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MDU Expanding Bakken Transportation Network with Two New Projects

After a fifth consecutive quarter of record natural gas transportation volumes, MDU Resources Group Inc. is moving forward with two new pipeline projects in Montana and North Dakota as record production in the Bakken Shale continues to drive demand for additional transportation capacity, management said.

MDU is finalizing construction plans for Demicks Lake, a 14-mile, 20-inch diameter pipeline in McKenzie County, ND, and a Line Section 22 expansion near Billings, MT, CEO David Goodin said Thursday on a call to discuss quarterly earnings. Construction on both projects, which are supported by long-term customer agreements, is expected to begin in early 2019 with expected in-service by end of year.

MDU’s natural gas utility business reported 1.5% higher natural gas sales volumes for the third quarter partially due to completing two expansion projects in 2017 and the 13-mile Line Section 27 expansion that was completed in mid-September. The company’s 40,000 Dth/d Valley Expansion project, which federal regulators approved in February, also was put into commercial operation on Nov. 1.

“This project will help bring much-needed gas capacity to eastern North Dakota,” Goodin said. Combined, Line Section 27 and the Valley Expansion bring MDU’s total capacity to more than 1.8 Bcf/d.

MDU reported third quarter earnings of $107.4 million (55 cents/share), up from 3Q2017 earnings of $89.6 million (46 cents).

The company’s pipeline and midstream business segment reported earnings of $11 million for the quarter, up from $6 million in the same quarter last year. The gains were driven by a tax benefit of $4.2 million related to the final accounting order of the Federal Energy Regulatory Commission.

Meanwhile, the revenues from higher transportation volumes was offset by lower storage related revenues and higher operation and maintenance expense.

MDU management confirmed 2018 earnings per share guidance between $1.25-$1.45, with long-term compound annual growth rate of between 5% and 8%.

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