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Friday, April 30, 2010

MDU First Quarter, 2010, Earnings Release

MDU's First Quarter Earnings Report (2010) will be available later today; some have received a summary from the company already.

Financials:
1Q, 2010: 22/share cents gain vs a lost of $1.87/share 1Q, 2009
According to some analysts, this missed estimate by 6 cents

Operations:
MDU has increased acreage in two areas for oil and gas exploration and production
Bakken (North Dakota): total -- 56,000 acres
Niobrara (SE Wyoming and north-central Colorado) -- 80,000

Comment: and this is just my personal thoughts, take it for what it's worth -- as a long term investor in MDU early in my investing career, I always thought MDU was appropriately conservative but also very forward-looking. Having said that, I started becoming disillusioned with MDU about two years ago with regard to their activity in western North Dakota (the Bakken). Despite being headquartered in Bismarck, ND, the company seemed to completely miss what was going on under their feet, and let other companies including EOG, COP (BR), WLL, CLR, BEXP, Slawson, Oasis, and even smaller companies like KOG, NOG, and AEZ take the lead in grabbing acreage. As a utility, they were focused on coal and natural gas, of course, but they did have a division, Fidelity, which calls itself an OIL and gas exploration and production company. It appears they did well with natural gas production but not oil. No one could have predicted the fall in natural gas prices and the growing disparity between prices of oil and natural gas, but  other OIL and gas companies seemed to react more quickly. The majors were a bit slow in seeing this shift, and some majors made significant blunders (COP's purchase of natural gas reserves in the Far East a couple of years ago) according to some analysts. But I can't get it out of my mind that MDU was too close to the forest to see the trees. Or is it too close to the trees, to see that there is a forest there?

JRR Tolkien says we all have our myths, and that's my myth regarding MDU.

It appears MDU is trying to get back into the game by increasing its acreage in the Niobrara.

Its other unregulated divisions are dependent on the economic recovery.

MDU's regulated divisions should perform better than peers simply because of the amount of economic activity in western North Dakota.

2 comments:

  1. a very accurate , and fitting description.

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  2. Thank you. For the most part I prefer to stick to facts on my blog and not get into opinion, but I really have followed MDU for 30 years and thought I knew the company. I especially liked its five divisions (regulated and unregulated) but their apparent missteps in North Dakota oil are very frustrating. Regardless, thank you for stopping by.

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