While its diverse operations continued to thrive, earnings growth didn’t follow for Bismarck, ND-based MDU Resources Group in 1Q2020 as it shifted gears internally to confront the coronavirus, senior executives said Friday.
Nearly 3,500 of a 14,000-member staff in eight states are working from home in response to Covid-19, said CEO Dave Goodin during a conference call Friday.
“These are unprecedented times, and Covid-19 is affecting all of us,” said Goodin. Within MDU there have been nine confirmed cases among employees, he said.
The virus is expected to continue to pressure revenues and margins across the businesses, and MDU has reduced its earnings guidance for 2020. Long-term profits remain at 6-8%.
CFO Jason Vollmer pointed out some of the mixed results between natural gas utilities and the pipeline construction unit. The gas utilities reported net income of $32.3 million, compared with $36.5 million in 1Q2019, mostly from lower investment returns and a 10.9% overall decrease in retail sales. The pipeline business unit had earnings of $7.4 million, compared with $6.8 million.
Executives indicated that the Covid-19 and global oil price crash have had both good and bad impacts on operations.
“While a decrease in oil prices has slowed drilling activity, we continue to benefit from natural gas production in the Bakken, and the low natural gas price environment is providing organic growth opportunities for gas projects adjacent to our existing pipeline system,” Goodin said.
“Preparatory work on the North Bakken Extension project is well underway,” he said. The WBI Holdings Inc. unit filed an application in February with the Federal Energy Regulatory Commission, with a certificate expected in 2021 and completion late next year.
The North Bakken Extension is not fully subscribed, but to date WBI has signed contracts for 243 MMcf/d, enough to proceed toward a final investment decision.
WBI CEO Trevor Hastings said the potential growth “is not from acquisitions, but from a number of industrial customers looking for gas service, adjacent to our existing service territory.” He said there is a continuation of the interest sparked by the low prices for natural gas over the last few years.
MDU 1Q2020 net earnings were $25.1 million (13 cents/share), compared with $40.9 million (21 cents) for the same period in 2019.
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