MDU Resources Group Q3 Earnings Decline as Project Costs Rise

MDU Resources Group Faces Earnings Headwinds Amid Major Pipeline Push

MDU Resources Group reported a decline in third-quarter 2026 earnings, posting $14 million, or $0.07 per share, compared to $18.4 million, or $0.09 per share, during the same period last year.

The Bismarck, North Dakota-based energy company, as reported by TradingView, faced specific financial pressures from the cancellation of a renewable natural gas project and costs associated with pipeline advisory services.

Adjusted earnings, which strip out the impact of the canceled project and one-time advisory expenses, reached $16.6 million, or $0.08 per share.

Despite the quarterly dip, President and CEO Nicole Kivisto reaffirmed the company’s 2026 earnings guidance of $0.93 to $1.00 per share. The firm continues to target long-term earnings-per-share growth of 6% to 8%, provided that regulatory outcomes remain constructive and capital plans proceed as expected.

The Bakken East Pipeline Investment

The company's most important development this quarter was the board's decision to move forward with the WBI Energy Bakken East Pipeline Project. Following a positive final investment decision, MDU narrowed its capital investment estimate for the project to a range between $2.8 billion and $3.1 billion.

The 350-mile pipeline is engineered to transport 1.4 billion cubic feet of natural gas per day. According to the company, the project will be built in two phases, with expected in-service dates in late 2029 and late 2030.

The final design includes varying diameters of pipe—42-inch, 36-inch, and 30-inch—along with four new compressor stations and expanded capacity at two existing facilities.

Chief Financial Officer Jason Vollmer noted that the decision to use larger pipe was strategic.

By increasing the diameter, the company expects to reduce the total amount of compression required, which should ultimately lower fuel costs for customers. MDU intends to file its application with the Federal Energy Regulatory Commission during the fourth quarter of 2026.

Electric Utilities Offset Segment Pressures

While the pipeline and natural gas distribution segments faced challenges, the electric utility business provided a bright spot. Earnings for the electric segment rose to $26.5 million from $21.5 million in the prior-year quarter. This growth was driven by higher retail sales volumes, the addition of the Badger Wind Farm to the portfolio, and the implementation of new rate structures.

Data centers have increased electric demand. MDU reported that retail electric sales volumes increased by 9.3%, while data center sales volumes surged by 18.4%. Kivisto noted that the company currently has over 1 gigawatt of data center load under signed electric service agreements, with approximately 280 megawatts already online.

MDU Resources Group Q3 Earnings Decline as Project Costs Rise — Photo: stockanalysis.com

Customers that create costs are responsible for those costs through contracts, approved tariffs, and regulatory mechanisms. This approach allows existing customers to benefit from broader utilization of our system while supporting economic development opportunities.

The company maintains that it evaluates these large-load investments on a case-by-case basis to ensure that the costs associated with serving such high-demand facilities are borne by the customers creating them, rather than shifting the burden to the broader ratepayer base.

Regulatory Shifts and Project Losses Impact Gas Distribution

The natural gas distribution segment felt the sting of regulatory and project-related shifts. A $2.1 million after-tax loss was recorded following the discontinuation of the Knott Landfill Renewable Natural Gas Project in Oregon. Kivisto pointed to rising development costs and shifting regulatory requirements in Oregon as primary drivers for the exit.

Regulatory activity remained high throughout the quarter. On September 1, 2026, interim electric rates in North Dakota took effect, providing a $26.3 million increase subject to potential refund. Meanwhile, an Oregon-approved $12.2 million annual revenue increase for natural gas distribution went into effect on October 31.

Looking toward the start of 2027, the company has requested a $4.5 million annual revenue increase in Minnesota, alongside a $3.9 million interim increase.

As MDU looks toward the end of the year, the company is evaluating financing strategies for the Bakken East project, including the potential inclusion of strategic or financial partners.

While WBI Energy is expected to maintain majority ownership and operational control, management plans to share more granular details regarding the financing structure during the fourth-quarter earnings call scheduled for February 2027.