Bismarck, ND-based MDU Resources Group in 2Q2016 completed its exit from the exploration and production (E&P) and refining sectors amid more red ink, while reporting strong earnings in its remaining utility and construction businesses.

“We’re now a more streamlined company with a lower risk profile and less exposure to commodity prices,” CEO David Goodin said. “Our continuing operations delivered strong results in the second quarter.”

MDU’s pipeline and midstream segment posted a 139% hike in natural gas storage volumes in 2Q2016.

MDU reported a record $33.7 million in profits, a 67% quarter-over-quarter increase, in construction materials. Backlogs in each construction unit hit more than $800 million in materials and another $500 million in services.

“Looking ahead, our construction businesses have a combined backlog of $1.3 billion,” Goodin said. Margins are expected to be higher in materials and slightly lower in services for the rest of the year, compared to last year.

North Dakota and the Bakken continue to present opportunities for MDU’s pipeline and midstream business. Goodin cited a favorable market response to MDU’s proposed $50 million transmission pipeline to bring natural gas supplies to eastern North Dakota and western Minnesota (see Daily GPI, June 14). “An open season seeking commitments on the 38-mile pipeline closed July 15, and initial interest is promising,” he said.

The Valley Expansion project will connect Viking Transmission Pipeline in Minnesota to MDU’s existing WBI transmission pipeline in Mapleton, ND, with a 40 MMcf/d capacity line that can expand even more. Construction and start-up of the new line are slated for 2018.

Goodin noted that MDU’s pipeline group also completed a northwest expansion of transmission lines in the oil/gas producing Bakken Shale play in North Dakota. “Other expansion projects are underway in North Dakota, many with a targeted completion of the second quarter next year,” he said.

Earlier this year, MDU made clear it was going to complete its E&P exit after selling its remaining marketed oil and natural gas production assets, effectively closing its Fidelity Exploration and Production Co. unit (see Shale Daily, April 11). Fidelity, which was based in Denver, has closed its offices.

A short time later, a unit of San Antonio, TX-based Tesoro Corp. acquired MDU’s jointly owned Dakota Prairie Refinery in the Bakken (see Shale Daily, June 28). The new refinery opened last year and was losing money for MDU, which Goodin said took a $156.7 million loss after taxes in 2Q2016.

For 2Q2016, earnings from continuing operations for MDU were $46.1 million (24 cents/share), compared to $25.8 million (13 cents) for the same period in 2015. When the discontinued E&P and refining businesses were included for the quarter, MDU had a loss of $109.3 million (minus 56 cents), compared to a loss of $229.8 million (minus $1.18) for same period last year.

Stay up to date on 2Q16 earnings and projections for the remainder of the year with NGI’s Earnings Call and Coverage sheet.