MDU Resources (MDU) Raises Dividend, Sees Capex of $1.63B Through 2019

The MDU Resources Group (NYSE: MDU) board of directors today increased the company’s quarterly common stock dividend to 18.25 cents per share, for an annualized dividend of 73 cents per share. The previous quarterly dividend was 17.75 cents per share.

This is the 24th consecutive year that MDU Resources has increased its common stock dividend, a mark achieved by only about 3 percent of the more than 3,300 North American-listed, dividend-paying common stocks traded on a major exchange.

"We are proud to have this longstanding history of increasing dividends along with our record of 77 years of uninterrupted payments," said Harry J. Pearce, chairman of the board. "Our dividend is an important part of our commitment for delivering value to our shareholders."

The board of directors also declared dividends on preferred stock as follows:

$1.12-1/2 per share on 4.50 percent Series Preferred
$1.17-1/2 per share on 4.70 percent Series Preferred
$1.27-1/2 per share on 5.10 percent Series Preferred

The dividends are payable Jan. 1, 2015, to stockholders of record Dec. 11, 2014.

The company also announced its capital expenditure forecast for 2015 through 2019. "Our planned five-year capital investment program for our utility, pipeline and construction businesses is approximately 80 percent higher than our previous plan," said David L. Goodin, president and CEO of MDU Resources Group. "Our new capital expenditure forecast provides greater clarity into our plans for deploying capital to concentrate on the outstanding opportunities for meaningful growth at these businesses and takes into consideration our announced marketing and potential sale of our E&P business."

The company’s utility group has a record capital program that would grow its rate base approximately 10 percent annually over the next five years on a compound basis, including investments in new electric generation, transmission and distribution to serve growing customer demand.

The pipeline and energy services business has a record capital program as well. The group recently announced it is evaluating constructing a second 20,000-barrel-per-day diesel refinery to be located in the substantially under-supplied Bakken region of North Dakota. A permitting process has begun and a potential construction start is targeted for next year. The company’s jointly-owned Dakota Prairie Refinery currently under construction near Dickinson, North Dakota, is expected to come into service at the end of this year.

The pipeline group also is working on plans to construct the 95-mile Wind Ridge Pipeline, with startup targeted for 2017. It would deliver approximately 90 million cubic feet per day of natural gas to an announced fertilizer plant near Spiritwood, North Dakota. The business is exploring opportunities to expand the pipeline to reach underserved eastern North Dakota markets.

In addition, the company is pursuing substantial opportunities for further investments in gathering, processing and transportation projects building on its success in the Bakken. Natural gas production continues to increase in the Bakken, which is driving the need for additional infrastructure.

At the company’s construction businesses, the focus will be on growing the business through organic opportunities and resuming acquisition activity. This group has acquired and successfully integrated more than 70 companies, and in the more recent past, has added greenfield operations in new markets.

During the marketing and potential sale process of the exploration and production business, the company expects to focus operations on production and continued development of its acreage, with a projected partial-year capital investment of approximately $116 million in 2015.

"Strategically this is an important time for our company as we focus on the successful marketing and potential sale of our E&P business along with our record level of planned capital investments over the next five years across our remaining businesses," Goodin said. "We are resolved to create greater long-term value for MDU Resources’ shareholders along with a lower overall business-risk profile."

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