Exhibit 99
MDU Resources Announces Third Quarter Earnings Increase
BISMARCK, ND - October 25, 2000 - MDU Resources Group, Inc.
(NYSE:MDU) announced third quarter earnings of $39.8 million
compared to $28.9 million for 1999. Earnings per common share,
diluted, reached 63 cents, up 21 percent from 52 cents a year
ago. Year-to-date earnings for the nine months ended
September 30, 2000, totaled $73.9 million or $1.23 per common
share, diluted, compared to $59.0 million or $1.09 per common
share for the comparable period last year. Based on year-to-date
performance and that anticipated for the fourth quarter, the
company is comfortable with the analysts' current range of
estimates on earnings per share from operations of $1.65 to $1.75
for 2000 as reported by Zacks Investor Relations Services. In
addition, the company's earnings per share from operations for
2001 are projected in the $1.90 to $2.00 range.
"Outstanding third quarter and year-to-date earnings met our high
expectations," stated Martin White, president and chief executive
officer of MDU Resources. "Significantly higher earnings at both
our oil and natural gas production segment and our construction
materials and mining segment boosted our consolidated earnings.
In addition, I am delighted that our stock price has rebounded.
As of September 30, 2000, the price of our common stock has
appreciated approximately 50 percent since the beginning of the
year."
Third quarter earnings at the oil and natural gas production
segment more than doubled when compared to 1999. Oil and natural
gas production increased a combined 25 percent from a year ago
reflecting production from oil and gas properties acquired late
last year, as well as new production from the coal bed natural
gas properties. In addition, strong oil and natural gas prices
also contributed to the boost in earnings. Realized oil prices
averaged 36 percent higher, while natural gas prices averaged 32
percent higher for the quarter.
At the construction materials and mining segment, quarterly
earnings reached $19.2 million in 2000 as compared to $13.6
million for the same period last year. The earnings increase
resulted from acquisitions made during the prior 12 months and
higher ready-mixed concrete, aggregate and cement volumes at
existing operations. These results were partially offset by
higher energy costs. In addition, last year's third quarter
earnings were negatively affected by a $1.9 million after-tax
charge to earnings, the result of the resolution of the coal
arbitration proceeding.
"Third quarter earnings at our construction materials and mining
segment set a new record for our company," White said. "No single
business segment has achieved quarterly results of this magnitude
before. Construction materials and mining remains a growth engine
as it builds earnings through operational improvements, increased
consolidation and accretive acquisitions."
At the utility, third quarter electric earnings increased 25
percent to $5.9 million from $4.7 million a year ago due to
higher retail and wholesale electric sales and lower operation
and maintenance expenses. These increases were partially offset
by higher purchased power costs because an electric generating
station was down for repairs during July and part of August.
White noted that, "During the period in which summer weather
boosted earnings at our electric segment we also set a system
peak on August 11 of 432 megawatts, approximately 3 percent
higher than our previous peak. We met our customers' cooling
needs by meeting their demand with reliable electrical energy
throughout this period."
Normal seasonal losses were increased at the utility's natural
gas distribution segment as a result of a mid-summer acquisition
that added 22,000 customers. These results were partially offset
by lower operation and maintenance expenses and higher service
and repair margins from existing operations.
A doubling of third quarter earnings at the utility services
segment resulted from increased line construction margins in
the Rocky Mountain Region due, in part, from fiber optic work
and engineering services. Businesses acquired since the comparable
period last year also contributed to higher earnings. However,
this increase was partially offset by decreased construction
activity in the Pacific Northwest Region.
The earnings decrease at the pipeline and energy services segment
resulted largely from the absence in 2000 of a 1999 reversal of
contingency reserves totaling $3.9 million after-tax relating to
the resolution of certain production tax and other state tax
matters. Excluding the effect of the 1999 reversal of contingency
reserves, earnings from this segment increased slightly because
of higher volumes transported on the pipeline system.
"The outstanding third quarter results set the stage for another
record year of earnings for MDU Resources," White said. "The
Board of Directors recognized this growth at its August meeting
when it increased the annual dividend by nearly 5 percent. This
is the tenth consecutive year for dividend increases. Let me also
highlight the company's consecutive quarterly dividend payment
record which dates back to 1937."
For additional company information see accompanying investment
highlights.
* * * * * * *
MDU Resources Group, Inc. provides energy, value-added natural
resource products and related services that are essential to our
country's energy, transportation and communication
infrastructure. MDU Resources includes an electric and natural
gas utility, a natural gas pipeline, utility services, oil and
natural gas production, construction materials and mining, and
energy services. For more information about MDU Resources, see
the company's web site at http://www.mdu.com or contact the
investor relations department at [email protected].
The information in this release includes certain forward-looking
statements, including statements by the president and chief
executive officer of MDU Resources and earnings per share
estimates, within the meaning of Section 21E of the Securities
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 prevailing governmental policies and
regulatory actions with respect to allowed rates of return,
financings, or industry and rate structures, acquisition and
disposal of assets or facilities, operation and construction of
plant facilities, recovery of purchased power and purchased gas
costs, present or prospective generation and availability of
economic supplies of natural gas. Other important factors include
the level of governmental expenditures on public projects and
project schedules, changes in anticipated tourism levels, the
effects of competition (including but not limited to electric
retail wheeling and transmission costs and prices of alternate
fuels and system deliverability costs), oil and natural gas
commodity prices, drilling successes in oil and natural gas
operations, ability to acquire oil and natural gas properties,
the availability of economic expansion or development
opportunities, political and economic risks, changes in and
compliance with environmental and safety laws and policies,
weather conditions, population growth rates and demographic
patterns, market demand for energy from plants or facilities,
changes in tax rates or policies, unanticipated project delays or
changes in project costs, unanticipated changes in operating
expenses or capital expenditures, labor negotiations or disputes,
changes in credit ratings or capital market conditions, inflation
rates, inability of the various counterparties to meet their
obligations with respect to the company's financial instruments,
changes in accounting principles and/or the application of such
principles to the company, changes in technology and legal
proceedings, and the ability to effectively integrate the
operations of acquired companies. For further discussion refer to
the company's 1999 Annual Report on Form 10-K at Item 7 -
Management's Discussion and Analysis - Safe Harbor for Forward-
looking Statements and the company's most recent Form 10-Q at
Item 2 - Management's Discussion and Analysis - Safe Harbor for
Forward-looking Statements.
* * * * * * * *
Contacts:
Warren L. Robinson - Executive Vice President, Treasurer and
Chief Financial Officer
(701) 222-7991 or
Cathi Christopherson - Vice President, Corporate Communications
(701) 222-7959
MDU RESOURCES GROUP, INC.
COMPARATIVE HIGHLIGHTS
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
Revenues (in millions):
Electric $ 42.1 $ 40.2 $ 118.8 $ 117.3
Natural gas distribution 24.9 19.9 116.4 106.9
Utility services 60.1 25.7 107.2 67.9
Pipeline and energy services 144.2 104.2 419.6 279.0
Oil and natural gas production 35.2 20.5 91.9 54.0
Construction materials and mining 242.1 174.1 471.5 342.0
Intersegment eliminations (17.8) (9.0) (59.6) (42.2)
Total $ 530.8 $ 375.6 $1,265.8 $ 924.9
Operating Income (in millions):
Electric $ 12.2 $ 10.1 $ 27.4 $ 27.3
Natural gas distribution (3.0) (2.2) 1.0 2.7
Utility services 7.3 3.3 10.5 8.2
Pipeline and energy services 7.3 12.6 17.8 33.5
Oil and natural gas production 17.5 6.8 41.7 15.1
Construction materials and mining 34.7 23.5 48.1 28.4
Total $ 76.0 $ 54.1 $ 146.5 $ 115.2
Net Income (in millions) $ 40.0 $ 29.1 $ 74.5 $ 59.6
Earnings on Common Stock (in
millions):
Electric $ 5.9 $ 4.7 $ 12.2 $ 12.3
Natural gas distribution (2.2) (1.7) (0.3) 0.6
Utility services 3.9 1.9 5.4 4.6
Pipeline and energy services 3.0 6.5 6.6 17.6
Oil and natural gas production 10.0 3.9 23.5 9.4
Construction materials and mining 19.2 13.6 26.5 14.5
Total $ 39.8 $ 28.9 $ 73.9 $ 59.0
Earnings Per Common Share - Basic $ 0.63 $ 0.53 $ 1.23 $ 1.10
Earnings Per Common Share - Diluted $ 0.63 $ 0.52 $ 1.23 $ 1.09
Weighted Average Common Shares
Outstanding - Basic (in millions) 63.0 55.0 60.0 53.8
Weighted Average Common Shares
Outstanding - Diluted (in millions) 63.3 55.3 60.2 54.1
Electric (thousand KWH)
Retail sales 561,646 537,101 1,592,088 1,554,727
Sales for resale 222,408 187,232 680,586 704,487
Natural Gas Distribution (Mdk)
Sales 3,193 3,108 21,216 21,350
Transportation 3,106 2,595 9,000 7,873
Pipeline and Energy Services
Transportation (Mdk) 22,186 19,158 64,661 56,078
Oil and Natural Gas Production
Oil (000's of barrels) 486 414 1,428 1,332
Natural gas (MMcf) 7,361 5,761 20,198 18,006
Construction Materials and Mining (000's)
Aggregates (tons) 6,700 5,208 13,510 9,778
Asphalt (tons) 1,627 1,415 2,583 2,326
Ready-mixed concrete (cubic yards) 516 354 1,223 861
Coal (tons) 818 789 2,190 2,430
Investment Highlights October 25, 2000
The following information highlights the key growth strategies
and projections for MDU Resources over the next few years for
each of its six major business segments. Many of these
highlighted points are "forward-looking statements." There is no
assurance that the company's projections, including estimates for
growth and increases in revenues and earnings, will in fact be
achieved. Please refer to the various important factors listed at
the end of this document under the heading "Safe Harbor for
Forward-looking Statements" that could cause actual future
results to differ materially from the company's targeted growth,
revenue and earnings projections.
MDU Resources Group, Inc.
* The company is comfortable with the analysts' current range
of estimates on earnings per share from operations of $1.65 to
$1.75 for 2000 as reported by Zacks Investor Relations Services.
* Earnings per share from operations for 2001 are projected in
the $1.90 to $2.00 range.
* Based on our current expectations, the company anticipates
that its three to five year average annual earnings per share
growth rate from operations will be in the general range of 10 to
12 percent.
* The company expects to issue and sell equity from time-to-
time to keep its targeted debt at the nonregulated businesses at
approximately 40 percent of total capitalization.
* Acquisitions were made at each of the company's core
business units during the first three quarters of 2000.
* The company invested over $430 million in growth and ongoing
capital expenditures through September 30, 2000, using a
combination of debt and equity sources, and internally generated
funds. Of that total, approximately $255 million has been for
acquisitions.
Electric
* Owns or contracts for approximately 500 megawatts of
electricity, owns and operates approximately 3,100 miles of
transmission lines and over 4,000 miles of distribution lines.
* Set a peak record for on-system electric usage on August 11,
2000. This system peak demand of 432 megawatts was approximately
a 3 percent increase over 1999's peak.
* Due to growing electric demand, a gas-fired 40-megawatt
electric plant may be added in the three to five year planning
horizon.
Natural Gas Distribution
* Annual natural gas throughput for 2001 is expected to be
approximately 55 million decatherms, with about 39 million
decatherms from sales and 16 million from transportation.
* The number of natural gas retail customers at existing
operations is expected to grow by approximately 1.5 to 2 percent
on an annual basis over the next three to five years.
* Earnings are expected to increase from the growth in sales
of new value-added products and services such as appliance repair
contracts and home security systems.
Utility Services
* Offers a full line of services to strengthen the nation's
energy and communications network.
* Operations are divided into four regions covering all of the
United States, with the exception of the northern Atlantic
states.
* This segment is pursuing growth through the acquisition of
utility services companies that are well managed, have excellent
reputations and are growth-driven.
* Future acquisitions should continue to broaden this business
segment's markets throughout the United States.
* This business segment's goal is to exceed $500 million in
annual revenue within the next five years.
Pipeline and Energy Services
* This business segment's pipeline and storage services cover
seven states in the Rocky Mountains and Upper Midwest.
* Two large pipeline projects, currently under construction by
this segment, are related to the company's coal bed natural gas
drilling program in the Powder River Basin. The two projects
should be completed by the end of the year, providing the
pipeline company the ability to move approximately 40 percent
more of this gas through its system than is currently being
transported, as well as enabling additional deliveries to other
pipeline systems. The largest project involves building a 75-
mile, nonregulated pipeline through the heart of the basin, to
move gas produced from throughout the Powder River Basin to
interconnecting pipeline systems, including the company's own
transmission system.
* In 2001, Williston Basin's natural gas throughput is
expected to increase by approximately 6 percent.
Oil and Natural Gas Production
* From January 1 through September 30, the company-operated
portion of this segment's oil and natural gas production business
drilled 209 developmental wells in the Powder River Basin and 75
developmental wells in our other operated properties located in
Montana. During the same time frame, the company's non-operated
portion of this segment's oil and natural gas production business
participated in drilling a total of 68 wells, of which 55 were
successful.
* Combined oil and gas production at year-end 2000 should be
in the range of 130 to 140 million cubic feet equivalents of
natural gas per day, up approximately 30 percent from the
beginning of the year.
* Approximately 30 percent of our natural gas production has
been hedged through the end of this year at prices ranging from
$2.05 to $2.45 per Mcf based on Rocky Mountain gas sales and
$2.30 to $2.80 per Mcf based on NYMEX.
* Approximately 50 percent of our oil production has been
hedged through the end of this year at prices ranging from $18.78
to $22.33 per barrel based on NYMEX.
* This business segment is on target to increase its oil and
natural gas production by a combined 15 to 20 percent over last
year's level.
* The 2001 drilling program is projected to include over 500
wells - the largest single year drilling program to date - to
further develop our natural gas and oil reserves.
* The company's estimates for natural gas prices in the Rocky
Mountain region are in the range of $2.50 to $3.00 per Mcf during
2001. The company's estimates for natural gas prices on the NYMEX
are in the range of $3 to $4 per Mcf.
* The company's 2001 estimates for NYMEX crude oil prices are
in the range of $23 to $26 per barrel.
* Recently, this business segment began entering into hedging
arrangements for a portion of its 2001 production. Thus far, the
oil swap prices range from $28.65 to $29.22 per barrel based on
NYMEX and the natural gas swap prices range from $4.57 to $4.60
per Mcf based on NYMEX and $4.04 to $4.44 per Mcf for Rocky
Mountain gas sales. These swaps represent approximately 14
percent of estimated production in 2001 on an Mcf equivalent
basis.
* Combined oil and natural gas production at this business
segment is expected to be 20 to 40 percent higher in 2001 than in
2000.
Construction Materials and Mining
* As of September 30, the construction materials and mining
business has 880 million tons of economically recoverable
aggregate reserves. These reserves are strategically located and
represent more than a 40-year supply at current consumption
levels.
* Since 1992, this business segment has grown from $45 million
in annual revenues to $470 million last year. The company's goal
is to reach $1 billion in annual revenues within the next five
years.
* Earnings are expected to grow from a combination of
acquisitions and by optimizing both synergies and improvements at
existing operations.
Safe Harbor for Forward-looking Statements
The information in this document includes certain forward-looking
statements, including statements regarding earnings per share
estimates, accretion to earnings, geographic and product
diversity, growth and efficiency strategies, business
opportunities and production increases, within the meaning of
Section 21E of the Securities 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 prevailing
governmental policies and regulatory actions with respect to
allowed rates of return, financings, or industry and rate
structures, acquisition and disposal of assets or facilities,
operation and construction of plant facilities, recovery of
purchased power and purchased gas costs, present or prospective
generation and availability of economic supplies of natural gas.
Other important factors include the level of governmental
expenditures on public projects and project schedules, changes in
anticipated tourism levels, the effects of competition (including
but not limited to electric retail wheeling and transmission
costs and prices of alternate fuels and system deliverability
costs), oil and natural gas commodity prices, drilling successes
in oil and natural gas operations, ability to acquire oil and
natural gas properties, the availability of economic expansion or
development opportunities, political and economic risks, changes
in and compliance with environmental and safety laws and
policies, weather conditions, population growth rates and
demographic patterns, market demand for energy from plants or
facilities, changes in tax rates or policies, unanticipated
project delays or changes in project costs, unanticipated changes
in operating expenses or capital expenditures, labor negotiations
or disputes, changes in credit ratings or capital market
conditions, inflation rates, inability of the various
counterparties to meet their obligations with respect to the
company's financial instruments, changes in accounting principles
and/or the application of such principles to the company, changes
in technology and legal proceedings, and the ability to
effectively integrate the operations of acquired companies. For
further discussion refer to the company's 1999 Annual Report on
Form 10-K at Item 7 - Management's Discussion and Analysis - Safe
Harbor for Forward-looking Statements and the company's most
recent Form 10-Q at Item 2 - Management's Discussion and Analysis
- Safe Harbor for Forward-looking Statements.
