Black Hills Corp. said it purchased 40 Bcf of Piceance Basin gas reserves from Koch Exploration for an undisclosed sum. The company said the deal nearly doubles its acreage position to 60,000 gross acres in the Piceance of western Colorado, which has become one of the Rocky Mountain region's hottest drilling areas and a major supply source for proposed gas pipeline expansions out of the region. Black Hills said the assets cover more than 31,000 gross and 18,000 net acres, of which more than 48% are undeveloped. The acquisition includes 63 producing wells, 58 of which are operated by Koch, and majority interests in midstream and gathering assets, including a compressor and treatment facility currently awaiting final regulatory approvals for expansion through the addition of an amine processing plant. In 2005, production from the assets totaled 0.7 Bcfe. The acquisition increases Black Hills' natural gas and oil proven reserve position by 24% and increase's average daily production by 5%.
Experiencing a decade-long annual growth of 5% again last year, Las Vegas, NV-based Southwest Gas Corp. reported decreased consolidated earnings, compared to the previous year, for its growing distribution natural gas utility operations in Nevada, Arizona and the eastern fringe areas of California. Southwest is the major natural gas utility in both Nevada and Arizona, two of the fastest growing areas in the nation. Consolidated operating net income in 2005 was $43.8 million, or $1.15/share, compared with $56.8 million, or $1.61/share, for the previous year, Southwest announced Thursday; similarly fourth-quarter net income dropped, compared with the same period in 2004 (77 cents/share the last quarter of 2005, compared to $1.12/share for the same period a year earlier). Warmer-than-normal weather in both the fourth quarter and all year contributed to the lower earnings despite the continuing addition of more than 81,000 new customers again last year, according to Southwest CEO Jeffrey Shaw, who said the company will not change its "principal core strategies in 2006." He said Southwest Gas has added 684,000 customers over the past 10 years, bringing the current customer total to 1.67 million, the vast majority in Nevada and Arizona. To keep up with the unrelenting customer growth, Southwest is projecting more than $250 million annually for the next three years for its capital expenditures, said CFO George Biehl. Last year, capital investments totaled $259 million, with about 75% of that total going to handle customer growth, Biehl said.
A software glitch led Oneok to reduce its 2005 net income by $8.1 million (8 cents/share) and its energy services operating income by $13.2 million and raise its 1Q2006 earnings by similar amounts. The company said the software error affected the timing of the recognition of changes in the fair value of derivatives/hedges in the company's energy services segment during 2005. The amounts are recorded as cost of sales and fuel in the company's consolidated statement of income. As a result, the company is raising its 2006 guidance in its energy services segment to $183 million from $170 million, which will result in revised company guidance in the range of $2.30 to $2.36 per diluted share of common stock. Revised 2005 net income was $546.6 million, or $5.06 per diluted share, compared with $242.2 million, or $2.30 per diluted share of common stock in 2004. Revised 2005 income from continuing operations was $403.1 million, or $3.73 per diluted share, compared with 2004 income from continuing operations of $224.7 million, or $2.13 per diluted share.
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