CURRENT REPORT | |
PURSUANT TO SECTION 13 OR 15(d) OF THE | |
SECURITIES EXCHANGE ACT OF 1934 |
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 | February 2, 2015 |
Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | |||||||||||
(in millions, except per share amounts) | 2014 | 2013 | 2014 | 2013 | ||||||||
Non-GAAP:* | ||||||||||||
Income from continuing operations, as adjusted | $ | 34.0 | $ | 31.0 | $ | 128.8 | $ | 108.7 | ||||
Income (loss) from discontinued operations | — | (0.9 | ) | — | (0.9 | ) | ||||||
Net income, as adjusted (Non-GAAP) | $ | 34.0 | $ | 30.1 | $ | 128.8 | $ | 107.8 | ||||
Earnings per share from continuing operations, as adjusted, diluted | $ | 0.76 | $ | 0.70 | $ | 2.89 | $ | 2.45 | ||||
Earnings per share, discontinued operations | — | (0.02 | ) | — | (0.02 | ) | ||||||
Earnings per share, as adjusted (Non-GAAP) | $ | 0.76 | $ | 0.68 | $ | 2.89 | $ | 2.43 | ||||
GAAP: | ||||||||||||
Income from continuing operations | $ | 34.0 | $ | 19.0 | $ | 128.8 | $ | 115.8 | ||||
Income (loss) from discontinued operations | — | (0.9 | ) | — | (0.9 | ) | ||||||
Net income | $ | 34.0 | $ | 18.1 | $ | 128.8 | $ | 115.0 | ||||
Earnings per share from continuing operations, diluted | $ | 0.76 | $ | 0.43 | $ | 2.89 | $ | 2.61 | ||||
Income (loss) from discontinued operations | — | (0.02 | ) | — | (0.02 | ) | ||||||
Earnings per share, diluted | $ | 0.76 | $ | 0.41 | $ | 2.89 | $ | 2.59 | ||||
* An accompanying schedule for the GAAP to Non-GAAP adjustment reconciliation is provided below. |
• | On Dec. 19, Colorado Electric received approval from the Colorado Public Utilities Commission to increase annual revenue by an estimated $3.1 million, effective Jan. 1, 2015. Colorado Electric previously received approval from the commission to construct a 40 megawatt, natural gas-fired combustion turbine. The commission also authorized the implementation of a rider for a return on capital expenditures associated with constructing the combustion turbine. |
• | On Dec. 16, Kansas Gas received approval from the Kansas Corporation Commission to increase annual base revenue by an estimated $5.2 million, effective Jan. 1, 2015. |
• | On Oct. 1, Black Hills Power and Cheyenne Light, Fuel & Power placed into commercial service the jointly-owned Cheyenne Prairie Generating Station. |
◦ | On Oct. 1, Black Hills Power and Cheyenne Light closed the sale of $160 million of first mortgage bonds in a private placement to provide permanent financing for the plant. |
◦ | On Aug. 21, Black Hills Power received approval from the Wyoming Public Service Commission to increase annual electric revenues by approximately $2.2 million, effective Oct. 1, 2014. The new rates apply to electric service for the utility's 2,700 customers in Wyoming. |
◦ | On July 31, Cheyenne Light received approval from the Wyoming Public Service Commission to increase annual electric revenues by approximately $8.4 million and natural gas revenues by approximately $0.8 million, effective Oct. 1, 2014. |
◦ | On March 21, Black Hills Power filed a rate request with the South Dakota Public Utilities Commission to increase its annual electric revenue by $14.6 million. Interim rates were implemented on Oct. 1. Hearings were held Jan. 27-28, 2015, and the commission’s final decision is expected in the first quarter. |
• | On July 22, Black Hills Power filed for a certificate of public convenience and necessity with the Wyoming Public Service Commission to construct a new 144-mile, $54 million electric transmission line from northeastern Wyoming to Rapid City, South Dakota. Approval for the CPCN is anticipated in the second quarter of 2015. Black Hills Power has received approval from the South Dakota Public Utilities Commission for a permit to construct the line. |
• | On July 21, Cheyenne Light recorded a new all-time peak load of 198 megawatts, exceeding the previous peak load of 192 megawatts set in December 2013. |
• | On May 5, Colorado Electric issued an all-source generation request, including up to 60 megawatts of eligible renewable energy resources to serve its customers in southern Colorado. Our power generation segment submitted solar and wind bids in response to the request. On December 23, the independent evaluator submitted a report to the Colorado Public Utilities Commission confirming the ranking of the bids. The report’s results indicate that our standalone bids were not |
• | On April 25, Cheyenne Light received approval from the Federal Energy Regulatory Commission to establish rates for transmission services under its Open Access Transmission Tariff, effective May 3, 2014. The approval includes a return on equity of 10.6 percent and a capital structure of 54 percent equity and 46 percent debt. |
• | On March 21, Black Hills Power retired the Ben French, Neil Simpson I and Osage coal-fired power plants. These three plants, totaling 81 megawatts, were closed because of federal environmental regulations. These plants were partially replaced by Black Hills Power's share of the Cheyenne Prairie Generating Station. |
• | We continue to acquire small natural gas distribution systems near our existing utility service territories. |
◦ | On Jan. 1, 2015, we closed a $6 million transaction to acquire the natural gas utility assets of MGTC, Inc., a northeast Wyoming system serving more than 400 customers. This system will be operated by and consolidated into the results of Cheyenne Light. |
◦ | On Oct. 14, Black Hills Corp. entered into an agreement to acquire a natural gas utility with 6,700 customers in northwest Wyoming and nearby pipeline assets for $17 million, subject to customary closing adjustments. An expedited approval process has been requested, with an expected closing in the second quarter. |
◦ | On April 1, we purchased a small natural gas system in Kansas adding approximately 70 new customers. |
• | On Sept. 3, power generation closed the sale of its 40 megawatt natural gas-fired combustion turbine to the City of Gillette, Wyoming, for approximately $22 million. The transaction includes a 20-year agreement for Black Hills Wyoming to operate the plant and share in savings when market power purchases cost less than operating the generating unit. |
• | Coal mine completed negotiations for the coal price reopener related to Wyodak power plant contract. The new coal price of $18.25 per ton, an increase of approximately $4.75 per ton, was effective July 1. |
• | Oil and gas drilled and completed three horizontal wells in the Mancos Shale formation in the southern Piceance Basin. The wells are expected to be placed on production in February. Drilling operations are ongoing for three additional Mancos wells. These wells are expected to be placed on production in the second quarter of 2015. |
• | On Jan. 28, 2015, the Black Hills Corp. board of directors approved an increase in the quarterly dividend of $0.015 per common share to $0.405 per share, equivalent to an annual increase of $0.06 and dividend rate of $1.62 per share. This represents the 45th consecutive annual dividend increase. Common shareholders of record at the close of Feb. 13, 2015, will receive $0.405 per share, payable on March 1, 2015. |
• | On May 29, Black Hills amended and extended its $500 million, unsecured revolving credit facility at improved pricing for a five-year term expiring May 29, 2019. |
• | During 2014, two credit agencies raised their corporate credit ratings for Black Hills. On Jan. 30, 2014, Moody’s Investors Service raised the company’s corporate rating to Baa1 from Baa2, with a stable outlook. On June 13, 2014, Fitch Ratings upgraded the company's corporate credit rating to BBB+ from BBB, with a stable outlook. |
• | The company recently announced that Anthony Cleberg, executive vice president and chief financial officer, will retire at the end of March 2015. Richard Kinzley, previously vice president and controller and a 15-year veteran of the company, was appointed senior vice president and chief financial officer, effective Jan. 1, 2015. In addition, the senior leadership team was expanded when Brian Iverson, previously vice president and treasurer and 11-year veteran of the company, was appointed senior vice president regulatory and government affairs and assistant general counsel. |
• | The company announced two new corporate officers to fill the positions vacated upon the promotions of Kinzley and Iverson. Esther Newbrough, previously assistant corporate controller, was appointed vice president - corporate controller, and Kimberly Nooney, previously assistant treasurer, was appointed vice president - treasurer. |
(in millions, except per share amounts) | Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | |||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Net income (loss): | |||||||||||||
Utilities: | |||||||||||||
Electric | $ | 15.4 | $ | 14.1 | $ | 59.6 | $ | 52.1 | |||||
Gas | 13.6 | 12.5 | 41.9 | 32.7 | |||||||||
Total Utilities Group | 29.0 | 26.6 | 101.5 | 84.8 | |||||||||
Non-regulated Energy: | |||||||||||||
Power generation (a) | 5.4 | (1.1 | ) | 28.5 | 16.3 | ||||||||
Coal mining | 3.3 | 1.1 | 10.5 | 6.3 | |||||||||
Oil and gas | (3.8 | ) | (0.5 | ) | (10.6 | ) | (4.2 | ) | |||||
Total Non-regulated Energy Group | 4.9 | (0.5 | ) | 28.3 | 18.4 | ||||||||
Corporate and Eliminations (b) (c) | 0.1 | (7.1 | ) | (1.0 | ) | 12.6 | |||||||
Income from continuing operations | 34.0 | 19.0 | 128.8 | 115.8 | |||||||||
Income (loss) from discontinued operations, net of tax | — | (0.9 | ) | — | (0.9 | ) | |||||||
Net income | $ | 34.0 | $ | 18.1 | $ | 128.8 | $ | 114.9 | |||||
Weighted average common shares outstanding - Diluted | 44.6 | 44.5 | 44.6 | 44.4 | |||||||||
Diluted - | |||||||||||||
Continuing Operations | $ | 0.76 | $ | 0.43 | $ | 2.89 | $ | 2.61 | |||||
Discontinued Operations | — | (0.02 | ) | — | (0.02 | ) | |||||||
Total Diluted Earnings Per Share | $ | 0.76 | $ | 0.41 | $ | 2.89 | $ | 2.59 |
(a) | Power Generation results for the three and 12 months ended Dec. 31, 2013, include an after-tax expense of $6.6 million for the early settlement of interest rate swaps in conjunction with the early repayment of the Black Hills Wyoming Project Financing debt and the write-off of deferred financing costs. |
(b) | Corporate results for the three and 12 months ended Dec. 31, 2013, include a non-cash after-tax gain related to mark-to-market adjustment on certain interest rate swaps of $0.5 million and $20 million, respectively. |
(c) | Corporate results for the 12 months ended Dec. 31, 2013, include $7.6 million after-tax expense for a make-whole premium, write-off of deferred financing costs for early redemption of our $250 million notes and interest expense on new debt. |
• | Capital spending of $457 million, including oil and gas capital expenditures of $123 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 12.5 to 14.0 billion cubic feet equivalent; |
• | Oil and natural gas annual average NYMEX prices of $3.00 per million British thermal units for natural gas and $50.00 per barrel for oil; production-weighted average well-head prices of $1.56 per MMBtu for natural gas and $45.00 per bbl of oil, and average hedged prices received of $2.08 per MMBtu and $56.78 per bbl; |
• | Oil and natural gas depletion expense in the range of $2.35 to $2.55 per million cubic feet equivalent; |
• | Excludes any non-cash ceiling test impairment charges we may be required to take if natural gas and crude oil prices remain at low levels for an extended period of time; |
• | No equity financing in 2015 except for approximately $3 million from the dividend reinvestment program; and |
• | No significant acquisitions or divestitures. |
Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | ||||||||||||||||||||||||||||||
(In millions, except per share amounts) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||
(after-tax) | Income | EPS | Income | EPS | Income | EPS | Income | EPS | |||||||||||||||||||||||
Income (loss) from continuing operations (GAAP) | $ | 34.0 | $ | 0.76 | $ | 19.0 | $ | 0.43 | $ | 128.8 | $ | 2.89 | $ | 115.8 | $ | 2.61 | |||||||||||||||
Adjustments, after-tax: | |||||||||||||||||||||||||||||||
Unrealized (gain) loss on certain interest rate swaps | — | — | (0.5 | ) | (0.01 | ) | — | — | (19.6 | ) | (0.44 | ) | |||||||||||||||||||
Costs associated with payment of Black Hills Wyoming Project Debt Settlement including settlement of interest rate swaps and write-off of deferred financing cost, net of interest savings | — | — | 6.6 | 0.15 | — | — | 6.6 | 0.15 | |||||||||||||||||||||||
Financing costs relating to repayment of $250 million bonds, net of interest savings (a) | — | — | 5.9 | 0.13 | — | — | 5.9 | 0.13 | |||||||||||||||||||||||
Total adjustments | — | — | 12.0 | 0.27 | — | — | (7.1 | ) | (0.16 | ) | |||||||||||||||||||||
Income (loss) from continuing operations, as adjusted (Non-GAAP) | 34.0 | 0.76 | 31.0 | 0.70 | 128.8 | 2.89 | 108.7 | 2.45 | |||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | — | — | (0.9 | ) | (0.02 | ) | — | — | (0.9 | ) | (0.02 | ) | |||||||||||||||||||
Net income (loss) (Non-GAAP) | $ | 34.0 | $ | 0.76 | $ | 30.1 | $ | 0.68 | $ | 128.8 | $ | 2.89 | $ | 107.8 | $ | 2.43 |
(a) | Financing costs include a make-whole premium, write-off of deferred financing costs and interest expense on the new debt. |
Three Months Ended Dec. 31, | Increase (Decrease) | Twelve Months Ended Dec. 31, | Increase (Decrease) | ||||||||||||||||
2014 | 2013 | 2014 vs. 2013 | 2014 | 2013 | 2014 vs. 2013 | ||||||||||||||
(in millions) | |||||||||||||||||||
Gross margin | $ | 101.9 | $ | 93.6 | $ | 8.3 | $ | 382.7 | $ | 371.3 | $ | 11.4 | |||||||
Operations and maintenance | 43.7 | 40.6 | 3.1 | 165.6 | 160.0 | 5.6 | |||||||||||||
Depreciation and amortization | 21.4 | 19.5 | 1.9 | 79.4 | 77.7 | 1.7 | |||||||||||||
Operating income | 36.8 | 33.5 | 3.3 | 137.7 | 133.6 | 4.1 | |||||||||||||
Interest expense, net | (13.2 | ) | (14.0 | ) | 0.8 | (48.8 | ) | (56.3 | ) | 7.5 | |||||||||
Other (expense) income, net | 0.2 | 0.2 | — | 1.2 | 0.6 | 0.6 | |||||||||||||
Income tax benefit (expense) | (8.3 | ) | (5.6 | ) | (2.7 | ) | (30.5 | ) | (25.8 | ) | (4.7 | ) | |||||||
Income (loss) from continuing operations | $ | 15.4 | $ | 14.1 | $ | 1.3 | $ | 59.6 | $ | 52.1 | $ | 7.5 |
Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | ||||||||
Operating Statistics: | 2014 | 2013 | 2014 | 2013 | |||||
Retail sales - MWh | 1,212,592 | 1,172,249 | 4,775,808 | 4,642,254 | |||||
Contracted wholesale sales - MWh | 89,930 | 88,664 | 340,871 | 357,193 | |||||
Off-system sales - MWh | 284,808 | 366,422 | 1,118,641 | 1,456,762 | |||||
Total electric sales - MWh | 1,587,330 | 1,627,335 | 6,235,320 | 6,456,209 | |||||
Total gas sales - Cheyenne Light - Dth | 1,435,290 | 1,813,603 | 4,537,995 | 5,034,357 | |||||
Regulated power plant availability: | |||||||||
Coal-fired plants (a) | 98.1 | % | 96.4 | % | 93.8 | % | 96.7 | % | |
Other plants (b) | 93.0 | % | 96.1 | % | 90.2 | % | 96.5 | % | |
Total availability | 94.8 | % | 96.3 | % | 91.5 | % | 96.6 | % |
(a) | The 12 months ended Dec. 31, 2014 reflect a planned overhaul on Neil Simpson II for emissions controls upgrades. |
(b) | The 12 months ended Dec. 31, 2014 reflect planned overhauls for control system upgrades to meet NERC cyber security regulations on the Ben French CT's 1-4. |
Three Months Ended Dec. 31, | Increase (Decrease) | Twelve Months Ended Dec. 31, | Increase (Decrease) | ||||||||||||||||
2014 | 2013 | 2014 vs. 2013 | 2014 | 2013 | 2014 vs. 2013 | ||||||||||||||
(in millions) | |||||||||||||||||||
Gross margin | $ | 63.3 | $ | 64.2 | $ | (0.9 | ) | $ | 236.9 | $ | 229.2 | $ | 7.7 | ||||||
Operations and maintenance | 32.2 | 30.5 | 1.7 | 132.6 | 126.1 | 6.5 | |||||||||||||
Depreciation and amortization | 6.8 | 6.7 | 0.1 | 26.5 | 26.4 | 0.1 | |||||||||||||
Operating income | 24.3 | 27.0 | (2.7 | ) | 77.8 | 76.8 | 1.0 | ||||||||||||
Interest expense, net | (3.9 | ) | (6.1 | ) | 2.2 | (15.3 | ) | (24.3 | ) | 9.0 | |||||||||
Other (expense) income, net | — | (0.1 | ) | 0.1 | — | (0.1 | ) | 0.1 | |||||||||||
Income tax (expense) | (6.8 | ) | (8.3 | ) | 1.5 | (20.7 | ) | (19.7 | ) | (1.0 | ) | ||||||||
Income (loss) from continuing operations | $ | 13.6 | $ | 12.5 | $ | 1.1 | $ | 41.9 | $ | 32.7 | $ | 9.2 |
Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | ||||||||
Operating Statistics: | 2014 | 2013 | 2014 | 2013 | |||||
Total gas sales - Dth | 17,429,853 | 18,895,858 | 60,323,416 | 59,097,493 | |||||
Total transport volumes - Dth | 17,077,837 | 16,406,006 | 67,463,143 | 63,821,546 |
Three Months Ended Dec. 31, | Increase (Decrease) | Twelve Months Ended Dec. 31, | Increase (Decrease) | ||||||||||||||||
2014 | 2013 | 2014 vs. 2013 | 2014 | 2013 | 2014 vs. 2013 | ||||||||||||||
(in millions) | |||||||||||||||||||
Revenue | $ | 21.2 | $ | 20.6 | $ | 0.6 | $ | 87.6 | $ | 83.0 | $ | 4.6 | |||||||
Operations and maintenance | 9.4 | 7.9 | 1.5 | 33.1 | 30.2 | 2.9 | |||||||||||||
Depreciation and amortization | 1.1 | 1.2 | (0.1 | ) | 4.5 | 5.1 | (0.6 | ) | |||||||||||
Operating income | 10.7 | 11.5 | (0.8 | ) | 49.9 | 47.8 | 2.1 | ||||||||||||
Interest expense, net | (0.9 | ) | (12.2 | ) | 11.3 | (3.7 | ) | (20.4 | ) | 16.7 | |||||||||
Other income (expense), net | — | — | — | — | — | — | |||||||||||||
Income tax benefit (expense) | (4.4 | ) | (0.4 | ) | (4.0 | ) | (17.7 | ) | (11.1 | ) | (6.6 | ) | |||||||
Income (loss) from continuing operations | $ | 5.4 | $ | (1.1 | ) | $ | 6.5 | $ | 28.5 | $ | 16.3 | $ | 12.2 |
Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | ||||||||
Contracted Fleet Power Plant Availability | 2014 | 2013 | 2014 | 2013 | |||||
Gas-fired plants | 98.8 | % | 99.1 | % | 99.0 | % | 99.0 | % | |
Coal-fired plants (a) | 84.5 | % | 84.0 | % | 94.7 | % | 94.5 | % | |
Total availability | 95.0 | % | 95.6 | % | 97.8 | % | 97.9 | % |
(a) | Availability was impacted by planned outages at Wygen I occurring during the three months ended Dec. 31, 2014 and Dec. 31, 2013, respectively. |
Three Months Ended Dec. 31, | Increase (Decrease) | Twelve Months Ended Dec. 31, | Increase (Decrease) | ||||||||||||||||
2014 | 2013 | 2014 vs. 2013 | 2014 | 2013 | 2014 vs. 2013 | ||||||||||||||
(in millions) | |||||||||||||||||||
Revenue | $ | 17.6 | $ | 13.4 | $ | 4.2 | $ | 63.4 | $ | 56.6 | $ | 6.8 | |||||||
Operations and maintenance | 11.1 | 10.0 | 1.1 | 41.2 | 39.5 | 1.7 | |||||||||||||
Depreciation, depletion and amortization | 2.5 | 2.8 | (0.3 | ) | 10.3 | 11.5 | (1.2 | ) | |||||||||||
Operating income (loss) | 4.0 | 0.6 | 3.4 | 11.9 | 5.6 | 6.3 | |||||||||||||
Interest (expense) income, net | (0.1 | ) | (0.1 | ) | — | (0.4 | ) | (0.6 | ) | 0.2 | |||||||||
Other income (expense) | 0.5 | 0.6 | (0.1 | ) | 2.3 | 2.3 | — | ||||||||||||
Income tax benefit (expense) | (1.1 | ) | 0.1 | (1.2 | ) | (3.3 | ) | (0.9 | ) | (2.4 | ) | ||||||||
Income (loss) from continuing operations | $ | 3.3 | $ | 1.1 | $ | 2.2 | $ | 10.5 | $ | 6.3 | $ | 4.2 |
Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Operating Statistics: | (in thousands) | ||||||||||||
Tons of coal sold | 1,085 | 1,020 | 4,317 | 4,285 | |||||||||
Cubic yards of overburden moved | 1,722 | 518 | 4,646 | 3,192 | |||||||||
Revenue per ton | $ | 16.26 | $ | 13.14 | $ | 14.68 | $ | 13.21 |
Three Months Ended Dec. 31, | Increase (Decrease) | Twelve Months Ended Dec. 31, | Increase (Decrease) | ||||||||||||||||
2014 | 2013 | 2014 vs. 2013 | 2014 | 2013 | 2014 vs. 2013 | ||||||||||||||
(in millions) | |||||||||||||||||||
Revenue | $ | 11.6 | $ | 13.3 | $ | (1.7 | ) | $ | 55.1 | $ | 54.9 | $ | 0.2 | ||||||
Operations and maintenance | 10.9 | 9.5 | 1.4 | 42.7 | 40.4 | 2.3 | |||||||||||||
Depreciation, depletion and amortization | 6.1 | 5.0 | 1.1 | 27.6 | 21.8 | 5.8 | |||||||||||||
Operating income | (5.4 | ) | (1.2 | ) | (4.2 | ) | (15.1 | ) | (7.3 | ) | (7.8 | ) | |||||||
Interest expense, net | (0.4 | ) | (0.3 | ) | (0.1 | ) | (1.7 | ) | (0.6 | ) | (1.1 | ) | |||||||
Other (expense) income, net | 0.1 | — | 0.1 | 0.2 | 0.1 | 0.1 | |||||||||||||
Income tax benefit (expense), net | 1.9 | 0.9 | 1.0 | 6.0 | 3.5 | 2.5 | |||||||||||||
Income (loss) from continuing operations | $ | (3.8 | ) | $ | (0.5 | ) | $ | (3.3 | ) | $ | (10.6 | ) | $ | (4.2 | ) | $ | (6.4 | ) |
Three Months Ended Dec. 31, | Percentage Increase | Twelve Months Ended Dec. 31, | Percentage Increase | |||||||||||||
Operating Statistics: | 2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | ||||||||||
Bbls of crude oil sold | 88,066 | 89,773 | (2 | )% | 337,196 | 336,140 | — | % | ||||||||
Mcf of natural gas sold | 1,698,148 | 1,700,143 | — | % | 7,155,076 | 6,983,104 | 2 | % | ||||||||
Gallons of NGL sold | 1,364,030 | 874,423 | 56 | % | 5,651,321 | 3,704,639 | 53 | % | ||||||||
Mcf equivalent sales | 2,421,405 | 2,363,699 | 2 | % | 9,985,584 | 9,529,178 | 5 | % | ||||||||
Depletion expense/Mcfe | $ | 2.31 | $ | 1.56 | 48 | % | $ | 2.21 | $ | 1.83 | 21 | % | ||||
Average hedged price received: | ||||||||||||||||
Crude Oil | $ | 68.63 | $ | 80.39 | (15 | )% | $ | 79.39 | $ | 89.34 | (11 | )% | ||||
Natural Gas | $ | 2.42 | $ | 2.63 | (8 | )% | $ | 2.91 | $ | 2.69 | 8 | % |
Dec. 31, 2014 | Dec. 31, 2013 | |||||||||||||||||||
Oil and Gas Total Proved | Crude Oil | Natural Gas | NGLs (b) | Total | Crude Oil | Natural Gas | Total | |||||||||||||
Reserves: (a) | (Mbbl) | (MMcf) | (Mbbl) | (MMcfe) | (Mbbl) | (MMcf) | (MMcfe) | |||||||||||||
Total proved reserves | 4,276 | 65,440 | 1,720 | 101,416 | 3,921 | 63,190 | 86,713 | |||||||||||||
Well-head reserve prices | $ | 85.80 | $ | 3.33 | $ | 34.81 | $ | 89.79 | $ | 3.45 |
(a) | Oil and gas reserve information is based on reports prepared by Cawley, Gillespie & Associates, Inc. an independent consulting and engineering firm. |
(b) | Proved reserves data for NGL’s for 2013 is not available. |
• | The accuracy of our assumptions on which our earnings guidance is based; |
• | 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, plant retirements and decommissioning, fuel, transmission, purchased power and other operating costs, and the timing in which new rates would go into effect; |
• | Our ability to obtain regulatory approval to include additional generation in rate base in the future, and to implement a cost of service gas program; |
• | Our ability to receive regulatory approvals for announced acquisitions and to successfully close and implement the transactions; |
• | Our ability to complete our capital program in a cost-effective and timely manner, including our ability to successfully develop our Mancos Shale gas reserves; |
• | Our ability to provide accurate estimates of proved crude oil and natural gas reserves and future production and associated costs; |
• | The impact of the volatility and extent of changes in commodity prices on our earnings and the underlying value of our oil and gas assets, including the possibility that we may be required to take impairment charges under the SEC’s full cost ceiling test for natural gas and oil reserves; and |
• | Other factors discussed from time to time in our filings with the SEC. |
Consolidating Income Statement | ||||||||||||||||||||||||||||||
Three Months Ended Dec. 31, 2014 | 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 | $ | 175.0 | $ | 177.2 | $ | 2.3 | $ | 12.0 | $ | 11.6 | $ | — | $ | — | $ | — | $ | — | $ | 378.1 | ||||||||||
Inter-company revenue | 3.8 | — | 18.9 | 5.6 | — | 57.9 | — | 0.6 | (86.8 | ) | — | |||||||||||||||||||
Fuel, purchased power and cost of gas sold | 76.9 | 113.9 | — | — | — | — | 1.1 | — | (26.6 | ) | 165.3 | |||||||||||||||||||
Gross Margin | 101.9 | 63.3 | 21.2 | 17.6 | 11.6 | 57.9 | (1.1 | ) | 0.6 | (60.2 | ) | 212.8 | ||||||||||||||||||
Operations and maintenance | 43.7 | 32.2 | 9.4 | 11.1 | 10.9 | 55.6 | — | — | (57.9 | ) | 105.0 | |||||||||||||||||||
Depreciation, depletion and amortization | 21.4 | 6.8 | 1.1 | 2.5 | 6.1 | 2.2 | (3.3 | ) | 3.3 | (2.2 | ) | 37.8 | ||||||||||||||||||
Operating income (loss) | 36.7 | 24.3 | 10.7 | 4.0 | (5.4 | ) | 0.2 | 2.2 | (2.7 | ) | (0.1 | ) | 70.0 | |||||||||||||||||
Interest expense, net | (14.2 | ) | (4.0 | ) | (1.1 | ) | (0.1 | ) | (0.6 | ) | (12.3 | ) | — | — | 13.3 | (18.9 | ) | |||||||||||||
Interest rate swaps - unrealized (loss) gain | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Interest income | 1.0 | — | 0.2 | — | 0.2 | 11.9 | — | — | (12.9 | ) | 0.4 | |||||||||||||||||||
Other income (expense) | 0.2 | — | — | 0.5 | 0.1 | 18.5 | — | — | (18.8 | ) | 0.6 | |||||||||||||||||||
Income tax benefit (expense) | (8.3 | ) | (6.8 | ) | (4.4 | ) | (1.1 | ) | 1.9 | 0.6 | (0.8 | ) | 1.0 | — | (18.0 | ) | ||||||||||||||
Income (loss) from continuing operations | $ | 15.4 | $ | 13.6 | $ | 5.4 | $ | 3.3 | $ | (3.8 | ) | $ | 19.0 | $ | 1.4 | $ | (1.7 | ) | $ | (18.5 | ) | $ | 34.0 |
* | The generating facility constructed by Black Hills Colorado IPP at our Pueblo Airport Generation site which sells energy and capacity under a 20-year PPA to Colorado Electric is accounted for as a capital lease. Therefore, revenue and expenses of the Electric Utilities and Power Generation segments reflect adjustments for lease accounting which are eliminated in consolidations. |
Consolidating Income Statement | ||||||||||||||||||||||||||||||
Three Months Ended Dec. 31, 2013 | 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 | $ | 169.2 | $ | 166.2 | $ | 1.0 | $ | 5.7 | $ | 13.3 | $ | — | $ | — | $ | — | $ | — | $ | 355.4 | ||||||||||
Inter-company revenue | 4.0 | — | 19.6 | 7.8 | — | 56.0 | — | 0.5 | (87.8 | ) | — | |||||||||||||||||||
Fuel, purchased power and cost of gas sold | 79.6 | 102.1 | — | — | — | — | 1.0 | — | (29.4 | ) | 153.3 | |||||||||||||||||||
Gross Margin | 93.6 | 64.2 | 20.6 | 13.4 | 13.3 | 56.0 | (1.0 | ) | 0.5 | (58.5 | ) | 202.1 | ||||||||||||||||||
Operations and maintenance | 40.6 | 30.5 | 7.9 | 10.0 | 9.5 | 52.3 | — | — | (54.9 | ) | 95.9 | |||||||||||||||||||
Depreciation, depletion and amortization | 19.5 | 6.7 | 1.2 | 2.8 | 5.0 | 2.8 | (3.3 | ) | 3.1 | (2.8 | ) | 35.1 | ||||||||||||||||||
Operating income (loss) | 33.5 | 26.9 | 11.4 | 0.7 | (1.2 | ) | 0.9 | 2.3 | (2.7 | ) | (0.8 | ) | 71.1 | |||||||||||||||||
Interest expense, net | (15.3 | ) | (6.1 | ) | (12.3 | ) | (0.2 | ) | (0.7 | ) | (27.6 | ) | — | — | 19.6 | (42.5 | ) | |||||||||||||
Interest rate swaps - unrealized (loss) gain | — | — | — | — | — | 0.8 | — | — | — | 0.8 | ||||||||||||||||||||
Interest income | 1.4 | 0.1 | 0.1 | — | 0.4 | 17.1 | — | — | (18.6 | ) | 0.4 | |||||||||||||||||||
Other income (expense) | 0.2 | (0.1 | ) | — | 0.6 | — | 12.6 | — | — | (12.9 | ) | 0.4 | ||||||||||||||||||
Income tax benefit (expense) | (5.6 | ) | (8.3 | ) | (0.4 | ) | 0.1 | 0.9 | 2.1 | (0.9 | ) | 1.0 | — | (11.1 | ) | |||||||||||||||
Income (loss) from continuing operations | $ | 14.1 | $ | 12.5 | $ | (1.1 | ) | $ | 1.1 | $ | (0.5 | ) | $ | 5.9 | $ | 1.5 | $ | (1.7 | ) | $ | (12.8 | ) | $ | 19.0 |
* | The generating facility constructed by Black Hills Colorado IPP at our Pueblo Airport Generation site which sells energy and capacity under a 20-year PPA to Colorado Electric is accounted for as a capital lease. Therefore, revenue and expenses of the Electric Utilities and Power Generation segments reflect adjustments for lease accounting which are eliminated in consolidations. |
Consolidating Income Statement | ||||||||||||||||||||||||||||||
Twelve Months Ended Dec. 31, 2014 | 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 | $ | 683.2 | $ | 617.8 | $ | 6.4 | $ | 31.1 | $ | 55.1 | $ | — | $ | — | $ | — | $ | — | $ | 1,393.6 | ||||||||||
Inter-company revenue | 14.1 | — | 81.2 | 32.3 | — | 222.5 | — | 2.1 | (352.1 | ) | — | |||||||||||||||||||
Fuel, purchased power and cost of gas sold | 314.6 | 380.9 | — | — | — | 0.1 | 4.1 | — | (117.9 | ) | 581.8 | |||||||||||||||||||
Gross Margin | 382.7 | 236.9 | 87.6 | 63.4 | 55.1 | 222.3 | (4.1 | ) | 2.1 | (234.2 | ) | 811.8 | ||||||||||||||||||
Operations and maintenance | 165.6 | 132.6 | 33.1 | 41.2 | 42.7 | 213.4 | — | — | (225.5 | ) | 403.2 | |||||||||||||||||||
Depreciation, depletion and amortization | 79.4 | 26.5 | 4.5 | 10.3 | 27.6 | 7.7 | (13.1 | ) | 12.8 | (7.7 | ) | 148.1 | ||||||||||||||||||
Operating income (loss) | 137.7 | 77.8 | 49.9 | 11.9 | (15.1 | ) | 1.2 | 8.9 | (10.7 | ) | (1.0 | ) | 260.5 | |||||||||||||||||
Interest expense, net | (53.4 | ) | (15.7 | ) | (4.4 | ) | (0.5 | ) | (2.6 | ) | (50.3 | ) | — | — | 55.9 | (71.0 | ) | |||||||||||||
Interest rate swaps - unrealized (loss) gain | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Interest income | 4.6 | 0.4 | 0.7 | 0.1 | 0.9 | 49.0 | — | — | (53.8 | ) | 1.9 | |||||||||||||||||||
Other income (expense) | 1.2 | — | — | 2.3 | 0.2 | 61.6 | — | — | (62.6 | ) | 2.7 | |||||||||||||||||||
Income tax benefit (expense) | (30.5 | ) | (20.7 | ) | (17.7 | ) | (3.3 | ) | 6.0 | — | (3.3 | ) | 4.0 | 0.1 | (65.4 | ) | ||||||||||||||
Income (loss) from continuing operations | $ | 59.6 | $ | 41.9 | $ | 28.5 | $ | 10.5 | $ | (10.6 | ) | $ | 61.5 | $ | 5.6 | $ | (6.8 | ) | $ | (61.4 | ) | $ | 128.8 |
* | The generating facility constructed by Black Hills Colorado IPP at our Pueblo Airport Generation site which sells energy and capacity under a 20-year PPA to Colorado Electric is accounted for as a capital lease. Therefore, revenue and expenses of the Electric Utilities and Power Generation segments reflect adjustments for lease accounting which are eliminated in consolidations. |
Consolidating Income Statement | ||||||||||||||||||||||||||||||
Twelve Months Ended Dec. 31, 2013 | 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 | $ | 651.4 | $ | 539.7 | $ | 4.6 | $ | 25.2 | $ | 54.9 | $ | — | $ | — | $ | — | $ | — | $ | 1,275.9 | ||||||||||
Inter-company revenue | 13.9 | — | 78.4 | 31.4 | — | 220.6 | — | 1.8 | (346.2 | ) | — | |||||||||||||||||||
Fuel, purchased power and cost of gas sold | 294.0 | 310.5 | — | — | — | 0.1 | 3.7 | — | (116.2 | ) | 492.1 | |||||||||||||||||||
Gross Margin | 371.3 | 229.2 | 83.0 | 56.6 | 54.9 | 220.5 | (3.7 | ) | 1.8 | (230.0 | ) | 783.7 | ||||||||||||||||||
Operations and maintenance | 160.0 | 126.1 | 30.2 | 39.5 | 40.4 | 202.8 | — | — | (212.0 | ) | 386.9 | |||||||||||||||||||
Depreciation, depletion and amortization | 77.7 | 26.4 | 5.1 | 11.5 | 21.8 | 11.6 | (13.1 | ) | 11.9 | (11.6 | ) | 141.2 | ||||||||||||||||||
Operating income (loss) | 133.6 | 76.8 | 47.8 | 5.6 | (7.3 | ) | 6.1 | 9.4 | (10.0 | ) | (6.4 | ) | 255.6 | |||||||||||||||||
Interest expense, net | (61.5 | ) | (25.2 | ) | (21.2 | ) | (0.6 | ) | (2.3 | ) | (85.2 | ) | — | — | 84.3 | (111.8 | ) | |||||||||||||
Interest rate swaps - unrealized (loss) gain | — | — | — | — | — | 30.2 | — | — | — | 30.2 | ||||||||||||||||||||
Interest income | 5.3 | 1.0 | 0.8 | — | 1.6 | 69.8 | — | — | (76.7 | ) | 1.7 | |||||||||||||||||||
Other income (expense) | 0.6 | (0.1 | ) | — | 2.3 | 0.1 | 41.5 | — | — | (42.6 | ) | 1.8 | ||||||||||||||||||
Income tax benefit (expense) | (25.8 | ) | (19.7 | ) | (11.1 | ) | (0.9 | ) | 3.5 | (7.8 | ) | (3.5 | ) | 3.7 | — | (61.6 | ) | |||||||||||||
Income (loss) from continuing operations | $ | 52.1 | $ | 32.7 | $ | 16.3 | $ | 6.3 | $ | (4.2 | ) | $ | 54.5 | $ | 5.9 | $ | (6.3 | ) | $ | (41.5 | ) | $ | 115.8 |
* | The generating facility constructed by Black Hills Colorado IPP at our Pueblo Airport Generation site which sells energy and capacity under a 20-year PPA to Colorado Electric is accounted for as a capital lease. Therefore, revenue and expenses of the Electric Utilities and Power Generation segments reflect adjustments for lease accounting which are eliminated in consolidations. |
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