In terms of oil/gas production or coal-fired generation, both of which it owns, Rapid City, SD-based Black Hills Corp. and its operating units in those areas are taking a wait and see attitude, according to CEO Dave Emery, who made the observation during a conference call with financial analysts last Friday.

Black Hills estimated that in 2011 there could be slightly higher natural gas wholesale prices and slightly elevated amount of production, but that may be misleading since Emery assured analysts that the company sees little change from its projections earlier in the year that saw gas prices and production staying flat.

“We’ve said for the last couple of years in this low-priced environment, particularly on the natural gas side, we would only pursue projects that made real good economic sense because we are in a position where most of our acreage is held by production,” Emery said in response to a question from an analyst. “We’re just not doing a whole lot of gas drilling.

“We have done a little bit of shale testing, and a few things like that, but we’ve been real measured in our capital deployment. A fairly large part of our planned capital expenditures ($40 million in 2010) will be related to oil plays, such as the Bakken oil play in the Williston Basin in North Dakota.”

Emery said Black Hills has said with what he called “somewhat depressed prices,” and with all the other construction going on, the holding company has tried to limit spending on exploration and production to approximate cash it is producing.

“It is not a hard and fast rule, so if we found a really good project we might deviate. For planning purposes that is what we are looking at. We’re doing some testing that hopefully will set us up to take full advantage of higher prices when they do start moving up again.”

In response to questions about coal, Emery said Black Hills does not expect to have the large number of unplanned outages that have been experienced in 2010 at its coal-fired units. Besides the unusual amount of unplanned outages, he said there was also a drop in demand for the coal-fired power ongoing this year. “We’re just not running the plants as much, although we expect a little more normal year [for coal-fired generation] next year,” Emery said.

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