Introduction to New Mexico operations
Black Hills Gas Resources

Black Hills Exploration and Production, the oil and gas subsidiary of Black Hills Corporation, has operations in 10 states, primarily in the western U.S. Our focus is on gas production.

New Mexico properties are run by Black Hills Gas Resources (BHGR), our largest single operation, in terms of both reserves and production. Located on the JicarillaApache Reservation, BHGR comprises a total of 37,000 acres of developed and undeveloped property (net). BHGR represents about two-thirds of total corporate reserves and production.

 

Facts about New Mexico operations

  • Productive wells in operation YE04: 129
  • Drilled and recompletedwells in 2004: 34
  • Undeveloped acreage (YE04 net): 22,000
  • Developed acreage (YE04 net): 15,000
  • 17 miles of pipeline infrastructure connecting to new markets
  • We operate an amine plant to process gas
  • Reserves (YE04): 115 BCFE (nearly all gas)
  • BHGR employees: 18Drilling and completion consultants: 15

 

Development strategy

  • More than half of the acreage in New Mexico is currently undeveloped. The current drilling program will continue for a number of years into the future.
  • Expansion of our drilling program is expected from the acquisition of additional lease acreage and from acquisition of rights to drill in deeper horizons thatare productive elsewhere in the San Juan Basin.

 

  • BHGR owns 13½ miles of 12” pipeline and 3½ miles of 8” pipeline.
  • Our pipelines connectinto the San Juan Blanco Hub.

 

Geological description

  • Our New Mexico property is located in the northeast-ernflank of the San Juan Basin, which covers an extensive region of the Southwest U.S.
  • The Tertiary period of geologic time took place 53 million to 65 million years ago...The Cretaceous period was formed 73 million to 96 million years ago.
  • The San Juan Basin is known to have multiple “pay zones” where gas and oil are found.
  • The Pictured Cliffs formation is where we currently are focusing most of our drilling and production activity.
  • We also produce gas from and pursue several of the other formations.

 

BLACK HILLS ENERGY IN BRIEF

  • Black Hills Energy is the non-regulated subsidiary of Black Hills Corporation, consisting of oil and natural gas production, coal mining, independent power generation (IPP), and energy marketing.
  • 172 BCFE of proven natural gas and oil reserves.About 82% of total reserves are gas. Production in 2004 was 12.6 BCFE (10 BCF gas), a 16% increase over 2003.
  • 964 MW of IPP. Most of the generation serves peaking and intermediate load. Over 95% is under contract with load-serving utilities.
  • 294 million tons of coal reserves in the Powder River Basin of Wyoming. 2004 production was 4.8 million tons. Most of the coal production fuels power plants at the mine.
  • Energy marketing consists of gas and oil marketing and 2 small pipelines transporting crude oil between gulf ports near Houston and connection points in north Texas. Gas marketing consists of producer services and origination services and is headquartered near Denver, CO. Average daily physical gas volumes in 2004 were about 1.2 million mmbtu.