MDU Resources' Bakken East FID Delays and Data Center Inclusion Spark Contradictions in Earnings Calls

Date of Call: Aug 6, 2026

Financials Results

• EPS: $0.10 per share, compared to $0.07 per share for the second quarter of 2025

Guidance:

• Reaffirmed 2026 EPS guidance range of $0.93-$1.00.
• Long-term EPS growth objective remains at 6%-8%.
• Capital program for 2026-2030 totals approximately $3.1 billion.

Business Commentary:

Earnings Performance and Growth Drivers:

• MDU Resources Group reported second quarter 2026 earnings of $21.3 million or $0.10 per share, compared to $13.7 million or $0.07 per share for the same period in 2025.
• The growth was driven by continued execution across regulated utility and pipeline businesses, new rates, customer growth, investments like the Badger Wind Farm, and higher retail sales volumes.

Bakken East Pipeline Project:

• The company has executed agreements with all customers that submitted binding open-season interest, totaling nearly 1.2 billion cubic feet per day of transportation capacity.
• The project is being designed for 1.4 billion cubic feet per day of capacity, with a final investment decision expected ahead of a FERC 7C filing anticipated in the fourth quarter of 2026.
• The progress is attributed to the successful signing of precedent agreements and ongoing evaluation of financing and partnership options.

Data Center and Electric Service Expansion:

• MDU has over one gigawatt of data center load under signed ESAs, with approximately 240 megawatts currently online.
• The company filed a North Dakota general rate case requesting an annual revenue increase of approximately $34.5 million.
• The expansion is driven by strategic growth initiatives and the capital-light model for serving data centers, which benefits both the company and its customers.

Regulatory and Rate Case Updates:

• In Montana, interim rates reflecting an annual increase of approximately $10.4 million remain in effect, and a settlement agreement of $10 million has been filed.
• In Wyoming, a general rate case settlement was approved for an annual increase of $5.8 million.
• These regulatory updates reflect infrastructure investments, reliability improvements, and higher operation and maintenance expenses.

Pipeline Segment Performance:

• The pipeline segment earned $14.4 million in the second quarter, compared to $15.4 million in the same period in 2025.
• The decrease was driven by lower other income and higher depreciation and amortization expense from a growth project placed in service.
• Continued customer demand for short-term natural gas transportation contracts and interruptible storage services partially offset these impacts.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'solid results,' 'continued execution,' and 'encouraging development activity.' Key positive momentum from signing all precedent agreements for Bakken East Pipeline, with 'real positive news' and excitement about progress. The tone is confident regarding financing, regulatory outcomes, and long-term growth.

Q&A:

• Question from Andrew Kadavion (Wells Fargo): On the financing options for Bakken East, have you seen any favorable markets out there that could help you efficiently finance the project?
  Response: Management is confident in the ability to finance the project and sees good appetite for these types of assets, but will look at all options and finalize the board decision process.

• Question from Andrew Kadavion (Wells Fargo): Would the financing options be part of the board’s FID decision? Is that still on schedule for third quarter, or were we looking at fourth quarter for that now?
  Response: The final investment decision is expected ahead of a FERC 7C filing, which is now anticipated in the fourth quarter of 2026, and the timeline is being updated with the board.

• Question from Tanner (Jefferies): Could you provide more information on the negotiated option in place for Bakken East and the strategic rationality behind it?
  Response: The option allows customers to add more volumes at a negotiated agreement, potentially increasing contracted volumes close to the original open season amount, while the project is still designed for 1.4 Bcf per day.

• Question from Tanner (Jefferies): Is the state’s backstop a portion of the executed agreements, or have you found an offtaker to stand in their place?
  Response: The state is part of the signed precedent agreements.

• Question from Tanner (Jefferies): Can you speak to the magnitude of margin uplifts from the Polaris Forge 3 ESA and if this gives confidence to elongate the period between electric rate filings?
  Response: The 430 MW ESA is pending regulatory approval and not currently included in guidance; the capital-light model for data centers provides benefits to both the company and retail customers, but a decision on filing cycles awaits approval.

• Question from Aidan Kelly (J.P. Morgan): Are there any factors that would cause you to expand the Bakken East pipe, and what are your thoughts on the potential there?
  Response: The project is designed for 1.4 Bcf to meet current demand, but expandability is being considered for future additional demand, which may require extra capital like compression.

• Question from Aidan Kelly (J.P. Morgan): When should we expect you to refresh the capital plan and roll in this Bakken East estimate?
  Response: An update is expected by the normal November capital cycle after the third quarter board meeting, once there is more clarity from a final investment decision.

• Question from Ryan Levine (Citi): How is MDU approaching community engagement on data center concerns and advancing projects?
  Response: Management feels good about community conversations in areas with signed ESAs and continues to tell its story about the benefits to retail customers and communities through various outreach methods.

• Question from Ryan Levine (Citi): Just to confirm, there’s no meaningful milestones that need to be achieved between now and [the 7C filing in Q4] to move forward with the project?
  Response: Clarification that the final investment decision is intended to occur before the 7C filing in Q4, but no other specific major milestones were detailed aside from ongoing work and board engagement.

Contradiction Point 1

Bakken East Project FID and Regulatory Timeline

Contradiction on the expected timing for the final investment decision and the associated FERC 7C filing.

Andrew Kadavion (Wells Fargo) - Andrew Kadavion (Wells Fargo)

2026Q2: The timeline for a final investment decision (FID) is now expected to occur ahead of a FERC 7C filing, which is anticipated in Q4 2026, not Q3. - Jason Vollmer(CFO)

Have favorable financing markets been identified for Bakken East to support the project efficiently, and will financing options be part of the board's FID decision with the timeline still on schedule for Q3 or now Q4? - *Operator (on behalf of all participants)*

20251107-2025 Q3: Progress on surveys for the Line Section 32 Expansion Project (FERC application anticipated Q1 2026, construction completion targeted late 2028). Bakken East pipeline project selected for firm capacity commitments... Binding open season planned for Q1 2026. - Nicole Kivisto(CEO)

Contradiction Point 2

Inclusion of Data Center Load (Polaris Forge 3 ESA) in Financial Guidance

Contradiction on whether a specific data center project is included in the company's financial forecasts.

Tanner (Jefferies) - Tanner (Jefferies)

2026Q2: The 430 MW ESA is pending approval... and is not currently included in financial guidance or the long-term growth rate objective. - Jason Vollmer(CFO)

What is the magnitude of margin uplift from the Polaris Forge 3 ESA (430 MW) relative to the Ellendale campus, and does this provide confidence to extend the period between electric rate filings? - *Operator (on behalf of all participants)*

20251107-2025 Q3: Data center load: 580 MW under signed agreements (180 MW online, 100 MW ramping late 2025/2026, 150 MW in 2026, 150 MW in 2027). - Nicole Kivisto(CEO)

Contradiction Point 3

Timeline for Final Investment Decision (FID)

The expected timing for reaching a final investment decision has shifted from Q3 2026 to ahead of a Q4 2026 FERC 7C filing.

What are your thoughts on the recent market volatility and its potential impact on your Q3 earnings? - Andrew Kadavion (Wells Fargo)

2026Q2: The timeline for a final investment decision (FID) is now expected to occur ahead of a FERC 7C filing, which is anticipated in Q4 2026, not Q3. - Jason Vollmer(CFO)

Have favorable markets been identified to efficiently finance Bakken East, and will financing options be part of the board’s FID decision, with the timeline still on track for Q3 or now Q4? - Julien Dumoulin-Smith (Jefferies)

2026Q1: The previously filed FERC 7(c) application schedule targets a filing in Q3 2026. - Nicole Kivisto(CEO), Jason Vollmer(CFO)

Contradiction Point 4

Inclusion of Bakken East in Capital Plan

Statements about when the project will be included in the formal capital plan appear inconsistent.

Aidan Kelly (J.P. Morgan) - Aidan Kelly (J.P. Morgan)

2026Q2: The capital plan is typically updated in late November after the Q3 board meeting. A more specific refresh would occur after an FID decision, which is expected ahead of the Q4 7C filing. The project is an incremental addition to the current capital program. - Nicole Kivisto(CEO), Jason Vollmer(CFO)

What factors could lead to expanding Bakken East pipeline capacity beyond current design, and when is the capital plan expected to be refreshed to include these changes? - Julien Dumoulin-Smith (Jefferies)

2026Q1: The current capital plan of $3.1 billion does not include this project. - Jason Vollmer(CFO)

Contradiction Point 5

Bakken East Project FID and Capital Plan Timeline

Contradiction on when the FID is expected and when the project will be formally integrated into the capital forecast.

What questions will Andrew Kadavion from Wells Fargo raise during the earnings call? - Andrew Kadavion (Wells Fargo)

2026Q2: The timeline for a final investment decision (FID) is now expected to occur ahead of a FERC 7C filing, which is anticipated in Q4 2026, not Q3... The capital plan is typically updated in late November after the Q3 board meeting. A more specific refresh would occur after an FID decision... - Jason Vollmer(CFO) & Nicole Kivisto(CEO)

Have you identified favorable markets to efficiently finance Bakken East, and will financing options be part of the board’s FID decision, with the timeline remaining on schedule for Q3 or now Q4? - Tanner (Jefferies)

2025Q4: ...a target timeline for a final FERC Section 7C filing in Q3 2026. The project is not currently in the 5-year capital forecast and would be incremental if proceeded. - Nicole Kivisto(CEO)