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MDU Resources Grows Aggregates Business

Aggregates, energy and oil producer MDU Resources Group Inc. reported 2013 consolidated adjusted earnings of $289.9 million, or $1.53 per share, compared to $218.9 million, or $1.16 per share in 2012.

The company reported consolidated adjusted earnings of $90.3 million, or 48 cents per share, in the fourth quarter of 2013 compared to $76.2 million, or 40 cents per share in the fourth quarter of 2012.

“Adjusted earnings grew 32 percent for the year to the highest level since 2008 and shareholders experienced a total annual return of 48 percent in 2013, so this has been a very successful year,” said David L. Goodin, president and CEO of MDU Resources. “All of our businesses are operating exceptionally well. Our focus on substantial capital investment to grow our businesses is having an impact and with the added investments planned for this year, we expect to continue the momentum. We also successfully executed on more than $100 million in sales of non-strategic assets in 2013 and plan to maintain our focus on the efficient use of capital.”

The company’s construction-materials business increased earnings by 57 percent. As the country’s sixth-largest sand and gravel producer, the company said it will continue to strategically manage its 1.1 billion tons of aggregate reserves in all its markets, as well as take further advantage of being vertically integrated.

The construction materials approximate work backlog as of Dec. 31 was $456 million, compared to $406 million a year ago. Private work represents 11 percent of construction backlog and public work represents 89 percent of backlog. The Dec. 31 approximate backlog at construction services was $459 million, compared to $325 million a year ago. The backlogs include a variety of projects such as highway grading, paving and underground projects, airports, bridge work, reclamation, harbor expansions, substation and line construction, solar and other commercial, institutional and industrial projects including refinery work. The company’s approximate backlog in North Dakota as of Dec. 31 was $97 million. North Dakota backlog was $46 million a year ago.

Projected revenues included in the company’s 2014 earnings guidance are in the range of $1.6 billion to $1.8 billion for construction materials and $1.0 billion to $1.1 billion for construction services. The company anticipates margins in 2014 to be in line with 2013 margins.

The company said it continues to pursue opportunities for expansion in energy projects such as refineries, transmission, substations, utility services, solar, wind towers and geothermal. Initiatives are aimed at capturing additional market share and expanding into new markets.

The company’s exploration and production business achieved its growth target for oil production with a 30 percent increase, despite bitterly cold December temperatures that impacted operations across North Dakota’s oil fields. Over the past two years, Fidelity Exploration & Production Company’s oil production has increased 77 percent. Nearly 60 percent of Fidelity’s 4.8 million net barrels in 2013 came from the Bakken. Production also grew 221 percent in the prolific Paradox basin in Utah, where two back-to-back high-producing wells have highlighted the potential of this developing play.

A major portion of Fidelity’s $440 million 2014 drilling program will again be targeted at further development in the Bakken and Paradox areas. Two rigs are working in each of the plays. In addition, Fidelity recently acquired an additional 35,000 acres in the Paradox basin, bringing the acreage total there to approximately 130,000 net acres of leaseholds. The new acreage is on trend with current Paradox acreage position and the geology is similar. The company continues to have an option to earn an additional 20,000 acres in the play.