Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (February 2006)
25 slides from Dte Energy's investor presentation, Feb 6, 2006
Slide 1: DTE Energy: Well-Positioned for Long-Term Growth
DTE Energy: Well-Positioned for Long-Term Growth Investor Visit February 6, 2006
Slide 2: Safe Harbor Statement
Safe Harbor Statement This discussion document is based on material previously presented 11/8/05, and furnished in a public disclosure. The information contained herein is as of the date of this presentation. DTE Energy expressly disclaims any current intention to update any forward-looking statemen
Slide 3: DTE Energy Is Well-Positioned for Long-Term Growth
DTE Energy Is Well-Positioned for Long-Term Growth Detroit Edison MichCon Power and Industrial Projects Unconventional Gas Production Fuel Transportation and Marketing Utility growth Regulatory stability Investments in utilities Drive for low costs, high customer satisfaction Non-utility growth Prog
Slide 4: Detroit Edison and MichCon Have Opportunities for Long-Term Growth
Detroit Edison and MichCon Have Opportunities for Long-Term Growth Constructive Regulatory Environment Utility Accelerated Long-Term Earnings Growth Investment Opportunities Cost Reductions
Slide 5: We Expect a Constructive Regulatory Environment in 2006
We Expect a Constructive Regulatory Environment in 2006 Regulatory Initiatives Progress Rate increases to deal with 10+ years of inflation Detroit Edison $374M increase phased in Nov. 2004 to Jan. 2006 MichCon $60M increase effective April 2005 Full cost recovery for natural gas, fuel supply, purcha
Slide 6: We See Opportunities for Significant Investment in Both Utilities
Base Electric Environmental Gas System Expansion / Safety Total bars 0 700 1450 0 other 700 750 250 1700 Base investments to improve power plant availability and electric and gas distribution system reliability Investments to reduce emissions from Detroit Edison's coal-fired power plants Investments
Slide 7: Environmental Capital Expenditures Expected to Total ~$750M from 2005-2010
Environmental Capital Expenditures Expected to Total ~$750M from 2005-2010 Potential Environmental Capital Expenditures ($ millions) SCR project, Monroe Power Plant 2005 2006 2007 2008-2010 2009 2010 80 200 200 200 70 30 actual #s 84 218 226 129 70 31 ~$80 ~$200-250 ~$200-250 ~$200-250
Slide 8: MichCon Plans New Investments for System Expansion and Safety
MichCon Plans New Investments for System Expansion and Safety Potential Investment in Gas System Expansion and Pipeline Integrity* ($ millions) 2005 2006 2007 2008-2010 2009 2010 20 30 100 100 40 40 actual #s 18 38 93 32 36 45 Western Michigan system expansion Federally mandated pipeline inspection
Slide 9: Investment in New Base-Load Power Plant a Real Possibility
Investment in New Base-Load Power Plant a Real Possibility Michigan needs new baseload generation "...we recommend [building] one or two...coal generating plants...with the first becoming operational about 2011..." The right regulatory structure is needed to encourage new construction "...Staff reco
Slide 10: We Are Focused on Achieving Low Costs and High Customer Satisfaction
DTE's Performance Excellence Process Mitigate inflation Offset higher commodity prices Reduced need for future rate increases Help fund improved reliability and customer service Help to fund large scale utility investment program We Are Focused on Achieving Low Costs and High Customer Satisfaction
Slide 11: Performance Excellence Process Is Underway
Performance Excellence Process Is Underway Ease future rate pressure on customers Create headroom for utility investments Broad cost reduction, productivity improvement effort All areas of Detroit Edison, MichCon, Corporate Center to be addressed Targeting first quartile cost/performance/customer sa
Slide 12: Putting It All Together: Utilities Have Good Long-Term Growth Potential
Putting It All Together: Utilities Have Good Long-Term Growth Potential 5% annual utility earnings growth potential through 2010 Constructive regulatory environment Potential asset base growth of $1.6-$1.8B by 2010 Broad cost reduction, performance improvement program
Slide 13: DTE Energy Is Well-Positioned for Long-Term Growth
DTE Energy Is Well-Positioned for Long-Term Growth Detroit Edison MichCon Power and Industrial Projects Unconventional Gas Production Fuel Transportation and Marketing Utility growth Regulatory stability Investments in utilities Drive for low costs, high customer satisfaction Non-utility growth Prog
Slide 14: Near-Term Focus for DTE Energy's Non-Utility Businesses
Near-Term Focus for DTE Energy's Non-Utility Businesses Continue to apply value-focused approach to invest strong near- term cash flows... ....into three core segments capable of achieving near-term income of $50-100M... ....producing a scale / focus that increases visibility and improves valuation
Slide 15: The Power and Industrial Segment Provides Private Utility Services
The Power and Industrial Segment Provides Private Utility Services Creates value by providing reliable and efficient operations and optimized fuel inputs Manages risk through contract structuring Long-term contracts Fuel cost pass through Non-recourse debt Currently own and operate 25 sites in the a
Slide 16: Building Scale in the Power and Industrial Segment
Five site, $35-40M transaction with DQE ~$25M multi-site acquisition ~$20M biomass acquisition Expected average ROIC of 14%, incremental 2006 net income of $8-10M Building Scale in the Power and Industrial Segment We captured significant near-term growth opportunities via acquisitions
Slide 17: Existing Project Investments Expected to Provide Attractive Returns
2005E 2006 2007 2008 45 37 42 47 3 9 24 36 Net Income Potential ($ millions) $80 $45 $65 $48 Growth Existing Project Investments Expected to Provide Attractive Returns Additional high probability near- term opportunities: ~$40M industrial project (1Q2006) ~$20M multi-site expansion with existing cus
Slide 18: DTE Has Developed a Meaningful Unconventional Gas Position
Most active operator in the play 15 year track record 290,000 acres leased 325 Bcf proved reserves 1,950 wells producing 60 MMcfd Antrim Shale 75,000 acres - recently acquired 18,000 acres Among 10 largest acreage positions in the play ~60 producing wells 20 square miles of 3D seismic data Barnett S
Slide 19: Antrim Shale: Our Approach Going Forward and Recent Examples
Antrim Shale: Our Approach Going Forward and Recent Examples Active Leasing and Drilling Program Remarket Existing Production Apply New Technologies DTE Energy's Antrim Shale Operations Continue to build base of undeveloped acreage Currently at 80,000 acres Added ~19,000 acres over last 12 months -
Slide 20: Barnett Shale: Our Approach Going Forward and Recent Examples
5 rigs operating by YE 2006 Plan to drill 55 wells in 2006, primarily in proven areas Additional testing of unproven acreage Prove out existing acreage and prudently add to position Seek out small, directly negotiated acquisitions DTE Energy's Barnett Shale Operations Dallas/Fort Worth Area August 2
Slide 21: Unconventional Gas Investments Expected to Provide Attractive Returns
Unconventional Gas Investments Expected to Provide Attractive Returns 2005E 2006 2007 2008 Antrim 10 15 21 31 Barnett 0 13 37 48 Unconventional Gas Net Income Potential ($ millions) $70-80 Barnett Antrim $25-30 $50-60 $10 Expected growth expenditures of $400M from 2005-2008 Earnings expected to trip
Slide 22: Fuel Transportation and Marketing Segment Includes Storage and Pipelines
Michigan/ Dawn storage hub Fuel Transportation and Marketing Segment Includes Storage and Pipelines Northeast natural gas market is supply-constrained Key future gas supplies to this market will move on pipelines through/near Michigan Nation's most economically expandable storage is concentrated in
Slide 23: Attractive Gas Pipeline and Storage Projects Will Build Scale
Attractive Gas Pipeline and Storage Projects Will Build Scale Vector Pipeline Chicago MichCon Transmission Millennium Pipeline Dawn Hub Dawn Ramapo Market coverage DTE Storage DTE Storage Development Opportunities DTE Pipeline DTE Pipeline Development Opportunities 3rd Party Pipeline Corning Expand
Slide 24: Gas Pipeline and Storage Investments Expected to Provide Attractive Returns
Gas Pipeline and Storage Investments Expected to Provide Attractive Returns 2005E 2006 2007 2008 Existing 22 23 28 33 Growth 0 0 12 20 Gas Pipeline and Storage Net Income Potential ($ millions) $30-35 $20-25 $25-30 $20-25 Expected growth expenditures of $150-200 from 2005-2008 Incremental net income
Slide 25: DTE Energy Is an Attractive Investment
DTE Energy Is an Attractive Investment Potential for 5% annual growth in utility earnings between 2005 - 2010 $1.6-1.8B expansion of asset base Broad cost reduction, performance improvement effort Improved, constructive regulatory environment Significant progress on non-utility growth strategy in re