RESOURCES Group, Inc Midwest Utilities Seminar April 2014 . Doran N. Schwartz Vice President & Chief Financial Officer 1
Diversified Natural Resources Company Earnings Contribution Utilities Pipeline & Energy Services Regulated 30% Construction Exploration 36% & Production 34% Note: 2013 Adjusted Earnings. 3
Our Vision With integrity, create superior shareholder value by expanding upon our expertise to be the supplier of choice in all of our markets while being a safe and great place to work. 4
Shareholder Returns Total Annualized Shareholder Returns MDU Year-to-Date YTD 11% 11% 21% 5 Year 10 Year 11% 4% 13% 3% 20 Year 1% MDU S&P 500 S&P 400 Peer Avg. Note: At Feb. 28, 2014 RESOURCES Group, Inc . 5
Vertically Integrated Advantage Ability to leverage our expertise across business units Customers in common Strong balance sheet Improved financing options Scale for lower rates Utilize cash flow reallocation from one business to…
Electric & Natural Gas Utilities Operating in 8 states More than 1 million electric and natural gas customers in 448 communities 2.1% customer growth in 2013 Electric Natural Gas 135,000 customers 877,000 customers 544 MW of…
Rate Base & Earnings Growth More than tripled rate base and Projecting 9% CAGR in earnings since 2006 rate base next 5 years 1,400 80 2,200 2,000 1,200 1,800 1,000 60 1,600 1,400 800 1,200 40 600 1,000 800 400 20 600 400 200…
Substantial Growth Opportunities Record 300 million capital expenditures planned for 2014 70 million targeting Bakken to accommodate electric and natural gas load growth 77 million 88-MW gas turbine in Mandan, projected in-service…
Outlook Plan to invest approximately 1.3 billion during next 5 years Expect to grow rate base by approximately 700 million, 9% compounded annually over next 5 years Large growth projects Potential projects for accommodating load…
Pipeline & Energy Services Engaged in transportation, gathering, storage, Regulated operations and energy service related activities. 3,800 miles of pipeline Over 1 Bcf/d system capacity 13 interconnecting points 3 storage fields…
Bakken Opportunities Through Growing Production Pipeline (MMcf/d) Bakken Oil Bakken Natural Gas Historical & Forecast (MBO/d) 2,750 Historical Forecast 3,900 3,600 Energy 2,500 3,300 2,250 3,000 Service 2,000 1,750…
Dakota Prairie Refinery Began construction March 2013, now approx. 50% complete Process 20,000 barrels/day Pipeline & Energy Services Bakken crude Output diesel fuel, naphtha and atmospheric tower bottoms Year 1 EBITDA…
Dakota Prairie Refinery ISBL Vessel Foundation Crude Oil Distillation Tower Pipe Rack and Vessel 14
Proposed Dakota Pipeline 375-mile 24-inch pipe would transport Bakken natural gas from western ND to northwestern MN Would provide interconnections with pipelines owned by Great Lakes Gas Transmission, Viking Gas Transmission and…
Proposed Dakota Pipeline Route Pipeline & Energy Services 16
Invested Capital End of 2018 1,400 1,200 1,000 Dakota Pipeline 800 Goal 600 2015-2018 Projects Dakota Prairie Pronghorn 400 Other Projects 200 12/31/2011 - (Millions) Pipeline & Energy Services 17
Outlook Filed rate case Oct. 31 with FERC requesting 28.9 million annually, expect May 1 implementation of rates Liquid based midstream opportunities Start up of joint venture 20,000 BOPD Dakota Prairie Refinery Anticipate increased…
Construction Materials & Services Materials Top 10 U.S. producer 6th Sand and gravel Increasingly valuable aggregate reserves totaling 1.1 billion tons in strategic locations Services Ranked No. 11 on The Top 600 Specialty…
Growing Demand Strength in North Dakota - Combined backlog of approx. 97 million at Dec. 31, compared to 46 million a year ago - Greenfielding materials locations in key growth markets - Services expertise in transmission and…
Outlook Substantially higher backlog totaling 915 million Strengthening markets in key areas Strong national indicators for business Public work expanding Expanded operations in North Dakota Highly-skilled specialized workforce 1.1…
Exploration & Production Significantly grow earnings and NAV by: Targeting oil to maximize profitability Expanding key existing positions and exploring emerging opportunities Two producing regions: Leveraging our horizontal…
Returns Based Investing Production Mix 2008 2013 Gas Gas 80% 45% Oil 16% Oil 47% NGL 8% NGL 4% Rebalancing portfolio toward higher returns for oil 25
Bakken Oil Play 2013 4Q 2013 net oil production 7,900 BOPD Oil Production Extreme winter weather impacted Dec-Feb 2.8 Million production Net Barrels Approximately 130 million in capital spending planned for 2014 59% of company oil…
Bakken Mountrail County D&C Performance 1280 Average Well Costs 1280 Average Spud-To-TD Time 10 30 9 25 8 7 20 Well Cost, MM 6 Days 5 15 4 10 3 2 5 1 0 0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q12 2Q12 3Q12…
Paradox Basin - Continuing to build a dominant position WY Approx. 130,000 net acres, Paradox plus 20,000 acres under UT CO Grand County option Cane Creek Unit Added 2nd rig in December San Juan County AZ Recently spud 1st…
Paradox Basin Well Name 2014 2015 2016 2017 Cane Creek Unit - develop Cane Creek Shale - develop Cane Creek Shale - develop Cane Creek Shale Fertilizer area - develop Uphole Clastics - appraise Uphole Clastics - develop Uphole…
Paradox Basin Current net production averaging 4,000 BOPD Recent Big Success wells: Well Name 1st Sales Cum. To Date Current Prod. FTP (MBO) (BOPD) (psi) CCU 12-1 Sept 2012 630 1,000 300 CCU 18-1 Mar 2013 270 800 170 CCU 36-1…
Powder River Basin Moving into sweet spot of a top-tier basin Acquisition of 42,148 SM Loco Federal 4076-9-4-1FH Frontier gross/24,475 net acres 906 BOPD + 1186 MCF/d SM Brider Federal 4076-23-14-1SH Shannon 642 BOPD + 313 MCF/d…
Powder River Basin Potential impact of stacked pay Frontier Play Entering development phase 2nd Bench1 90 gross/24 net wells Net potential reserves 15 MMBO and 26 Bcf 1st Bench1 120 gross/26 net wells Net potential reserves 16…
Gas Properties Oil growth is key to Fidelitys strategy, but we maintain a diversified portfolio Our gas assets include: Significant operated fields (all 100% WI) Baker Field, Fallon County, MT Bowdoin Field, Phillips County, MT…
2013 Reserve Summary NPV10 increased 272 million to 1.34 billion Strategic direction driving value creation over reserve volume growth YE 2013 reserves of 80.7 MMBOE essentially flat to YE 2012 reserves of 80.5 MMBOE Managed…
2014 Outlook Returns Based Investment Philosophy Focus on oil growth Led by growth in Paradox, Bakken and Powder River Basin Production guidance unchanged expect to update with Q1 earnings release Capital expenditures of…
Record Capital Program 4.6B 3.2B Increase Cap Ex Construction E&P 43% Regulated over next 5 years 2009-2013 2014-2018 Note: Excludes unidentified acquisitions and proposed 375-mile pipeline. 38
Credit & Liquidity At December 31, 2013 (Millions) Capacity Outstanding Available Commercial Paper Programs 625 154 471 40% Revolving Credit Agreements 115 15 98 * Construction Total Exploration 740 169 569 24% & Production…
Funding Plan for 2014 2014 Projected Capital Expenditures Totaling Approximately 1.2 Billion Funding Sources Range Operating cash flows 700M - 750M Debt 200M - 250M Non-strategic asset sales 0 - 100M+ Equity 250M - 300M 41
Equity For Accretive Growth Business Project Accretive Utility Rate base growth Pipeline Dakota Prairie Refinery E&P Paradox development and Powder River 42
Dividend Growth 76 consecutive years of 0.71 quarterly dividend payments Dividend increased November 2013, marking 23 consecutive 0.48 years of increases Committed to paying a competitive dividend 2004 2005 2006 2007 2008 2009…
Outlook Strong performance in 2013 positioned for growth Utility record 300 million capital program in 2014 driven by customer RESOURCES and load growth particularly in North Dakota Pipeline expanding its liquids-based midstream…
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