SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 12, 1999
MDU RESOURCES GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-3480 41-0423660
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Schuchart Building
918 East Divide Avenue
P.O. Box 5650
Bismarck, North Dakota 58506-5650
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code (701) 222-7900
(Former name or former address, if changed since last report.)
Item 5. Other Events.
The following press release was issued by MDU Resources Group,
Inc. on January 12, 1999:
MDU Resources Continues Growth Despite Non-Cash Charge
BISMARCK, NORTH DAKOTA - January 12, 1999 - Shareholders of
MDU Resources Group, Inc. (NYSE:MDU) enjoyed a 29 percent
annual total return on their investment in 1998 due, in
significant part, to company growth through acquisitions.
Throughout 1998, the company invested approximately $230
million in an aggressive development program that resulted in
the acquisition of numerous business operations and
properties throughout the United States. MDU Resources now
possesses a geographic footprint stretching from the Hawaiian
Islands to Kentucky and from the Gulf of Mexico to Alaska.
In the fourth quarter, Knife River Corporation expanded
its growing construction materials and mining operations with
the acquisition of a privately held supplier of construction
material and paving services in central Oregon and a ready-
mix facility in northern California. The company's oil and
gas exploration and production unit, Fidelity Oil Group,
acquired a 20 percent interest in the majority of existing
reserves of a privately held Houston-based oil and gas
company operating primarily in the Gulf Coast region. In
early January 1999, Fidelity acquired additional interests in
gas fields in northern Louisiana. These purchases add
approximately 4.4 million equivalent barrels to Fidelity's
oil and gas reserves, increasing total reserves to
approximately 30 million equivalent barrels of oil at
mid-January 1999. Over 60 percent of this reserve base is
natural gas.
Despite the growth that has occurred at Fidelity during
1998, oil and natural gas prices have not cooperated. On an
inflation adjusted basis, oil prices have hit their lowest
level in more than 50 years and natural gas prices are
significantly lower than last year. As a result of these low
prices, MDU Resources will be taking a non-cash after-tax
charge of approximately $20 million to fourth quarter
earnings. MDU Resources uses the full-cost method of
accounting for its oil and natural gas production activities.
Under this method capitalized costs are subject to a "ceiling
test" that limits such costs to the aggregate of the present
value of future net revenues of proved reserves and the lower
of cost or fair value of unproved properties. The ceiling
test write-down is required under Securities and Exchange
Commission rules. MDU Resources was subject to a similar
non-cash after-tax charge of $20 million in the second
quarter of 1998.
"While these non-cash charges will reduce our reported
earnings for 1998, our company remains financially strong and
stable. Absent these non-cash charges, our earnings from
ongoing operations are expected to produce the sixth
consecutive year of record earnings," stated Martin A. White,
president and chief executive officer of MDU Resources.
"1998 was an excellent year of growth for our company.
Through the acquisition of well-managed and profitable
companies, and by adding value through improved productivity
and internal growth, the company should add to its future
earnings base."
MDU Resources Group, Inc. is a multidimensional natural
resource company comprised of construction materials and
mining operations; oil and natural gas acquisition,
exploration and production activities; an electric and
natural gas utility; a natural gas transmission and energy
marketing company; and, utility services companies. For more
information about MDU Resources, see the company's web site
at http://www.mdures.com.
The information in this release includes certain
forward-looking statements within the meaning of Section 21E
of the Securities and Exchange Act of 1934. Although the
company believes that its expectations are based on
reasonable assumptions, actual results may differ materially.
Important factors that could cause actual results to differ
materially from those in the forward-looking statements
include federal and state regulatory actions and
developments, weather, the timing and extent of changes in
commodity prices, and the timing and extent of success in
discovering, developing and producing or acquiring oil and
gas reserves. These and other risks are described in the
company's documents and reports that are available from the
Securities and Exchange Commission, including the report
filed on Form 10-K for the fiscal year ended December 31, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
MDU RESOURCES GROUP, INC.
Date: January 13, 1999 By: /s/ Warren L. Robinson
Warren L. Robinson
Vice President, Treasurer and
Chief Financial Officer
