DTE Energy Company · NYSE:DTE
DTE Energy — Investor Presentation (May 2007)
37 slides from DTE Energy's investor presentation, May 30, 2007
Slide 1: 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 2: Plans for Sustained Earnings Growth
Plans for Sustained Earnings Growth Continue to earn authorized ROE Build rate base through customer-focused investment program Expect to invest ~ $800M for environmental upgrades at Detroit Edison in 2007-2010 Investing in pipeline safety, system expansion and storage expansion at MichCon Continue
Slide 3: Utility Growth, Non-Utility Monetization, Summary
Utility Growth Non-Utility Monetization Summary
Slide 4: Utility Growth Investments on Track
Utility Growth Investments on Track Detroit Edison MichCon Distribution system expansion to meet demand growth in Western Michigan (~$75M capex, in service year end 2007/2008) Regulated gas storage expansion to increase summer storage by 17Bcf (~$75M capex, in service year end 2007) $40M investment
Slide 5: Investing in Detroit Edison: Increasing Earnings Potential
2006A 2007E 2008E 2009E 2010E Base capex 8304 8728 9077 9367 9697 Investing in Detroit Edison: Increasing Earnings Potential Capital Expenditures $850-950 $850-950 $750-950 $750-950 Not including new base-load generation ($ millions) Depreciation $480-490 $505-520 $525-550 $560-585 Equity Base ~$3,1
Slide 6: Investing in MichCon: Increasing Earnings Potential
2006A 2007E 2008E 2009E 2010E Base capex 1841 1956 2000 2041 2088 Capital Expenditures $200-230 $200-250 $100-200 $100-200 ($ millions) Depreciation $95-100 $100-110 $105-115 $110-120 Equity Base ~$800 ~$900-950 Earnings Potential* $80-85 ~$100 ~5-6% annual earnings growth MichCon Potential Net Util
Slide 7: Performance Excellence Process Reduces the Need for Rate Increases
Performance Excellence Process Reduces the Need for Rate Increases Sustaining high levels of customer service Consistently achieving utility ROE target Reducing the impact of utility investments on customer rates Illustrative customer rate impact from sustained cost savings and high capital investme
Slide 8: Detroit Edison Rate Case Filing
Detroit Edison Rate Case Filing Straightforward case filed in April 2007 Projected cost reductions allowed us to cut our rate request almost in half $123M request is a 2.9% average rate increase Pre-hearing conference to set schedule for case is June 7 Expect final decision in 12 months Modest rate
Slide 9: Performance Excellence Process Financial Benefits
on-going Performance Excellence Process Financial Benefits 2006 2007E 2008E 2009E 2010E O&M Savings 34 153 218 218 218 Capital Savings 11 25 32 32 32 PSCR Savings 53 45 50 50 50 Potential Benefits of Performance Excellence Process ($ millions, pre-tax) ~$95 $200-250 $250-350 2006 2007E 2008E 2009E 2
Slide 10: Utility Growth, Non-Utility Monetization, Summary
Utility Growth Non-Utility Monetization Summary
Slide 11: Non-Utility Restructuring Proceeding Extremely Well
DTE Energy's Non-Utility Restructuring Proceeding Extremely Well Non-Utility restructuring should better align the business with shareholder interests by reducing earnings volatility, providing more transparent valuation and directly driving shareholder value through the repurchase of parent company
Slide 12: Non-Utility Restructuring: Sale of Antrim Gas Properties
Agreed to sell all Antrim Shale gas properties to Atlas Energy Resources First deal of its size in the Antrim Shale Interests in over 2,000 wells, 294,000 net acres and 60 mmcfd net production Strong value received for the low cost operator in the Antrim Shale Gross Proceeds of $1.225 Billion After
Slide 13: Future Development of Barnett Assets
Non-Utility Restructuring: Future Development of Barnett Assets Strong value realized for the mature Antrim assets made it a clear choice to complete this sale while we continue to pursue strategic alternatives for the less mature Barnett properties Concentrating on moving Barnett assets up the valu
Slide 14: Explore Sale of Partnership Interest in Power & Industrial
DTE's investment approach in P&I Projects has resulted in a portfolio of projects following attractive features Non-Utility Restructuring: Explore Sale of Partnership Interest in and Recapitalization of Power & Industrial Business Received strong interest from potential investors Expect announcement
Slide 15: Power & Industrial Steel and On-Site Energy Projects
Non-Utility Restructuring: Explore Sale of Partnership Interest in and Recapitalization of Power & Industrial Business Steel Projects On-Site Energy Projects 3 Coke Battery projects 3 PCI projects Coke is a critical raw material for the production of iron in blast furnaces at integrated steel mills
Slide 16: Sell or Restructure Peaker Assets
Non-Utility Restructuring: Sell or Restructure Peaker Assets Progress on Sale or Restructuring Moves will reduce future earnings drag* Plan completion of restructuring by year end * Operating earnings losses of $13M in 2006, reconciliation to GAAP reported earnings in appendix Purchase agreement exe
Slide 17: Synfuels Expected to Produce $0.9-1.0B in Cash in 2007-2009
Synfuels Expected to Produce $0.9-1.0B in Cash in 2007-2009 2007 2008 2009 Total 475 475 800 325 100 900 2007E 2008E 2009E Total Prior - Expected Synfuel Cash Flow* - Minimum 2007-2009 ($ millions) ~$475 ~$300 ~$125 ~$900 The Antrim sale shifts ~$170M of synfuel cash from 2008/2009 into 2007 through
Slide 18: Sources and Uses of Monetization Proceeds and Synfuel Cash
Sources and Uses of Monetization Proceeds and Synfuel Cash Sources Near Term Uses Long Term Uses East 1.4 0.7 0.75 West 0.95 0.75 0.75 0.85 0.25 0.65 Synfuel $900-1,000 (2007-2009) Monetization Proceeds $1,250-1,550 (2007) Debt $800-900 (2007-2008) Share Repurchase* $650-$850 (2007) Utility Equity/O
Slide 19: Deployment of Non-Utility Monetization Cash Proceeds
With the signing of the agreement with Atlas, DTE Energy's Board of Directors approved up to $1.55 billion in common share repurchase authority, increased from the previous level of $700 million Deployment of Non-Utility Monetization Cash Proceeds We remain committed to using a significant portion o
Slide 20: Utility Growth, Non-Utility Monetization, Summary
Utility Growth Non-Utility Monetization Summary
Slide 21: DTE Energy's Investment Thesis
DTE Energy's Investment Thesis DTE Energy plans to create significant value for shareholders over the next five years The utilities are positioned to grow earnings 5-6% per year while driving a customer focused investment program Non-Utility monetization plans proceeding well, realizing shareholder
Slide 22: For More Information
For More Information DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030
Slide 23: Appendix
Appendix DTE Energy
Slide 24: 2007 Segment Earnings Guidance
Unconventional Gas guidance has been reduced following the sale of Antrim 2007 Segment Earnings Guidance Operating Earnings* (2007 guidance not inclusive of future non-utility monetizations) ($ Millions) 2007 Revised Guidance * See note regarding reconciliation to GAAP reported earnings included in
Slide 25: Michigan's 21st Century Energy Plan
Michigan's 21st Century Energy Plan Indicative of Collaborative Regulatory Environment Key Elements of the Plan Collaboratively developed with all of Michigan's stakeholders, including Detroit Edison Estimate 800 MW base load capacity and 2,200 MW peaking capacity needed by 2015 Base load built by u
Slide 26: Rate Case Filings
Rate Case Filings Filed rate case April 13, 2007 Pre-hearing conference to set schedule for case is June 7 Anticipate rates will be effective mid-2008 Elements of filing: 2006 test year plus "known and measurable" changes 2008 revenue deficiency of $123M, which would increase rates by 2.9% on averag
Slide 27: 2007 Cash Impact of Antrim Transaction
2007 Cash Impact of Antrim Transaction Gross Proceeds Net Tax Impacts * After-Tax Proceeds $1,225 ($255) $970 The transaction results in 2007 after-tax proceeds of $970 million Since the Antrim properties have been around for more than 10 years, they have a low tax basis This low tax basis is partia
Slide 28: Total Non-Utility Monetization Projected After-Tax Proceeds Reconciliation
Total Non-Utility Monetization Projected After-Tax Proceeds Reconciliation ($ Millions)
Slide 29: Barnett Shale Operating Metrics
16 Net Production Rate (mmcf/day) 21 16 Gross Producing Wells 65 137 3/31/07 1/1/06 Reserves (Bcfe) Probable Reserves Proven Reserves 120 59 179 12/31/05 1/1/05 Acreage Position (thousands) Net Undeveloped Acres Net Developed Acres 62 76 64 16 82 12/31/06 1/1/06 123 12/31/06 3/31/07 1/1/06 12/31/06
Slide 30: Reconciliation of 2006 Reported to Operating Earnings
Reconciliation of 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 measu
Slide 31: Reconciliation of 2006 Reported to Operating Earnings per Share
Reconciliation of 2006 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 perform
Slide 32: Reconciliation of Q1 2007 Reported to Operating Earnings
Reconciliation of Q1 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 33: Reconciliation of Q1 2007 Reported to Operating Earnings per Share
Reconciliation of Q1 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 34: Reconciliation of Q1 2006 Reported to Operating Earnings
Reconciliation of Q1 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 35: 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
Slide 36: Reconciliation of 2006 Power & Industrial Projects Reported to Operating Earnings
Reconciliation of 2006 Power & Industrial Projects Reported to Operating Earnings ($ millions, after-tax) 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
Slide 37: Reconciliation of Reported to Operating Earnings
Reconciliation of 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 measuremen