Despite flat results in the second quarter when its utilities drove increased profits, Rapid City, SD-based Black Hills Corp. CEO Dave Emery talked up the company’s early stage horizontal drilling in the San Juan and Piceance basins.

Talking to analysts on a conference call last Friday, Emery reported adjusted net second quarter income of $12.9 million, or 32 cents/share, compared to $7.5 million, or 19 cents/share, for the same period in 2010. He attributed a lot of the increased profits to good performances from the Black Hills natural gas and electric utilities, which had rate adjustments kick in earlier this year in five different jurisdictions.

For the future, however, Emery talked positively about the company’s prospects in the oil/gas exploration and production (E&P) sector, particularly Black Hills’ Mancos horizontal test drilling program in Colorado and New Mexico. He said the company is “progressing” on the Mancos, which underlies its overall acreage in the San Juan and Piceance basins.

One Mancos well in San Juan has been drilled, cased and cemented and is now being fracture stimulated, Emery said. “In the Piceance, one well has been drilled, cased and cemented and is awaiting the completion and fracturing, and a second well has gained a permit, the location has been prepared and a drilling rig has been moved to the site.

“We expect to have results of all three wells by the end of this year,” Emery said. “On all those Mancos test wells, we hope to have good production tests and be able to release solid information on all three.”

In addition, Emery touched on Black Hills’ relatively small involvement in the Bakken oil shale play in North Dakota in Williston Basin. He called the economics there “great.” Black Hills has what he called a “small, nonoperating working interest” in a Bakken oil project. “Impacts [on our earnings] are incrementally small, but this has always been a pretty good opportunity for us.”

Emery said in recent years Black Hills has been more focused on oil properties with the dampened wholesale gas prices generally accompanying the domestic shale gas boom. “We’ve been pretty consistent with all of our oil and natural gas peers in that regard [emphasizing oil over gas development] in the current environment.”

The oil interest includes projects in Wyoming (Six-Mile Anticline in Goshen County) and Montana (Freedom Dome in Heath Shale in Garfield County).

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.