MDU Resources Q3 Profit Falls; Bakken East Moves Forward

MDU Resources Group reported lower third-quarter earnings as improved electric utility results were outweighed by a larger seasonal loss at its natural gas utility, weaker pipeline earnings and higher corporate costs. The regulated energy delivery company reaffirmed its 2026 earnings guidance while moving forward with the planned Bakken East Pipeline, a project expected to require $2.8 billion to $3.1 billion of capital.

For the three months ended Sept. 30, 2026, MDU Resources posted GAAP net income of $14.0 million, or $0.07 per diluted share, compared with $18.4 million, or $0.09 per share, a year earlier. Adjusted net income was $16.6 million, or $0.08 per share, after excluding costs related to the discontinued Knott Landfill renewable natural gas project and non-capitalized Bakken East advisory expenses.

Nine-month GAAP net income increased to $116.1 million from $114.1 million, though diluted earnings per share declined to $0.55 from $0.56 as average diluted shares outstanding rose. Adjusted nine-month net income was $119.4 million, or $0.57 per share, compared with $114.1 million, or $0.56 per share, in the prior-year period.

Electric utility earnings rise

The electric utility was the strongest contributor in the quarter, with earnings increasing to $26.5 million from $21.5 million. New rates approved in North Dakota, Montana and Wyoming generated $7.1 million of additional revenue, while the Badger Wind Farm contributed $3.2 million of quarterly earnings. Retail electricity sales volumes rose 9.3%.

MDU said it has more than 1 gigawatt of data-center load covered by signed electric service agreements. That includes 530 megawatts in Ellendale, North Dakota, where 280 megawatts is online and additional volume is expected as new buildings are completed. A 430-megawatt project in Center, North Dakota, is expected online in 2027, and a 50-megawatt project in Leola, South Dakota, is expected in 2028. The latter two projects remain subject to commission approval.

The company said its capital investment in data-center projects has been minimal to date and described the agreements as accretive to return on equity. It continues to discuss other potential projects.

Gas utility and pipeline results weaken

The natural gas distribution business recorded a seasonal loss of $20.7 million, compared with an $18.2 million loss a year earlier. New rates added $6.5 million of revenue, retail sales volumes increased 7.1%, and customer count grew 1.5%. Those benefits were more than offset by higher operation and maintenance expense. The segment also recognized a $2.1 million after-tax loss tied to the decision to discontinue development of the Knott Landfill project.

Pipeline earnings fell to $13.1 million from $16.8 million. Higher demand for short-term contracts and increased demand revenue from the Minot and Line Section 32 expansions were more than offset by higher operating and maintenance costs, Bakken East advisory expenses and lower storage-related activity.

MDU reached a positive final investment decision on Bakken East on Sept. 30. The pipeline is designed for an initial capacity of 1.4 billion cubic feet per day, with flexibility for future expansion, and would include four new compressor stations and upgrades at two existing stations. About 1.2 Bcf per day is covered by signed precedent agreements, with options that could bring commitments close to the level of interest submitted during the project’s open season.

The company anticipates filing a formal Federal Energy Regulatory Commission Section 7(c) application in the fourth quarter of 2026. Construction is expected to begin in 2028, with the first phase targeted for service in late 2029 and the second phase in late 2030. MDU is evaluating financing structures, including potential partnerships.

Separately, the planned Line Section 32 expansion would add 190 million cubic feet per day of capacity, with an expected late-2028 in-service date and projected capital investment of about $70 million. MDU also is developing an approximately 90-mile pipeline from Tioga to Minot, North Dakota, to support anticipated industrial demand. A development agreement providing cost-recovery protections remains in place through December 2026.

Guidance and regulatory activity

MDU reaffirmed its 2026 earnings guidance of $0.93 to $1.00 per share and maintained its long-term EPS growth target of 6% to 8%. The annual outlook assumes normal weather, economic and operating conditions, annual utility customer growth of 1% to 2%, and successful execution of approved capital investment and rate-recovery plans.

North Dakota electric interim rates took effect Sept. 1, subject to refund, while an approved Oregon rate settlement became effective Oct. 31. The company filed a Minnesota natural gas rate case on Oct. 30 seeking a $4.5 million annual revenue increase, including a requested interim increase of about $3.9 million from Jan. 1, 2027. New FERC pipeline rates are scheduled to take effect Dec. 1, subject to refund.

As of Sept. 30, MDU’s debt-to-total capitalization ratio was 46.6%. The company said it is targeting a strong investment-grade credit profile as it funds growth. Its forecasts remain dependent on regulatory approvals, rate recovery, financing arrangements, construction execution and operating assumptions; changes in those factors could produce results that differ materially from current expectations.