Oct. 29, 2009 (PR Newswire) -- RAPID CITY, S.D., Oct. 29 /PRNewswire-FirstCall/ -- Black Hills Corp. (NYSE: BKH) today announced third quarter 2009 financial results. Loss from continuing operations for the third quarter 2009 was $3.9 million, or $0.10 per share, compared to income from continuing operations for the third quarter 2008 of $19.5 million, or $0.51 per share. Net loss for the three months ended Sept. 30, 2009, was $2.2 million, or $0.06 per share compared to net income of $164.9 million or $4.29 per share for the same period in 2008. The 2009 quarterly results include a $5.7 million, or $0.15 per share non-cash mark-to-market loss for certain interest rate swaps.

For the nine months ended Sept. 30, 2009, income from continuing operations was $46.4 million, or $1.20 per share, compared to $44.5 million, or $1.16 per share for the same period ended Sept. 30, 2008. Net income for the nine months ended Sept. 30, 2009, was $48.8 million, or $1.26 per share, compared to $203.9 million, or $5.31 per share, reported for the same period in 2008. The 2009 results include a $24.6 million or $0.64 per share non-cash mark-to-market gain for certain interest rate swaps; a $16.9 million, or $0.44 per share, gain on the sale of a 23.5 percent ownership interest in the Wygen I power generation facility; and a $27.8 million, or $0.72 per share, non-cash ceiling test impairment charge.

"We made substantial progress during the third quarter on key strategic growth initiatives. However, continued low natural gas prices reduced income from our oil and gas and energy marketing businesses and lower off-system sales margins for our electric utilities. We are not satisfied with our bottom-line results in 2009, but as our guidance for 2010 indicates, we are confident that planned capital expenditures will lead to strong earnings growth in the coming years," said David R. Emery, chairman, president and CEO of Black Hills Corp. "Our employees continue to make great progress on our strategic and integration projects that strengthen our balance sheet, increase our asset base and improve operating efficiencies for the long-term benefit of our customers and shareholders. We recently completed a $180 million first mortgage bond offering at very favorable rates, reducing short-term debt. With the completion of a 20-year power purchase agreement with Black Hills Energy - Colorado Electric, we now have plans to invest approximately $1 billion in growth capital through 2011."

Black Hills Corp reported highlights for the third quarter and other recent events including:

--  Black Hills Power filed two independent requests for electric revenue
increases with the South Dakota Public Utility Commission and the
Wyoming Public Service Commission to recover costs associated with the
Wygen III power plant under construction near Gillette, Wyo., other
generation, transmission and distribution assets and increased operating
expenses.
--  In the South Dakota request, Black Hills Power seeks a $32 million
increase in annual utility revenues and anticipates new rates will
be effective for South Dakota customers on April 1, 2010.
--  In the Wyoming request, Black Hills Power seeks a $3.8 million
increase in annual utility revenues and anticipates new rates will
be effective for Wyoming customers in 2010.
--  Construction of the Wygen III generation facility project is under
budget and scheduled to begin commercial operation as early as April 1,
2010, three months earlier than originally expected. A 25 percent
ownership interest in this generation facility was sold in April 2009.
--  Plans to construct utility-owned gas-fired generation facilities to
serve Black Hills Energy  -  Colorado Electric customers are moving
forward. Equipment has been ordered, and construction is expected to
begin in third quarter 2010 with an in-service date of January 2012.
Hearings regarding the certificate of public convenience and necessity,
filed in June 2009, are expected to occur in December 2009.
--  Black Hills Colorado IPP, a non-regulated subsidiary of the company, was
selected to provide power to Black Hills Energy - Colorado Electric
through a competitive bid process. BHCI will build 200 megawatts of
natural gas-fired electric generation in Colorado to sell to Black Hills
Energy - Colorado Electric through a 20-year power purchase agreement.
The BHCI facility is expected to cost $240 million to $265 million and
be ready to deliver power by Jan. 1, 2012.
--  Black Hills Wyoming, a subsidiary of the company, extended its 60
megawatts power purchase agreement with Cheyenne Light from the original
termination date of March 31, 2013, until Dec. 31, 2022. Black Hills
Wyoming will continue to provide the capacity and associated energy from
the Wygen I generation facility.
--  Black Hills Energy - Colorado Electric, Black Hills Power and Cheyenne
Light were selected by the Department of Energy for smart grid
investment grant funding totaling $16.7 million. The DOE funds are made
available under the American Recovery and Reinvestment Act of 2009 and
are subject to negotiation of final terms with the DOE. The funds would
enable the installation of about 149,000 smart meters in the company's
Colorado, South Dakota and Wyoming electric utility service territories.

--  Cheyenne Light began receiving wind power from the recently commissioned
Silver Sage wind generation facility on Oct. 1. Combined with the wind
energy received under a previously completed renewable energy sales
agreement with the Happy Jack wind generation facility, up to 60
megawatts of wind energy is being purchased by the utility. Under
separate power purchase agreements, Black Hills Power purchases 35
megawatts of the wind energy from Cheyenne Light.

Compared to the third quarter of 2008, income from continuing operations in the third quarter of 2009 reflects the following:

Utilities
---------
$0.2 million decrease in electric utility earnings
$1.6 million decrease in gas utility earnings

Non-regulated Energy
--------------------
$1.2 million increase in coal mining earnings
$1.7 million decrease in oil and gas earnings
$2.6 million decrease in power generation earnings
$11.3 million decrease in energy marketing earnings

Corporate
---------
$7.0 million decrease in corporate earnings

"We expect a significant improvement in our financial performance next year. Continued execution of our strategy combined with an improving business climate and strengthening natural gas prices will lead to the strong earnings growth our shareholders expect from Black Hills," Emery said.

EARNINGS GUIDANCE

For 2009, Black Hills expects earnings from continuing operations to be in the range of $1.75 to $1.85 per share. This estimate is predicated on a number of considerations, including the following:

--  $16.9 million, or $0.44 per share, gain on the sale of a 23.5 percent
ownership interest in the Wygen I power generation facility;
--  $24.6 million, or $0.64 per share, non-cash mark-to-market gain for
certain interest rate swaps that remain in place with no additional
mark-to-market earnings impacts estimated in the fourth quarter;
--  $27.8 million, or $0.72 per share, oil and gas non-cash ceiling test
impairment charge; no further ceiling test impairment charge
anticipated;
--  Normal operations and weather conditions in utility service territories
impacting customer usage, off-system sales, construction, maintenance
and/or capital investment projects;
--  No significant unplanned outages at the company's power generation
facilities for remainder of 2009;
--  Slight earnings improvement from energy marketing during fourth quarter
compared to first nine months of 2009;
--  Total oil and natural gas production of 12.3 to 12.6 Bcf equivalent.
Forecasted production includes the impacts of approximately 0.4 Bcfe
shut-in due to low commodity prices;
--  Oil and gas average NYMEX prices for October 2009 through December 2009
of $4.78 per Mcf for natural gas and $78.16 per Bbl for oil;
production-weighted average well-head prices of $3.86 per Mcf and $70.08
per Bbl, all based on forward strips, and average hedged prices of $5.21
per Mcf and $70.36 per Bbl; and

--  No significant acquisitions or divestitures.

In 2010, Black Hills expects earnings from continuing operations to be in the range of $1.80 to $2.05 per share. This estimate is predicated on a number of considerations, including the following:

--  Planned capital expenditures in 2010 estimated at $425 million to $475
million; including oil and gas capital expenditures of $30 million to
$40 million assuming slight recovery in natural gas prices;
--  Planned debt and equity financings to maintain a capital structure in
the range of 50 percent to 55 percent debt to total capitalization;
--  Previously disclosed undesignated long-term debt hedges remain in place
with no additional mark-to-market impacts from Sept.