Slide 1: Business and Financial Update August 14, 2007
Business and Financial Update August 14, 2007
Slide 2: Safe Harbor Statement
Safe Harbor Statement The information contained herein is as of the date of this presentation. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as "anti
Slide 3: Participants
Participants Dave Meador, Executive Vice President and CFO Peter Oleksiak, VP and Controller Nick Khouri, VP and Treasurer
Slide 4: Overview
Utility growth plan on track Filed Detroit Edison rate case Signed settlement on MichCon gas storage Capital projects are on schedule Utilities are expected to earn authorized return this year Non-utility monetizations have exceeded expectations After-tax proceeds of ~$1.5 billion Expect to buy back
Slide 5: Business Update
Business Update Second Quarter 2007 Earnings Results Cash Flow and Capital Expenditures Summary
Slide 6: Detroit Edison Utility Growth Plans on Track
Detroit Edison Utility Growth Plans on Track Rate Case #U-15244 filed in April 2007 MPSC Staff testimony expected Jan. 2008 Final order expected 3Q08 Temporary rate reduction expires April 13, 2008 Plan to supplement filing to include recovery of MCN merger control premium Capital Projects On track
Slide 7: MichCon Utility Growth Plans on Track
Utility Growth Plans on Track Signed settlement agreement with all parties on MichCon gas storage Provides opportunity for MichCon to earn 11% authorized ROE with no customer rate increase Gives regulatory certainty - no rate case until 2009* Settlement is subject to MPSC approval Capital Projects $
Slide 8: Non-Utility Monetizations Have Exceeded Expectations
Non-Utility Monetizations Have Exceeded Expectations Total after-tax proceeds of ~$1.5 billion Repurchased over $625 million of common stock as of August 10 (~12.7 million shares) Expect to buy back $900 million of common stock by year end and retire $700 million of parent company debt Actions Proce
Slide 9: DTE Plans to Focus Efforts on Development of Western Barnett
DTE Plans to Focus Efforts on Development of Western Barnett Plan to drill 40 Western Barnett wells in 2007 Western development strategy could take ~$80-150 million annual capex* Might explore opportunities to monetize portions of other acreage DTE has ability to create additional value in Western B
Slide 10: Second Quarter 2007 Earnings Results
Business Update Second Quarter 2007 Earnings Results Cash Flow and Capital Expenditures Summary
Slide 11: Second Quarter Earnings Summary
Second Quarter Earnings Summary Solid overall results Utilities remain on track to earn authorized ROE for 2007 Earnings improved in all non-utility segments
Slide 12: Second Quarter 2007 Operating Earnings
Second Quarter 2007 Operating Earnings Operating Earnings per Share* 2Q average shares outstanding: 175.3 million Detroit Edison $0.37 Unconventional Gas Production $0.03 Non-Utility $0.39 Coal & Gas Midstream $0.06 Corporate & Other ($0.16) MichCon** ($0.01) $0.59 Power and Industrial Projects $0.0
Slide 13: DTE Energy Second Quarter 2007 Operating Earnings Variance
2005 2006 -4 93 -3 DTE Energy Second Quarter 2007 Operating Earnings Variance * Reconciliation to GAAP reported earnings included in the appendix 2005 excl synfuel DECO MichCOn coal UGP pip ET hold 41 23 23 31 32 35 43 63 18 7 1 3 8 31 9 63 Operating Earnings Variance Excluding Synthetic Fuel* ($ mi
Slide 14: Detroit Edison Second Quarter 2007 Operating Earnings Variance
Economy/Other Detroit Edison Second Quarter 2007 Operating Earnings Variance Operating Earnings Variance* ($ millions) * Reconciliation to GAAP reported earnings included in the appendix 2005 PSCR weather show cause other Margin DTE2 Relia D&A 2006 81 81 105 104 97 75 70 62 62 63 24 11 12 7 22 5 8 1
Slide 15: MichCon Second Quarter 2007 Operating Earnings Variance
2005 Gas Markets Other O&M other 2006 -9 -6 -4 -4 -3 -3 -3 -2 -3 -4 MichCon Second Quarter 2007 Operating Earnings Variance Operating Earnings Variance* ($ millions) Weather * Reconciliation to GAAP reported earnings included in the appendix Volume 2Q06 Operating Earnings 2Q07 Operating Earnings Sea
Slide 16: Non-Utility Second Quarter 2007 Operating Earnings Results
Non-Utility Second Quarter 2007 Operating Earnings Results Operating Earnings* ($ millions) * Reconciliation to GAAP reported earnings included in the appendix Earnings Drivers
Slide 17: 2007 Segment Earnings Guidance
2007 Segment Earnings Guidance * Reconciliation to GAAP reported earnings included in the appendix 2007 earnings guidance remains unchanged except for monetization impacts and Synthetic Fuel Due to the timing of the share repurchase plan, we plan to provide revised EPS guidance upon completion of al
Slide 18: Cash Flow and Capital Expenditures Summary
Business Update Second Quarter 2007 Earnings Results Cash Flow and Capital Expenditures Summary
Slide 19: Underlying cash flow continues to improve
Underlying cash flow continues to improve Higher Synfuel Production in 2007 YTD adjusted cash from operations is up nearly 12% from the previous year Including capital, dividends, and asset sales, net cash reached $1.65 billion YTD 2007 YTD 2007 Cash Flow DTE Energy Cash Flow ($ millions) * Accounte
Slide 20: Utility capital spending
Utility capital spending Detroit Edison operational spending decreased primarily due to the timing of outages Detroit Edison environmental spending increased to $116M, up from $80M last year due to increased spend on SCR and Low Nox projects MichCon spending is up from $62M last year to $97M in 2007
Slide 21: 2007 Post Monetization Guidance Cash Flow
2007 Post Monetization Guidance DTE Energy Cash Flow Strong Cash Flow Supports Debt Repayment and Stock Buyback ($ millions) * Accounted for as 'investing activity' on statement of cash flows; Reconciliation to GAAP reported cash flow included in the appendix The continuation of strong underlying ca
Slide 22: Continuing to Grow our Businesses: Capital Expenditures 2007E
Utility Capex of $1,050 to $1,165 million is approximately 30% higher than prior 5 year average Utility investment leads to continued net plant growth in 2007 Continuing to Grow our Businesses DTE Energy Capital Expenditures 2007E ($ millions) Capital Expenditures Depreciation Detroit Edison MichCon
Slide 23: Summary
Business Update Second Quarter 2007 Earnings Results Cash Flow and Capital Expenditures Summary
Slide 24: DTE Energy's Investment Thesis
DTE Energy's Investment Thesis DTE Energy expects to create significant value for shareholders over the next five years The utilities are positioned to grow earnings 5 - 6% per year while driving a customer focused investment program Continued growth in the Coal & Gas Midstream segment. Unconvention
Slide 25: Upcoming Investor Events
Upcoming Investor Events Lehman Brothers CEO Energy and Power Conference DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030 Sept. 4: EEI Financial Conference Nov. 5-6:
Slide 26: Appendix
Appendix DTE Energy ys
Slide 27: Barnett Shale Strategy Update
Barnett Shale Strategy Update Clay Zones of DTE Acreage South 32,000 acres Vertical Wells Horizontal Wells Dallas/ Ft Worth Metropolitan Area West 41,000 acres Core 11,000 acres Hood Johnson Erath Jack Somervell Hill Wise Tarrant Bosque Parker Denton Palo Pinto
Slide 28: Barnett Shale Operating Metrics
16 Net Production Rate (mmcf/day) 25 16 Gross Producing Wells 65 151 6/30/07 12/31/05 Reserves (Bcfe) Probable Reserves Proven Reserves 120 59 179 12/31/05 12/31/04 Acreage Position (thousands) Net Undeveloped Acres Net Developed Acres 62 76 65 16 84 12/31/06 12/31/05 123 12/31/06 6/30/07 12/31/05 1
Slide 29: Synfuels Expected to Produce $900 million in Cash in 2007-2009
Synfuels Expected to Produce $900 million in Cash in 2007-2009 2007 2008 2009 Total 675 675 850 175 50 900 2007E 2008E 2009E Total Expected Synfuel Cash Flow* ($ millions) ~$675 ~$175 ~$50 ~$900 Gains from non-utility monetizations enabled DTE to use more of its banked tax credits in 2007 Pulls ahea
Slide 30: Key Balance Sheet / Cash Metrics
Leverage* * Excludes securitization debt and MichCon short-term borrowing Funds from Operations / Debt* Key Balance Sheet / Cash Metrics 12/31/2006 12/31/07E 0.534 0.501 Leverage and FFO/Debt are expected to improve this year Restructuring efforts that reduce non- utility risk should pave the way fo
Slide 31: Synfuel Operating Earnings
Synfuel Operating Earnings* * Reconciliation to GAAP reported earnings included in this appendix ($ millions, after-tax)
Slide 32: DTE Energy Trading Earnings Reconciliation
DTE Energy Trading Earnings Reconciliation Total EITF 9 9 32 23 ** Consists of the income statement effect of not recognizing changes in the fair market value of certain non derivative contracts including physical inventory and capacity contracts for transportation, transmission and storage. These c
Slide 33: Sources and Uses of Monetization Proceeds and Synfuel Cash
Sources Long-Term Uses East 1.4 0.75 West 0.95 0.75 0.25 0.65 Sources and Uses of Monetization Proceeds and Synfuel Cash Synfuel $900 - 1,000 (2007 - 2009) Monetization Proceeds ~$1,500 (2007) Monetization Proceeds and Synfuel Cash Sources and Uses ($ Millions) $2,400 - 2,500 $2,400 - 2,500 Debt Red
Slide 34: Reconciliation of Q2 2007 Reported to Operating Earnings
Reconciliation of Q2 2007 Reported to Operating Earnings Use of Operating Earnings Information - DTE Energy management believes that operating earnings provide a more meaningful representation of the company's earnings from ongoing operations and uses operating earnings as the primary performance me
Slide 35: Reconciliation of Q2 2007 Reported to Operating Earnings per Share
Reconciliation of Q2 2007 Reported to Operating Earnings per Share Use of Operating Earnings Information - DTE Energy management believes that operating earnings provide a more meaningful representation of the company's earnings from ongoing operations and uses operating earnings as the primary perf
Slide 36: Reconciliation of Q2 2006 Reported to Operating Earnings
Reconciliation of Q2 2006 Reported to Operating Earnings Use of Operating Earnings Information - DTE Energy management believes that operating earnings provide a more meaningful representation of the company's earnings from ongoing operations and uses operating earnings as the primary performance me
Slide 37: Reconciliation of YTD 2007 Reported to Operating Earnings
Reconciliation of YTD 2007 Reported to Operating Earnings Use of Operating Earnings Information - DTE Energy management believes that operating earnings provide a more meaningful representation of the company's earnings from ongoing operations and uses operating earnings as the primary performance m
Slide 38: Reconciliations of Synfuel Reported to Operating Earnings
Reconciliations of Synfuel Reported to Operating Earnings and 2007 Reported to Operating Earnings Use of Operating Earnings Information - DTE Energy management believes that operating earnings provide a more meaningful representation of the company's earnings from ongoing operations and uses operati
Slide 39: Reconciliations of Cash From Operations to Adjusted Cash from Operations
Reconciliations of Cash From Operations to Adjusted Cash from Operations * accounted for in the investing activities section of the statement of cash flows Adjusted Cash From Operations Use of Adjusted Cash From Operations - DTE Energy management believes that adjusted cash from operations provide a