Business Context and Reporting Period
This Form 8-K filing by Black Hills Corporation reports a material asset disposition event that occurred on September 27, 2012. The filing details the completion of a sale by the registrant's subsidiary, Black Hills Exploration and Production, Inc.
Key Financial Metrics and Transaction Details
- Transaction Value: Approximately $243 million, subject to customary post-closing adjustments.
- Assets Sold: Approximately 85 percent of Bakken and Three Forks shale assets in the Williston Basin.
- Scope: Non-operated interest in approximately 28,000 net lease acres and 73 gross wells.
- Buyer: QEP Energy Company.
- Effective Date: Closing proceeds were calculated based on a July 1, 2012 effective date.
The filing includes Unaudited Pro Forma Condensed Consolidated Financial Statements (Exhibit 99) presenting results as if the sale occurred on January 1, 2011, and a balance sheet as if the sale occurred on June 30, 2012. Specific revenue, profit, cash flow, margin, debt, or liquidity figures for the current period are not provided in the text of this filing; investors must refer to the attached Exhibit 99 or prior 10-K/10-Q filings for those values.
Material Changes
The primary material change is the divestiture of a significant portion of the company's upstream exploration and production assets. This transaction alters the company's asset base and future revenue streams related to the Williston Basin shale plays. The pro forma financial information is intended to illustrate the impact of this disposition on the company's historical financial position.
Guidance, Outlook, and Risks
The filing explicitly states that the Unaudited Pro Forma Condensed Consolidated Financial Statements do not purport to be indicative of the Company's financial position or results of operations as of the dates presented, nor are they necessarily indicative of future results. No specific forward-looking guidance or management commentary regarding future operational outlook is included in the text of this report beyond the transaction details.
Investor Verification Checklist
- Review Exhibit 99 for the specific Unaudited Pro Forma Condensed Consolidated Financial Statements to understand the adjusted financial position.
- Verify the final purchase price after customary post-closing adjustments are applied to the $243 million estimate.
- Consult the Annual Report on Form 10-K for the year ended December 31, 2011, and the Form 10-Q for the six months ended June 30, 2012, to compare pro forma results against actual historical performance.
- Assess the impact of retaining only approximately 15 percent of the Bakken and Three Forks assets on future production volumes.