DTE Energy Company · NYSE:DTE
DTE Energy — Investor Presentation (March 2007)
39 slides from DTE Energy's investor presentation, Mar 21, 2007
Slide 1: Business and Financial Update March 21, 2007
Business and Financial Update March 21, 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: DTE Energy Is an Integrated Energy Company
Coal & Gas Midstream Power & Industrial Projects Unconventional Gas Production Detroit Edison MichCon DTE Energy Is an Integrated Energy Company Complementary Non-Utility Growth Businesses Strong, Stable and Growing Utilities Electric generation and distribution 2.2 million customers Fully regulated
Slide 4: Business Update, Financial Update, Summary
Business Update Financial Update Summary
Slide 5: 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 6: 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 7: Rate Case Previews
Rate Case Previews Expect to file rate case in Q2 2007 (must file prior to July 1, 2007) Anticipate rates would be effective mid-2008 Expected elements of filing: 2006 test year plus "known and measurable" changes Full and timely recovery of capital expenditures Continue progress on rate deskewing C
Slide 8: 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 9: Performance Excellence Process Focused on Improving Service while Reducing Cost
Performance Excellence Process Focused on Improving Service while Reducing Cost Increased Productivity and Reduced Costs* Improved Customer Service Total pre-tax O&M and capital savings of ~$45M for shareholders and customers in 2006 Projects completed in 2006 have achieved approximately $160M in an
Slide 10: 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 i
Slide 11: 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 12: 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 13: Non-Utility Restructuring Proceeding According to Plan
DTE Energy's Non-Utility Restructuring Proceeding According to Plan Non-Utility Action Plan should better align the business with shareholder interests by reducing earnings volatility, providing more transparent valuation and directly drive shareholder value through the repurchase of parent company
Slide 14: Non-Utility Restructuring: 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 15: Non-Utility Restructuring: Unconventional Gas
Made significant progress developing acreage in 2006 146% increase in reserves at Barnett 34% increase in reserves at Antrim Pursue plan to harvest value from mature holdings Retain the ability to benefit from the potential upside of earlier stage holdings Non-Utility Restructuring: Unconventional G
Slide 16: Non-Utility Restructuring: Continue to Invest in Focused Areas
Non-Utility Restructuring: Continue to Invest in Focused Areas Where We See our Strongest Opportunities * See appendix for detail Non-Utility Investment Outlook Coal & Gas Midstream Expect to invest $60-70M in 2007 Investing $50M (2007/08) for 14 Bcf expansion of gas storage in Michigan Investing $3
Slide 17: Focused Areas: Pipelines & Storage
Continue to Invest in Focused Areas Where We See Our Strongest Opportunities - Pipelines & Storage Washington 10 - 66 Bcf Capacity - Includes 14 Bcf expansion in service April 2006 Washington 28 - 9.7 Bcf Capacity Expansion in service late 2007 40% ownership interest DTE Investment of $30M Potential
Slide 18: Synfuels Expected to Produce $1.3-1.4B in Cash in 2006-2009
Synfuels Expected to Produce $1.3-1.4B in Cash in 2006-2009 2006 2007 2008 2009 Total 360 360 910 1160 550 250 75 1235 2007E 2008E 2009E Total Expected Synfuel Cash Flow* - Minimum 2006-2009 ($ millions) ~$475 ~$325 ~$100 ~$1,300 Prior to Nov. 2006, synfuel proceeds projected to be $1.0B Last Novemb
Slide 19: Business Update, Financial Update, Summary
Business Update Financial Update Summary
Slide 20: 2007 Segment Earnings Guidance
2007 Segment Earnings Guidance Operating Earnings* (2007 guidance not inclusive of non-utility restructuring) ($ millions) 2006 Actual 2007 Guidance Detroit Edison - Full year rate reduction from show cause settlement partially offset by incremental cost savings MichCon - Normal weather assumption a
Slide 21: 2007 Operating Earnings Guidance Year over Year Drivers
2006 Utility Growth Non-Utility Growth Normalized Trading Corporate & Other 2007E 414 414 420 399 383 383 6 24 45 16 $460-495 $24 $6 ($45) $515 Utility Growth 2006A Non-Utility Growth Normalized Energy Trading Corporate & Other 2007E 2007 Operating Earnings Guidance Year over Year Drivers DTE Energy
Slide 22: 2007E DTE Energy Cash Flow
2007E DTE Energy Cash Flow (2007 guidance not inclusive of non-utility restructuring) Strong Cash Flow Expected to Continue ($ millions) * Accounted for as 'investing activity' on statement of cash flows 2006 Does not include $800M of expected proceeds from non-utility restructuring 2006 cash from o
Slide 23: Increasing Investment in our Businesses
Increasing Investment in our Businesses DTE Energy Capital Expenditures (2007 guidance not inclusive of non-utility restructuring) 2006 2007E ($ millions)
Slide 24: Our Sustainable Dividend is Very Competitive
Our Sustainable Dividend is Very Competitive Dividend raised to $2.12 per share annually in Dec. 2006 As utility earnings increase, our payout ratio will decline and provide the flexibility to consider further dividend increases Non-Utility restructuring proceeds will be partially used for stock buy
Slide 25: Business Update, Financial Update, Summary
Business Update Financial Update Summary
Slide 26: DTE Energy's Investment Thesis
DTE Energy's Investment Thesis DTE Energy plans to create significant value for shareholders over the next five years The utilities are positioned to grow earnings 5-6% per year while driving a customer focused investment program Non-Utility restructuring should better align the company with shareho
Slide 27: Upcoming Investor Events
Upcoming Investor Events AGA Conference, April 30 in Orlando Q1 earnings conference call, May 3 at 8:30 a.m. EST Annual shareholders meeting, May 3 at 10 a.m. EST
Slide 28: For More Information
For More Information DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030
Slide 29: Appendix
Appendix DTE Energy
Slide 30: 2006 Cash Flow & Capital
2006 Cash Flow & Capital DTE Energy Capital Expenditures 2005 2006 ($ millions) DTE Energy Cash Flow ($ millions) * Accounted for as 'investing activity' on statement of cash flows 2005 2006
Slide 31: 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 32: 2006 Barnett Shale Drilling Results Exceeded Goals
2006 Barnett Shale Drilling Results Exceeded Goals Net Production Rate (mmcf/day) 0 16 Gross Producing Wells 5 123 12/31/06 1/1/05 Reserves (Bcfe) Probable Reserves Proven Reserves 8 16 120 59 179 8 12/31/05 1/1/05 Acreage Position (thousands) Net Undeveloped Acres Net Developed Acres 49 49 65 16 81
Slide 33: 2006 Antrim Shale Drilling Results Exceeded Goals
2006 Antrim Shale Drilling Results Exceeded Goals Net Production Rate (mmcf/day) 59 Gross Producing Wells 2,010 Reserves (Bcfe) Probable Reserves Proven Reserves 35 338 373 12/31/06 12/31/05 Acreage Position (thousands) Net Undeveloped Acres Net Developed Acres Antrim Shale Operating Metrics 12/31/0
Slide 34: 2006 Barnett Shale Accomplishments
2006 Barnett Shale Accomplishments 2006 Goal 2006 Results Drill 55 Wells Drilled 64 wells with 6 rigs operating Produce 4.1 Bcfe net (~500% increase over 2005) Produced 4.1 Bcfe Increase proved reserves to 100 Bcfe by year end Proved reserves increased to 174 Bcfe Drill 4 additional test wells in so
Slide 35: 2006 Antrim Shale Accomplishments
DTE Acreage 2006 Goal 2006 Results Drill 130 Wells Drilled 142 Produce 22 Bcfe net Produced 22 Bcfe net 100% reserve replacement Reserve replacement of 570% Drill 10 horizontal wells Drilled 10 horizontal wells 2006 Antrim Shale Accomplishments
Slide 36: 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 37: 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 38: 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 39: 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