Marking increasing energy-related earnings and decreasing losses in telecommunications and corporate operations, Black Hills Corp. Tuesday reported higher earnings for the fourth quarter, with net income of $19.4 million, or 59 cents/share, compared with $7.9 million, or 24 cents/share, for the same period the previous year. For the full year 2004, net income was $57.7 million, or $1.76/share, compared with $61 million, or $1.97/share, for 2003.
Company senior executives in a written announcement and during a conference call with financial analysts emphasized that performance improved sharply the second half of last year, and earnings estimates for 2005 have been raised to the $1.85-$2/share range. Oil/natural gas production had a “very good showing” the last quarter in 2004, and the power generation earnings overcame operating problems from earlier in the year to finish strong, according to Mark Thies, Black Hills CFO.
The biggest contributions in earnings came from oil/natural gas production and gas marketing operations. Power generation operations also increased earnings, but Thies said the company expects “small decreases” in the electric generation business this year due to a major planned maintenance outage of the coal-fired Wyodak power plant that will also result in reduced coal production for the company this year. The outage has been moved from the spring to the fall, he said.
Overall, power generation, oil/gas, and energy marketing showed increased profits year-over-year; coal mining and electric utility businesses showed profits, but less than levels in 2003; and the communications business reported a loss, although less than the previous year ($3.9 million loss in 2004, compared to $5.9 million the previous year).
Black Hills completed the purchase of Cheyenne Light, Fuel & Power from Xcel Energy in January, and Thies said that there should be close to “normal utility returns” this year when a rate increase is precluded by terms of the Wyoming regulatory commission’s approval of the sale. However, in 2006, he expects a “full return to normal utility returns” for the Wyoming utility, which has revenue potential in the $90-$100 million range from 38,000 electric and 31,000 natural gas customers.
“Last year, our company proceeded with goals important to our long-term agenda,” said Black Hills CEO David Emery in the company’s written earnings announcement. “Among them was a strengthened capital structure, achieved through more than $100 million of debt reduction. We overcame construction delays and operational challenges at our New Mexico natural gas operations, and we expect to deploy drilling and development capital there for several more years.”
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