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MDU Resources (MDU) to Expand Bakken Natural Gas Project

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MDU Resources Group, Inc.’s (MDU - Free Report) subsidiary, WBI Energy, recently announced a plan to expand North Bakken Project. The plan includes the construction of nearly 67 miles of new pipeline from Bakken production areas in western North Dakota to an interconnection point with Northern Border Pipeline.

Initially the expanded facility will provide 200 million cubic feet per day of natural gas transportation capacity. If required, the capacity can be extended to 375 million cubic feet per day, depending on customer demand.  

This expansion project will cost nearly $220 million. The construction of 20-inch diameter pipeline and two associated compressor facilities is expected to begin in early 2021 and will be completed in the later part of the year.

The successful open season prompted WBI Energy to pursue the new expansion project.

MDU Resources’ Capex Plan

MDU Resources announced long-term capital investment plan in the month of Nov 2018. The company expects to invest $2.6 billion through the 2019-2023 period, which is 13.7% higher from the previous five years plan of $2.3 billion for 2018-2022 period.

MDU Resources will spend 56% of the planned investment in the Utility segment, 27.5% in construction materials and services segment as well as 16.5% in the pipeline and midstream segment. These investments will increase reliability of services and enable the company to serve increasing customer base effectively. The company expects customer base to expand annually by 1-2%.

Natural Gas in the United States

U.S. Energy Information Administration (EIA) expects record-high dry U.S. natural gas production to continue to grow through 2020, from an estimated 83.3 billion cubic feet per day (Bcf/d) in 2018 to 90.2 Bcf/d in 2019 and 92.2 Bcf/d in 2020. Total U.S. natural gas consumption will increase 1.3% year over year in 2019 and 1.1% in 2020 to a total of 83.5 billion cubic feet/day (Bcf/d).

The environmental awareness has impacted coal-powered plants in the past few years. Utility companies are shifting their focus to low emission fuel, which is propelling the popularity of natural gas. We believe that this expansion project will enable MDU Resources to expand natural gas market and customer base.

Price Movement

 

 

Shares of MDU Resources have gained 5.1% in the past month compared with the industry’s rise of 6.2%.

Zacks Rank and Key Picks

MDU Resources has a Zacks Rank #2 (Buy). A few other top-ranked stocks from the same sector are Ameren Corporation (AEE - Free Report) , FirstEnergy Corporation (FE - Free Report) and IDACORP, Inc. (IDA - Free Report) . Ameren and IDACORP sport a Zacks Rank #1(Strong Buy), FirstEnergy holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth of Ameren, FirstEnergy and IDACORP is pegged at 6.80%, 6.00% and 2.60%, respectively.

The Zacks Consensus Estimate for 2019 earnings of Ameren, FirstEnergy and IDACORP have inched up 0.6%, 0.8% and 0.9% in the past 90 days, respectively.

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