Dte Energy Company · NYSE:DTE
Dte Energy — Lehman Brothers 2007 CEO Energy/Power Conference
29 slides from Dte Energy's conference presentation, Sep 4, 2007
Slide 1: Lehman Brothers 2007 CEO Energy/Power Conference
September 4, 2007 David E. Meador Executive Vice President and CFO Lehman Brothers 2007 CEO Energy/Power Conference
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: Overview
Overview Our primary focus is our utility strategy, which we expect will produce predictable, consistent earnings growth Our non-utility businesses will continue to create value for shareholders Our business strategy is supported by a strong balance sheet and enables an attractive dividend
Slide 4: Our Utility Operating Strategy Paves the Way for Increased Earnings Potential
Our Utility Operating Strategy Paves the Way for Increased Earnings Potential Well-run, customer-focused operations promote a constructive regulatory environment Constructive Regulation Run the Business Well Collaborative Environment Creative Solutions Cost Tracking Mechanisms Timely Recovery Custom
Slide 5: Run the Business Well: Cost Efficiency
Run the Business Well: Cost Efficiency Performance Excellence Process continues to produce meaningful savings Detroit Edison filed for a 2.9% rate increase in April, which would have been almost doubled without the implementation of our comprehensive cost reduction program Illustrative customer rate
Slide 6: Focus on Utility Cost Efficiency
0 10 20 30 40 50 60 $/MWh Total O&M Per Customer (Average 2003 - - 2005) 0 500 1,000 1,500 2,000 2,500 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 1st Quartile 0 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 0 1,000 500 1,500 2,000 2,500 Utilities continue to drive for
Slide 7: Operational Excellence: Service Reliability
Operational Excellence: Service Reliability System reliability is a key component of customer satisfaction System reliability is one of our strengths, allowing Detroit Edison to consistently stay in the top quartile of the industry Continued reliability improvements driven by: More efficient line cl
Slide 8: Operational Excellence: Safety
Operational Excellence: Safety Safety is a core value and a priority for all DTE Energy businesses 2002 2003 2004 2005 2006 2007 OSHA Recordables 6 4.2 3.8 3.1 2.27 1.8 OSHA Recordable Rate Top Quartile DTE Energy's accident rate has improved every year for the past four years Entered top quartile i
Slide 9: Running the Business Well Promotes a Constructive Regulatory Environment
Running the Business Well Promotes a Constructive Regulatory Environment MichCon Detroit Edison Fully regulated by the MPSC 11% authorized return on equity Full pass-through of gas cost Tracking mechanism for bad debt Innovative settlement agreement with all parties on MichCon gas storage Settlement
Slide 10: Significant Utility Investment Planned Through 2010
New construction Detroit Edison Significant Utility Investment Planned Through 2010 On track with over $800 million environmental projects at Monroe plant - new SCR completed in May Plan to file application for new nuclear unit at existing Fermi site by year-end 2008 Investing ~$330 million in Advan
Slide 11: Our Utility Strategy Is Producing Results
Our Utility Strategy Is Producing Results Our strategy reduces the need for rate increases and allows the utilities to earn their authorized ROE Utility Operating Earnings* ($ millions) 2002 x 2003 2004 2005 2006 2007 x 2008 2009 2010 352 307 202 345 429 428 460 490 520 $352 2002 2006 $429 * Reconci
Slide 12: Overview
Overview Our primary focus is our utility strategy, which we expect will produce predictable, consistent earnings growth Our non-utility businesses will continue to create value for shareholders Our business strategy is supported by a strong balance sheet and enables an attractive dividend
Slide 13: Continue to Invest in Focused Areas Where We See Strongest Opportunities
Continue to Invest in Focused Areas Where We See our Strongest Opportunities Non-Utility Investment Outlook Coal & Gas Midstream Investing $50M (2007/08) for 14 Bcf expansion of gas storage in Michigan Investing $30M for a Vector Pipeline Expansion - expected in-service Nov. 2007 Investing $200M (20
Slide 14: Non-Utility Monetizations Have Exceeded Expectations
Non-Utility Monetizations Have Exceeded Expectations Total after-tax proceeds of ~$1.5 billion Repurchased ~$675 million of common stock as of August 28 Expect to buy back $900 million of common stock by year end and retire $700 million of parent company debt* Actions Proceeds Antrim Sale closed Jun
Slide 15: 2007 Post-Monetization Earnings Profile
Detroit Edison MichCon Coal & Gas Midstream Power & Industrial Unconventional Gas Energy Trading East 345 82.5 22.5 20 5 12.5 52.5 DTE Earnings - Post Monetization 2007 Post-Monetization Earnings Profile Excludes Synthetic Fuel and Corporate & Other We expect the utilities to represent 80-90% of our
Slide 16: Overview
Overview Our primary focus is our utility strategy, which we expect will produce predictable, consistent earnings growth Our non-utility businesses will continue to create value for shareholders Our business strategy is supported by a strong balance sheet and enables an attractive dividend
Slide 17: Business Strategy is Supported by a Strong Balance Sheet
Leverage* * Excludes securitization debt and MichCon short-term borrowing Funds from Operations / Debt* Business Strategy is Supported by a Strong Balance Sheet 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 ris
Slide 18: Our Sustainable Dividend is Very Competitive
Our Sustainable Dividend is Very Competitive As utility earnings increase, our payout ratio will improve, providing flexibility to consider further dividend increases Industry Dividend Yield August 28, 2007 PGN 0.05428 ED 0.05146 AEE 0.05127 NI 0.04933 SO 0.04584 DTE 0.04549 CNP 0.042 AEP 0.03478 FE
Slide 19: DTE Energy's Investment Thesis
DTE Energy's Investment Thesis DTE Energy expects to create significant value for shareholders over the next five years 5% long-term utility earnings growth Well-run utilities engaged in a customer-focused investment program, operating in a constructive regulatory environment Investment in non-utili
Slide 20: Appendix
Appendix DTE Energy
Slide 21: 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 22: 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 23: 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 24: 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 ~$900 Gains from non-utility monetizations enabled DTE to use more of its banked tax credits in 2007 Pulls ahea
Slide 25: 2007 Segment Earnings Guidance
2007 Segment Earnings Guidance * Reconciliation to GAAP reported earnings included in the appendix 2007 earnings guidance remains unchanged except for monetization impacts and Synthetic Fuel Due to the timing of the share repurchase plan, we plan to provide revised EPS guidance upon completion of al
Slide 26: Strong Cash Flow Supports Debt Repayment and Stock Buyback
2007 Post Monetization Guidance DTE Energy Cash Flow Strong Cash Flow Supports Debt Repayment and Stock Buyback ($ 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 27: Continuing to Grow our Businesses
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 28: Reconciliation of Utility Reported Earnings to Operating Earnings
Reconciliation of Utility 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 perfo
Slide 29: Reconciliations of 2007 Reported to Operating Earnings
Reconciliations of 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 meas
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