Rose Petroleum plc

MDU Resources reports higher second quarter earnings


Source: OilVoice

MDU Resources Group, Inc. (NYSE:MDU) reported second quarter consolidated adjusted earnings of $56.7 million, or 29 cents per common share, compared to $47.2 million, or 25 cents per common share for the second quarter of 2013. Consolidated GAAP earnings were $53.9 million, or 28 cents per common share, compared to $46.3 million, or 24 cents per common share for the second quarter of 2013. For an explanation of non-GAAP earnings adjustments, see the Reconciliation of GAAP to Adjusted Earnings and the Use of Non-GAAP Financial Measures sections later in this press release.

Adjusted earnings for the six months ended June 30 were $117.4 million, or 61 cents per share, compared to $107.3 million, or 57 cents per share a year ago. Consolidated year-to-date GAAP earnings were $110.4 million, or 58 cents per share, compared to $102.7 million, or 54 cents per share in 2013.

"We are pleased to continue our strong 2014 performance with another good quarter," said David L. Goodin, president and CEO of MDU Resources. "In fact, this is our strongest first half since 2008. It reflects the focus our businesses have on performance and execution of their strategic growth plans."

The construction services business had a record second quarter, led by continuing strong performance by the outside electric group. At the construction materials business, higher aggregate margins and volumes offset lower construction margins including weather-related delays, resulting in the strongest second quarter since 2009. The combined construction business backlog is $1.15 billion.

Fidelity Exploration & Production Company continued its oil focus for rebalancing its production portfolio with a 14 percent quarter-over-quarter increase in oil production. The growth was led by a 42 percent increase in production from the Paradox Basin and contributions from properties in Wyoming's southern Powder River Basin, which were acquired in March. Natural gas production declined 18 percent, in large part because of the divestiture of Green River Basin assets in late 2013. Earnings were impacted by a net reduction in realized commodity derivatives and increased depreciation, depletion and amortization expense.

Fidelity recently announced that it has signed an agreement to sell a portion of its producing properties in Mountrail County, North Dakota. The sale is part of Fidelity's business strategy of acquiring and developing assets, capturing upside through monetization and redeploying the capital to repeat the growth cycle.

Despite mild weather, the utility had an earnings improvement this quarter. Electric sales grew 4 percent driven by continued strong customer growth combined with positive adjustments to electric and natural gas rates that reflected higher capital investments. Mild weather particularly in the western states resulted in lower natural gas sales.

The pipeline and energy services business more than doubled quarter-over-quarter earnings. The business continued to benefit from its 50 percent ownership in the Pronghorn gathering and processing facility, which had higher oil gathering and processing volumes. Pipeline operations benefited from the favorable settlement of a rate case with new rates going into effect May 1 as well as lower operation and maintenance expense.

Construction of the Dakota Prairie diesel refinery, a joint venture with Calumet Specialty Products Partners, is on budget and approximately 75 percent complete. The refinery remains on schedule for startup at year-end.

"We are pleased with the company's performance thus far in 2014," Goodin said. "Our expectations remain high for the remainder of the year, although we recognize that favorable weather will be important to performance at several of our businesses. We are maintaining our earnings guidance range of $1.50 to $1.65 per share despite the effects of the Mountrail County asset sale."