Energy Stock Black Hills Corp. (NYSE: BKH) Soars On Google Data Center Deal

(MENAFN- Investor Ideas) newswire) a trusted platform for investing ideas including energy stocks issues a news and trading alert for Black Hills Corp. (NYSE: BKH ).

Black Hills makes the NYSE top gainers list today on data center news, currently trading at 77.73 +6.99 (+9.88%) on volume of over 1.6 Million shares as of this report. The stock has a morning high of $7795.

Black Hills announced yesterday on the close that it has signed definitive agreements effective Sept. 30, 2026, with terms through 2048, to serve a planned Google data center to be constructed in Cheyenne, Wyoming. The negotiated agreements include a Large Power Contract Services Agreement (LPCSA) and a Generation Facilities Agreement (GFA).

The project, exclusive of additional transmission system expansion investments, is anticipated to be served by a total resource mix of 2.7 GW, including reserve margins, and is planned to begin taking energy service in late 2027 and ramp to the project's peak load in 2030. Black Hills will provide up to 590 MW of grid-connected energy service through company-owned generation and market energy. In addition, Black Hills will manage the output of approximately 2.1 GW of Wyoming-based, third-party contracted resources through a privately managed microgrid under the company's Large Power Contract Service (LPCS) tariff.

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To support the project, Black Hills plans to invest $1.8 billion between 2027 and 2029 to construct 564 MW (nameplate capacity) of company-owned generation. The company expects to begin earning a return on its generation investment when construction begins in 2027. Revenue from microgrid management fees (MGMF) is anticipated to begin in late 2027 and increase based upon a contractually defined ramp schedule included in the LPCSA.

The project is expected to provide approximately $150 million of net income in 2030. Beyond 2030 and as contracted, the company will continue to earn MGMF and a return on its capital investment to be fully depreciated by 2048. The project is expected to deliver approximately $2.4 billion of unlevered free cash flow, net of $1.8 billion of generation capital investment. This cash flow will meaningfully strengthen the company's financial profile, supporting a strong balance sheet, providing significant flexibility to finance the near-term investment, and creating substantial long-term flexibility for capital allocation.

Earning on generation investments and management of third-party resources through flexible Wyoming service model

To provide 590 MW of grid-connected service, Black Hills will construct and own through a non-regulated affiliate 564 MW (nameplate capacity) of new natural gas generation located at the company's existing Cheyenne Prairie Generating Station (CPGS) location. The remaining 26 MW will be supplied through a combination of market energy purchases and retail utility service provided under the company's applicable industrial tariff.

In addition to recovering and earning a return on its generation investment, Black Hills will receive MGMF revenue for coordinating grid operations, reliability services, and energy dispatch across the portfolio of contracted resources and market energy purchases to serve the planned data center. The MGMF is a negotiated rate based upon a contracted minimum peak load expected to begin in 2027 and increase throughout the project's ramp period.

The company expects to finance the $1.8 billion generation investment through a combination of project-generated cash flow, debt, and other financing alternatives, and is evaluating a range of financing options, with a focus on earnings accretion while maintaining our solid investment-grade credit ratings. Strong cash flow, contractual pass-through of debt costs, cash return on the investment during construction, and a risk-adjusted return on the capital investment provide substantial flexibility in determining the optimal financing mix. Google has provided Black Hills with $399 million of refundable advances for the procurement of long lead-time equipment under the parties' generation reservation agreement. Black Hills expects to reimburse those advances by June 30, 2027.

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