Exhibit 99
MDU Resources Earnings Increase
BISMARCK, ND - January 25, 2001 - MDU Resources Group, Inc.
(NYSE:MDU) announced financial results for the year ended December
31, 2000, showing consolidated earnings of $110.3 million, or
$1.80 per common share, diluted, compared to $83.3 million, or
$1.52 per common share, diluted, for 1999. Revenues, which
exceeded $1 billion for the first time in 1999, totaled nearly $1.9
billion, a 46 percent increase over those of a year ago.
"Our 2000 results are outstanding and reflect our focused growth
strategy and the diligent work of our employees," said Martin A.
White, president and chief executive officer of MDU Resources.
"Our company has changed dramatically in the past few years and
these changes are obvious in our earnings. Only ten years ago,
more than one-half of our earnings came from our utility business.
Today approximately 20 percent of our earnings come from our
electric and natural gas distribution businesses. The remainder of
our earnings comes largely from the business lines that we have
grown during the last decade, including the construction materials
and mining, natural gas and oil production and utility services
businesses. Unlike the utility, which now serves portions of five
states in the northern Great Plains, collectively these nonutility
segments do business throughout most of the United States. In
addition to the outstanding financial performance our growth
produced, a number of operational goals were also achieved, setting
the stage for further growth."
At the natural gas and oil production segment, earnings of $38.6
million were more than double when compared to 1999 earnings.
Natural gas and oil production increased a combined 15 percent from
a year ago, the result of aggressive drilling programs in existing
fields and production from coal bed natural gas and other
properties acquired in late 1999 and early 2000. In addition,
significantly higher energy prices at the wellhead contributed to
the earnings growth. Realized natural gas and oil prices averaged
50 percent higher for the year. Increased depreciation, depletion
and amortization costs, as well as higher operating expenses due
largely to acquisitions, somewhat offset the gains.
At the construction materials and mining segment, earnings
increased 47 percent to $30.1 million. The increase resulted from
acquisitions made since the comparable period last year and record
sales volumes of cement, aggregates and ready-mixed concrete.
These results were partially offset by increased energy costs and
higher interest expense. Depreciation, depletion and amortization
and selling, general and administrative costs increased as well.
Earnings from coal operations also increased largely due to the
absence in 2000 of a $5.6 million after-tax charge to 1999's
earnings, the result of the resolution of a coal arbitration
proceeding. The previously announced sale of coal properties is
still subject to various closing conditions.
Electric earnings increased 11 percent to $17.7 million largely due
to increased retail sales demand and continued strong wholesale
electric sales at higher margins. These increases were partially
offset by higher maintenance costs and depreciation expense.
Earnings from the utility services segment totaled $8.6 million, an
increase of 32 percent over last year. The improvement was the
result of earnings from companies acquired since the comparable
period last year as well as increased work loads in the Rocky
Mountain region, primarily related to fiber optic projects,
combined with increases in engineering services. The increases
were somewhat offset by decreased construction activity for
utilities on the West Coast. In early January 2001, the company
acquired the Capital Electric construction companies, based in
Kansas City, Missouri. This acquisition broadens the geographical
scope of utility services and complements existing businesses.
Earnings from the company's natural gas distribution segment
increased from $3.2 million to $4.8 million. The increase was
largely the result of higher retail sales due to weather in the
fourth quarter which was 46 percent colder than a year ago.
Earnings from the recently acquired Great Plains Natural Gas Co.
and higher service and repair margins also contributed to the
increase. These increases were somewhat offset by higher
depreciation expense. The earnings at this segment did
not benefit from high natural gas prices as gas costs are passed
through at cost from producer to the end-use customer.
Earnings at the pipeline and energy services segment of $10.5
million were half those of the comparable period last year. An
asset impairment totaling $3.9 million after-tax at one of our
energy services businesses contributed to the decreased earnings.
Also contributing to the earnings decline were the effects of
adjustments made to income in both 1999 and 2000 resulting from the
resolution of outstanding regulatory and tax issues. The
resolution in late 2000 of a 1995 general rate proceeding resulted
in a credit to income of $6.7 million after-tax, $3.3 million less
than similar credits to income in 1999. Lower operating margins
from energy services and increased operation and maintenance
expenses also contributed to the decline. Increased volumes
transported by the pipeline at higher average rates and increased
gathering revenues somewhat offset these declines.
The information in this release includes certain forward-looking
statements, including statements by the president and chief
executive officer of MDU Resources, 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 the effects of
competition; the availability of economic expansion or development
opportunities; federal and state regulatory actions and
developments; weather; the timing and extent of changes in
commodity prices; the timing and extent of success in discovering,
developing and producing or acquiring oil and gas reserves; and the
ability to effectively integrate operations of acquired companies.
For discussion of other important factors, 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.
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 electric and natural gas utilities, a
natural gas pipeline, utility services, natural gas and oil
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 investor@mduresources.com.
For additional company information see accompanying investment
highlights.
* * * * * * *
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 TWELVE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2000 1999 2000 1999
Revenues (in millions):
Electric $42.8 $37.5 $161.6 $154.9
Natural gas distribution 116.7 50.8 233.1 157.7
Utility services 62.1 32.0 169.4 99.9
Pipeline and energy services 217.2 104.6 636.8 383.5
Natural gas and oil production 46.5 24.4 138.3 78.4
Construction materials and mining 159.9 127.9 631.4 469.9
Intersegment eliminations (37.3) (22.3) (96.9) (64.5)
Total $607.9 $354.9 $1,873.7 $1,279.8
Operating Income (in millions):
Electric $11.4 $8.5 $38.8 $35.7
Natural gas distribution 8.5 4.0 9.5 6.7
Utility services 6.1 3.3 16.6 11.5
Pipeline and energy services 11.0 7.2 28.8 40.6
Natural gas and oil production 24.8 11.7 66.5 26.9
Construction materials and mining 8.7 9.9 56.8 38.4
Total $70.5 $44.6 $217.0 $159.8
Net Income (in millions) $36.6 $24.5 $111.0 $84.1
Earnings on Common Stock (in millions):
Electric $5.6 $3.7 $17.7 $16.0
Natural gas distribution 5.0 2.6 4.8 3.2
Utility services 3.2 1.9 8.6 6.5
Pipeline and energy services 3.9 3.3 10.5 21.0
Natural gas and oil production 15.1 6.8 38.6 16.2
Construction materials and mining 3.6 6.0 30.1 20.4
Total $36.4 $24.3 $110.3 $83.3
Earnings Per Common Share - Basic $0.57 $0.43 $1.80 $1.53
Earnings Per Common Share - Diluted $0.56 $0.42 $1.80 $1.52
Weighted Average Common Shares Outstanding -
Basic (in millions) 64.3 56.9 61.1 54.6
Weighted Average Common Shares Outstanding -
Diluted (in millions) 64.8 57.1 61.4 54.9
Electric (thousand KWH)
Retail sales 569,192 520,719 2,161,280 2,075,446
Sales for resale 249,732 239,033 930,318 943,520
Natural Gas Distribution (Mdk)
Sales 15,379 9,581 36,595 30,931
Transportation 5,314 3,678 14,314 11,551
Pipeline and Energy Services
Transportation (Mdk) 22,126 21,983 86,787 78,061
Natural Gas and Oil Production
Natural gas (MMcf) 9,024 6,646 29,222 24,652
Oil (000's of barrels) 454 426 1,882 1,758
Construction Materials and Mining (000's)
Aggregates (tons) 4,805 4,203 18,315 13,981
Asphalt (tons) 727 667 3,310 2,993
Ready-mixed concrete (cubic yards) 473 325 1,696 1,186
Coal (tons) 921 806 3,111 3,236
Investment Highlights January 25, 2001
The following information highlights the key growth strategies and
projections for MDU Resources Group, Inc., 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.
- - Based on our current expectations, the company anticipates
that its three to five year compound annual earnings per share
growth rate from operations will be in the general range of 10 to
12 percent.
- - Earnings per share, diluted, from operations for 2001 are
projected in the $1.95 to $2.05 range.
- - The company expects the percentage of 2001 earnings per share
from operations by quarter to be in the following approximate
ranges:
- First Quarter - 13 to 18 percent
- Second Quarter - 20 to 25 percent
- Third Quarter - 35 to 40 percent
- Fourth Quarter - 22 to 27 percent
- - The company expects to issue and sell equity from time to time
to keep its debt at the nonregulated businesses at no more than 40
percent of total capitalization.
- - The company invested over $529 million in growth and ongoing
capital expenditures during 2000, using a combination of debt and
equity sources, and internally generated funds. Of that total,
over $285 million was for acquisitions.
- - The company anticipates investing approximately $340 million
in growth and ongoing capital expenditures during 2001, including
potential future acquisitions.
- - At December 31, 2000, the company had a goodwill balance of
$91.4 million, net of accumulated amortization. Based on existing
operations, annual goodwill amortization expense is expected to be
approximately $4 million.
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 56 million decatherms, with about 40 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
electric, gas and communications networks.
- - Operations are divided into four regions covering the United
States. Currently this segment is licensed to do business in 39
states.
- - This segment is growing both internally and through
acquisitions of utility services companies that are well managed,
have excellent reputations and are growth-driven.
- - Revenues for the utility services segment are expected to
exceed $300 million in 2001.
- - This business segment's goal is to achieve compound annual
revenue and earnings growth rates of approximately 20 to 25 percent
over 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 pipeline projects related to the company's coal bed
natural gas drilling program in the Powder River Basin of Wyoming
and Montana were completed in 2000. The two projects provide the
pipeline company the ability to move approximately 40 percent more
coal bed natural gas through its system than has historically been
transported, as well as enabling additional deliveries to other
pipeline systems. The largest project involved 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 9 percent.
- - This segment continues business development activities looking
for assets and resources that add value to existing operations
through further vertical integration of its natural gas delivery
and storage systems.
Natural Gas and Oil Production
- - During 2000, the company-operated portion of this segment's
natural gas and oil production business drilled 291 developmental
wells in the Powder River Basin of Wyoming and Montana and 75
developmental wells in our other operated properties located in
Montana. Of the 366 wells drilled, 363 were successful.
During the same time frame, the company's non-operated portion
of this segment's natural gas and oil production business
participated in drilling a total of 90 wells, of which 72 were
successful.
- - The 2001 drilling program is projected to include over 500
wells, 90 percent of which are expected to be drilled on operated
properties and the emphasis will continue to be on natural gas.
The 2001 drilling program is expected to be the single largest
drilling program in our history.
- - Combined natural gas and oil production in 2000 totaled 40.5
Bcf equivalents - a daily average of 111,000 Mcf equivalents. For
the month of December, combined production averaged 128,300 Mcf
equivalents per day, which was 22 percent higher than January 2000.
- - Combined natural gas and oil production at this business
segment is expected to be 30 to 40 percent higher in 2001
than in 2000.
- - Proved natural gas and oil reserves at December 31, 2000, are
over 400 Bcf equivalents, of which approximately 77 percent are
natural gas.
- - 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
for 2001 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.
- - This business segment has entered into hedging arrangements
for a portion of its 2001 production. The company has entered into
swap agreements and fixed price forward sales representing
approximately one-fourth of 2001 estimated annual natural gas
production. 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. In addition, approximately one-third of 2001 estimated
annual oil production is hedged at NYMEX prices ranging from $28.65
to $29.22 per barrel.
Construction Materials and Mining
- - At December 31, 2000, the construction materials and mining
business estimates it had 890 million tons of economically
recoverable aggregate reserves. These reserves are
strategically located and represent more than a 40-year
supply at current consumption levels.
- - Excluding the effects of potential future acquisitions,
aggregate, asphalt and ready-mixed concrete volumes are expected to
increase by approximately 15 percent, 32 percent and
13 percent, respectively, in 2001.
- - Since 1992, this business segment has grown from $45 million
in annual revenues to $631 million in 2000. This segment expects
to achieve compound annual revenue and earnings growth rates of
approximately 10 to 20 percent over the next five years.
- - Earnings are expected to increase 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), natural gas and oil
commodity prices, drilling successes in natural gas and oil
operations, ability to acquire natural gas and oil 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.