Oil/gas production profits dropped, but electric generation zoomed upward allowing Rapid City, SD-based Black Hills Corp. Thursday to report third quarter profits of $22.3 million, or 66 cents/share, compared to red ink for the same period last year (a loss of $23.9 million, or 73 cents/share). For the first nine months this year, net income was $60.2 million, or $1.80/share, compred with $6.6 million, or 20 cents/share, for the same period in 2005.
Generation profits increased $34.4 million, or $1.03/share, compared with oil/gas production earnings that fell by $2.1 million, or 6 cents/share, in the third quarter.
Black Hills CEO David Emery said that the third quarter marked a period in which the company's electric generating plants, electric utility and coal-mining business segments returned to what he called "normalized operations" after withstanding some repairs earlier in the year that adversely affected operations.
While experiencing a decrease in natural gas prices in the quarter, Emery said gas production was down slightly compared with the same period last year due mostly to the loss of production from Black Hills' Denver-Julesburg Basin operations and delays in first-gas sales from new wells in the San Juan Basin. On the other hand, oil production was up 7%, Emery said.
"Recent well completions are testing at or above expectations, and we expect to demonstrate year-over-year gas production growth in the fourth quarter," Emery said. He predicted that the full-year 2006 gas results will show "strong reserve growth driven primarily by our Piceance Basin acquisitions."
Black Hills currently is estimating that annual production this year will reach the 14.2 Bcf equivalent, compared to 13.7 Bcf last year. "We recognize this result will not meet our overall long-term annual production growth goals of 10%," Emery said. "With gas sales starting from several new wells in the fourth quarter, we expect to end the year at higher production rates, setting up a return to our long-term production growth target."
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