Despite rising profits due to higher oil and natural gas prices, Rapid City, SD-based Black Hills Corp. announced that net earnings for the quarter remained near flat due to an accounting charge. The company posted $14.1 million, or 52 cents per share for the quarter, compared with earnings of $14 million, or 52 cents per share for the same quarter last year.

The accounting change resulted in a loss of 10 cents per share. Earnings from continuing operations were $0.62 per share for the quarter ended March 31, compared to $0.55 per share for the same period in 2002.

In addition to higher oil and gas prices, Black Hills attributed its strong financial performance for the first quarter of 2003 to increased gas marketing volumes and margins, stronger power sales resulting from higher generation capacity in its power generation segment and improving performance in the communications business segment, partially offset by a decrease in earnings at the electric utility due to higher operating costs and interest expense.

“We are very pleased with overall results of the first quarter of 2003,” said Daniel P. Landguth, CEO of Black Hills. “Earnings met expectations and cash flows supported our financial strength. Our non-regulated energy operations are driving our growth, where production increased in each business segment, compared to the first quarter of 2002. Power generation increased its capacity in service by 62%, energy marketing increased its average natural gas and crude oil daily volumes by 41% and 32%, respectively, and coal mining increased production by 14%. Oil and gas production was up 14% as well, and the increase came largely from properties we owned prior to the Mallon Resources acquisition, which was completed late in the first quarter.”

Since last year’s first quarter, Black Hills noted that it increased its gas storage reserves. “Upon closing the Mallon acquisition in March, independent engineers finalized for us an in-depth reserve evaluation of the former Mallon properties,” Landguth continued. “We are very pleased that this study, conducted using year-end 2002 product prices, yielded proved reserves of approximately 86 Bcf of gas as of Dec. 31, 2002.

“Our long-term strategy continues to demonstrate our strengths in robust and challenging markets alike. We are very well positioned to augment our earnings through prudent expansion of business lines where we have proven our ability to deliver economic value to both our investors and our customers.”

Going forward, the company recently reaffirmed its long-term earnings per share growth rate target of 8-10% per year. Due to the initial dilutive effect of the company’s common stock offering completed last week, Black Hills expects 2003 earnings per share from continuing operations to approximate 2002 results.

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