Dte Energy Company · NYSE:DTE
Dte Energy — Morgan Stanley Global Electricity & Energy Conference (March 2006)
29 slides from Dte Energy's conference presentation, Mar 16, 2006
Slide 1: Morgan Stanley Global Electricity & Energy Conference
Morgan Stanley Global Electricity & Energy Conference Anthony F. Earley, Jr. Chairman of the Board & Chief Executive Officer March 16, 2006
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: DTE Energy's Value Proposition
DTE Energy’s Value Proposition Utilities targeting earnings growth at 5% annual rate through 2010 Building scale at the non-utility businesses Stable dividend and attractive yield supported by strong balance sheet 3
Slide 4: DTE Energy's 2005 Results Demonstrate a Return to Growth
DTE Energy’s 2005 Results Demonstrate a Return to Growth DTE Energy Operating Earnings per Share* $3.60-3.90** $3.63 $3.27 $3.05 $2.57 * Reconciliation to GAAP reported earnings included in the appendix ** 2006 guidance assume no synfuel tax credit phase out 4
Slide 5: 5% Utility Income Growth Driven by Significant Investments
5% Utility Income Growth Driven by Significant Investments Potential utility asset base growth 2005-2010 Not including new base-load generation ($ millions) In addition to ongoing investments ~$250 ~$1,600-1,800 to improve reliability and customer ~$700-800 satisfaction, we expect major new ~$650-75
Slide 6: Recent Regulatory Rulings are Indicative of Michigan's Constructive Regulatory Environment
Recent Regulatory Rulings are Indicative of Michigan’s Constructive Regulatory Environment MichCon Rate Case $61M base rate increase Uncollectible expense tracking mechanism Detroit Edison Rate Case $248M base rate increase Full recovery of $550M of past environmental expenditures Pension expense tr
Slide 7: Our Performance Excellence Process Sharpens the Focus on Costs, Productivity and Customer Satisfaction
Our Performance Excellence Process Sharpens the Focus on Costs, Productivity and Customer Satisfaction Help to fund large scale utility investment program Offset higher Reduced need commodity for future rate prices increases DTE’s Performance Excellence Process Help fund improved Mitigate inflation
Slide 8: Performance Excellence Process Update
Performance Excellence Process Update Timeline December 2005 January 2006 March 2006 Q2 2006 Identify Evaluate Plan Opportunities Opportunities Implementation Implement Program Overview Broad cost reduction, productivity improvement effort Comprehensive focus on all areas of Detroit Edison, MichCon
Slide 9: Building Scale at our Non-Utility Businesses
Building Scale at our Non-Utility Businesses Power & Industrial Leverages our expertise in owning and Projects operating large industrial projects, such as on-site & biomass projects Utilizes our knowledge of the electricity, coal Fuel Transportation and natural gas markets through ownership of & Ma
Slide 10: Power & Industrial Projects: Executing Our Growth Plans
Power & Industrial Projects: Executing Our Growth Plans Expertise in large-scale on-site facilities Utility services for industrial sites Landfill gas production sites Synfuels, coke batteries and power generation plants Investing where we see continuing success Industrial site projects Biomass and
Slide 11: Fuel Transportation & Marketing: Growing Through Capacity Expansion
Fuel Transportation & Marketing: Growing Through Capacity Expansion Expertise in commodity logistics and trading Coal transportation and marketing Natural gas storage and pipelines Asset-based gas and electricity trading Investing into very strong storage and transportation fundamentals Pipeline inv
Slide 12: Unconventional Gas: Hidden Value Becoming Visible
Unconventional Gas: Hidden Value Becoming Visible Expertise in unconventional gas production 15+ years in Michigan’s Antrim formation, 2 years in Texas Barnett formation 2000+ active wells 21 Bcf of production ~550 Bcfe total proved and probable reserves Investing to increase value New production in
Slide 13: Unconventional Gas Production: Antrim Reserves Have Significant Value
Unconventional Gas Production: Antrim Reserves Have Significant Value Antrim Net Income Antrim Reserve Valuation Net Income Current Natural ($ millions) Gas Pricing ($/Mcf) Valuation Reserves $100 $10 Component (Bcfe) Comparable ($/mcf) $80 $8 Probable 35 0.50-1.00 $60 $6 Proved 338 2.50-3.00 $40 $4
Slide 14: We Have Made Considerable Progress in Developing Our Barnett Position
We Have Made Considerable Progress in Developing Our Barnett Position Acreage Position Reserves (thousands) (Bcfe) 179 76 Net 14 Developed 59 Proven Acres Reserves 49 0 Net Undeveloped Probable 62 Acres 120 Reserves 49 16 8 8 12/31/2004 12/31/2005 12/31/2004 12/31/2005 Gross Producing Wells Producti
Slide 15: While Currently Modest, Barnett's Valuation Should Grow
While Currently Modest, Barnett’s Valuation Should Grow Barnett Reserve Valuation Valuation Reserves Component Comparable (Bcfe) ($/mcf) Barnett probable reserves are Probable 120 1.50-2.50 high quality and market would value close to proved. Proved 59 1.50-3.00 Southern acreage is not included in t
Slide 16: Non-Utility Scale Continues to Grow in our Areas of Future Capital Investment
Non-Utility Scale Continues to Grow in our Areas of Future Capital Investment Non-Utility Operating Net Income* $68-103 In Areas of Expected Future Capital Investment ($ millions) $64 $35 2004A 2005A 2006E** Non-Utility Operating Net Income* $255 $285 $325-345 Synfuels, Power Generation, (220) (221)
Slide 17: Balance Sheet Position
Balance Sheet Position Funds from Operations/ Funds from Operations/ Leverage* Debt Interest 4.5-5.0X 26-28% 4.5X** 4.5X 52.1% 53%** 51.2% 48-50% 23%** 3.9X 22.7% 19.3% Long-Run Long-Run Long-Run Target Target Target * Excludes securitization debt and MichCon short term borrowings 17 ** Assumes midp
Slide 18: Stable Dividend and Attractive Yield
Stable Dividend and Attractive Yield Current Dividend Yield S&P Electrics/S&P MultiUtilities Paid dividend for 96 consecutive years DTE ~4.9% Stable credit ratings Strong liquidity with $1.2B of short term credit currently available 18
Slide 19: Our Value Proposition
Our Value Proposition Utilities targeting earnings growth at 5% annual rate through 2010 Stable regulatory environment Substantial expected additions to rate base Implementation of Performance Excellence Process Building scale at the non-utility businesses Solid reinvestment progress in 2005 with st
Slide 20: For More Information
For More Information DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030 20
Slide 21: Appendix
Appendix DTE Energy
Slide 22: DTE Energy's Barnett Shale Operations
DTE Energy’s Barnett Shale Operations Zones of DTE Acreage Clay Cooke Montague Cooke 23,000 acres Wise Denton Jack Core area Dallas/ Palker Ft Worth Metropolitan Palo Pinto Tarrant Area 3,000 acres Hood Johnson Erath Somervell Hill 52,000 acres Bosque Expansion area 22
Slide 23: Unconventional Gas Production Statistics
Unconventional Gas Production Statistics Antrim Barnett Net Income ($ millions) 2005 Natural Gas Production (Bcfe) 21.5 0.7 2006 Natural Gas Production (Bcfe) 22.4 4.1 $25-30 Current Proven Reserves (Bcfe) 338 59 Current Probable Reserves (Bcfe) 35 120 Gross Current Producing Wells 2,010 65 Planned
Slide 24: 2006 Guidance
2006 Guidance Operating Earnings* ($ millions) 2005 2006 Actuals Guidance Detroit Edison $272 $320-335 MichCon 73 70-80 Power & Industrial Projects** 280 215-225 Unconventional Gas Production 4 25-30 Fuel Transportation & Marketing*** 2 85-90 Corporate & Other (54) (70-80) Operating Earnings $577 $6
Slide 25: Capital Expenditures
Capital Expenditures ($ millions) 2005 2006 Actuals Estimate Detroit Edison - Operational $584 $575-675 - Environmental 65 200-250 - DTE2/SAP Implementation 73 100-140 MichCon - Operational $113 $105-150 - Pipeline Integrity 15 20-25 Non-Utility* - Power & Industrial Projects $77 $100-200 - Unconven
Slide 26: Cash Flow
Cash Flow ($ millions) 2005 2006 Actuals Estimate Operating Activities Cash from operations $1,001 $1,100-1,150 Synfuel production payment* 349 325-375 Adjusted cash from operations $1,350 $1,425-1,525 Investing Activities Capital expenditures ($1,115) ($1,300-1,700) Asset sales 60 0-25 Other invest
Slide 27: Reconciliation of 2002 & 2003 Reported Earnings to Operating Earnings
Reconciliation of 2002 & 2003 Reported Earnings 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 p
Slide 28: Reconciliation of 2004 & 2005 Reported Earnings to Operating Earnings
Reconciliation of 2004 & 2005 Reported Earnings 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 p
Slide 29: Reconciliations
Reconciliations Use of Non-Utility Operating Net Income – DTE Energy management believes that non-utility operating net income provides a more meaningful representation of the company’s earnings from ongoing non-utility operations and this measure as the primary performance measurement for external
DTE Energy — Morgan Stanley Global Electricity & Energy Conference (March 2006) on 6ix