Black Hills Corporation Subsidiary Finalizing Oil and Gas Concession Contract With Costa Rican Government

DENVER, June 20, 2011 /PRNewswire/ -- Black Hills Corp. (NYSE: BKH) announced today that its subsidiary Black Hills Exploration & Production, Inc., through its subsidiary Mallon Oil Company, Sucursal Costa Rica, is working with the Costa Rican government to obtain execution of an oil and gas lease concession contract to allow for exploration of approximately 2.3 million acres of land in northern Costa Rica. Black Hills acquired Mallon Resources and its subsidiary Mallon Oil Company in a stock-for-stock merger in 2003. Through that transaction, Black Hills obtained the rights to pursue execution of the concession contract. Recent news reports from Costa Rica have indicated that the concession contract may be executed, necessitating a comment from the company.  

"Mallon Oil Company began working to obtain this concession in 1999, and we have continued that effort since acquiring Mallon in 2003," said David R. Emery, chairman, president and chief executive officer of Black Hills Corp. "For years, it did not appear the concession contract would be executed, but now there is a reasonable possibility that the concession contract may be executed by the Costa Rican government this year. Upon successful execution of the concession contract, Black Hills will develop plans regarding the property and disclose more information as appropriate."

In 1998, the Costa Rican government invited all oil and gas companies to submit competitive bids for oil and gas lease concessions within the country pursuant to the hydrocarbon laws of Costa Rica. In 1999, Mallon Oil Company, through its wholly owned subsidiary Mallon Oil, Sucursal, submitted bids for six separate tracts collectively covering approximately 2.3 million acres in the northern portion of Costa Rica. After a thorough analysis of the bid proposals, all six bids from Mallon Oil, Sucursal, were accepted and awarded in 2000 and are subject to execution of the concession contract. Throughout the entire process, Mallon Oil, Sucursal, has met all legal requirements necessary to preserve its rights under the concession while the government of Costa Rica has followed its laws and procedures applicable to execution of the final concession contract.

Black Hills Exploration and Production, Inc.

Black Hills Exploration and Production, a subsidiary of Black Hills Corp. (NYSE: BKH), operates oil and natural gas producing properties in Colorado, New Mexico and Wyoming, and has non-operated interests in properties producing in California, Montana, North Dakota, Oklahoma, Texas and Wyoming. In Costa Rica, the company conducts business under the name Mallon Oil Company, Sucursal Costa Rica, a subsidiary of Black Hills Exploration and Production, Inc.

Black Hills Corporation

Black Hills Corp. — a diversified energy company with a tradition of exemplary service and a vision to be the energy partner of choice — is based in Rapid City, S.D., with corporate offices in Denver and Papillion, Neb. The company serves 762,000 natural gas and electric utility customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. The company's non-regulated businesses generate wholesale electricity, produce natural gas, oil and coal, and market energy. Black Hills' 2,100 employees partner to produce results that improve life with energy. More information is available at www.blackhillscorp.com.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This news release includes "forward-looking statements" as defined by the Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this news release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including statements regarding our ability to execute the concession contract with the Costa Rican government to allow exploration of approximately 2.3 million acres of land in northern Costa Rica, are forward-looking statements. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including the factors discussed above, the risk factors described in Item 1A of Part I of our 2010 Annual Report on Form 10-K filed with the SEC, and other reports that we file with the SEC from time to time. New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time-to-time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Black Hills Corp.

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