33.2 | — | — | — | — | (20.2 | ) | 86.1 | |||||||||||||||
Gross margin | 80.6 | 39.5 | 8.1 | 17.8 | 19.2 | 46.2 | (48.0 | ) | 163.4 | |||||||||||||||
Operations and maintenance | 34.8 | 28.3 | 4.6 | 14.2 | 9.6 | 41.0 | (42.0 | ) | 90.5 | |||||||||||||||
Depreciation, depletion and amortization | 13.3 | 6.1 | 1.1 | 5.1 | 7.7 | 2.8 | (2.8 | ) | 33.3 | |||||||||||||||
Operating income | 33.3 | 5.1 | 2.4 | (1.5 | ) | 1.9 | 2.4 | (4.0 | ) | 39.6 | ||||||||||||||
Interest expense, net | (13.4 | ) | (7.8 | ) | (2.2 | ) | — | (1.5 | ) | (23.7 | ) | 25.8 | (22.8 | ) | ||||||||||
Interest rate swaps - unrealized (loss) gain | — | — | — | — | — | (38.2 | ) | — | (38.2 | ) | ||||||||||||||
Interest income | 3.7 | 1.5 | 0.4 | 1.0 | — | 16.4 | (22.5 | ) | 0.5 | |||||||||||||||
Other income (expense) | 0.2 | — | — | 0.5 | — | 3.1 | (3.1 | ) | 0.7 | |||||||||||||||
Income tax benefit (expense) | (8.0 | ) | 1.8 | (0.3 | ) | 0.5 | (0.2 | ) | 14.9 | 0.3 | 9.0 | |||||||||||||
Income (loss) from continuing operations | $ | 15.8 | $ | 0.6 | $ | 0.3 | $ | 0.5 | $ | 0.2 | $ | (25.1 | ) | $ | (3.5 | ) | $ | (11.2 | ) |
(a) | Certain direct corporate costs and inter-segment interest expense previously allocated to our Energy Marketing segment were not reclassified to discontinued operations but included in the Corporate segment. |
Consolidating Income Statement | ||||||||||||||||||||||||
Nine Months Ended Sept. 30, 2011 | Electric Utilities | Gas Utilities | Power Generation | Coal Mining | Oil and Gas | Corporate (a) | Intercompany Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Revenue | $ | 431.6 | $ | 402.8 | $ | 2.6 | $ | 23.1 | $ | 55.9 | $ | — | $ | — | $ | 916.0 | ||||||||
Intercompany revenue | 9.9 | — | 20.9 | 25.8 | — | 142.1 | (203.7 | ) | (5.0 | ) | ||||||||||||||
Fuel, purchased power and cost of gas sold | 216.9 | 239.4 | — | — | — | 0.1 | (55.9 | ) | 400.5 | |||||||||||||||
Gross margin | 224.6 | 163.4 | 23.5 | 48.9 | 55.9 | 142.0 | (147.8 | ) | 510.5 | |||||||||||||||
Operations and maintenance | 106.1 | 91.1 | 12.9 | 41.8 | 30.3 | 125.8 | (129.0 | ) | 279.0 | |||||||||||||||
Depreciation, depletion and amortization | 39.1 | 18.0 | 3.1 | 14.4 | 22.6 | 8.2 | (8.0 | ) | 97.4 | |||||||||||||||
Operating income | 80.2 | 54.3 | 7.5 | (7.3 | ) | 3.0 | 8.0 | (11.6 | ) | 134.1 | ||||||||||||||
Interest expense, net | (40.5 | ) | (24.0 | ) | (6.6 | ) | — | (4.2 | ) | (69.0 | ) | 75.3 | (69.0 | ) | ||||||||||
Interest rate swaps - unrealized (loss) gain | — | — | — | — | — | (40.6 | ) | — | (40.6 | ) | ||||||||||||||
Interest income | 10.7 | 4.3 | 1.2 | 2.9 | — | 46.8 | (64.4 | ) | 1.5 | |||||||||||||||
Other income (expense) | 0.6 | 0.2 | 1.1 | 1.7 | (0.1 | ) | 32.9 | (32.9 | ) | 3.5 | ||||||||||||||
Income tax benefit (expense) | (16.4 | ) | (10.5 | ) | (1.1 | ) | 1.6 | 0.7 | 17.5 | 0.3 | (7.9 | ) | ||||||||||||
Income (loss) from continuing operations | $ | 34.6 | $ | 24.3 | $ | 2.1 | $ | (1.1 | ) | $ | (0.6 | ) | $ | (4.4 | ) | $ | (33.3 | ) | $ | 21.6 |
(a) | Certain direct corporate costs and inter-segment interest expense previously allocated to our Energy Marketing segment were not reclassified to discontinued operations but included in the Corporate segment. |
Investor Relations: | |
Jerome Nichols | 605-721-1171 |
Media Contact: | |
Media Relations Line | 866-243-9002 |
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