MDU Resources Reports Estimate of Probable and Possible Natural Gas and Oil Reserves
9/15/2008
Bismarck, ND
MDU Resources Group, Inc. (NYSE:MDU) reports that its indirect wholly owned subsidiary, Fidelity Exploration & Production Company (Fidelity), has completed a study of the quantities of its estimated probable and possible natural gas and oil reserves.
The company previously reported year-end 2007 proved reserves of approximately 707 billion cubic feet equivalent (Bcfe). The reserve analysis was prepared by the company’s technical staff and reviewed by Ryder Scott Company LP (Ryder Scott).
In January 2008, the company acquired producing properties in East Texas, which added 97 Bcfe to its proved reserve base and increased total proved reserves to approximately 800 Bcfe.
In addition to its proved reserves, Fidelity estimates that it holds approximately 950 Bcfe of probable and possible reserves, a 19 percent increase from its previous estimate released in July 2007. The increase is largely driven by the company’s exploration plays in the Bakken and Paradox Basin areas as well as the aforementioned East Texas acquisition.
Approximately half of the company’s probable and possible estimate is classified as probable and approximately 85 percent of the total is within the Rocky Mountain region. The probable and possible reserve estimates were prepared by the company’s technical staff in accordance with the probable and possible reserves definitions approved by the World Petroleum Council and the Society of Petroleum Engineers.
“The future production potential from our natural gas and oil production operations is very positive,” said Terry D. Hildestad, president and chief executive officer of MDU Resources. “These vast reserves, combined with the fact that we have over 1.8 million acres held with lease agreements, means we are well-positioned for strong growth."
The Securities and Exchange Commission (SEC) only permits disclosure of proved reserves in SEC filings. Proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic and operating conditions. MDU Resources uses in this release the terms probable and possible reserves, which SEC guidelines prohibit from being included in filings with the SEC. Probable reserves are unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable. Possible reserves are unproved reserves which analysis of geological and engineering data suggests are less likely to be recoverable than probable reserves. Estimates of probable and possible reserves are by their nature more uncertain than estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by the company. Caution is given not to add together the estimated quantities in each classification without considering the significant differences in the risk of potential recovery associated with each classification.
The information in this release includes forward-looking statements, including estimated quantities of reserves, as well as statements by the president and chief executive officer of MDU Resources, within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the company believes that its expectations are based on reasonable assumptions, actual results may differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include fluctuations in natural gas and crude oil prices, drilling successes in natural gas and oil operations, the timely receipt of necessary permits and approvals, the ability to contract for or to secure necessary drilling rig and service contracts and to retain employees to drill for and develop reserves. For a discussion of the other important factors that could cause actual results to differ, refer to Item 1A – Risk Factors in MDU Resources’ most recent Form 10-K and 10-Q.
MDU Resources Group, Inc., a member of the S&P MidCap 400 index, provides value-added natural resource products and related services that are essential to energy and transportation infrastructure, operating in three core lines of business: energy, construction materials and utility resources. MDU Resources includes natural gas and oil production, natural gas pipelines and energy services, construction materials and contracting, construction services, and electric and natural gas utilities. For more information about MDU Resources, see the company’s Web site at www.mdu.com.
Contacts:
Investor Relations:
Phyllis A. Rittenbach
Director of Investor Relations
(701) 530-1057
Media:
Tim Rasmussen
Operating Company Public Relations Manager
(701) 530-1069