MDU Resources Group, Inc. (NYSE:MDU) today reported first quarter consolidated earnings of $35.6 million, or 19 cents per common share, compared to $42.8 million, or 23 cents per common share for the first quarter of 2011. First quarter 2011 earnings include the effect of an approximate $4 million benefit related to the favorable resolution of certain tax matters.
“We achieved the upper range of our guidance for the quarter, even though we experienced some weather and pricing challenges,” said Terry D. Hildestad, president and chief executive officer of MDU Resources. “That is a good indication of the strength of our diversified business and a solid base on which to continue building our estimated $3.7 billion capital growth program over the next five years.
“Our exploration and production business is well on the way toward its 2012 target of increasing oil production by 20 percent to 30 percent over last year,” he said. “Led primarily by growth at Fidelity's Bakken operations, overall oil production increased to approximately 10,500 barrels per day in the first quarter, a 19 percent increase from the same period a year earlier.”
Fidelity currently is operating 10 rigs, eight more than a year ago. Five are working in the Bakken, where the company holds approximately 124,000 net leasehold acres, including an additional 27,000 Richland County acres that were acquired earlier in the first quarter. The company plans to invest approximately 40 percent of its $400 million capital budget in its Bakken acreage this year.
Hildestad said that Fidelity is seeing some improvement in Bakken wellhead oil pricing spreads compared to WTI prices. The price spread widened in March and negatively affected first quarter earnings but narrowed in April, and forecasts indicate continued improvement throughout 2012. Fidelity also was affected by average realized natural gas prices that were 32 percent lower than the first quarter of 2011.