FORM 10-K
39
MDU RESOURCES G ROUP, INC.
Operating Information Annual net production by region for 2007 was as follows:
Natural
Gas
Oil
Total
Percent of
Region
(MMcf)
(MBbls)
(MMcfe)
Total
Rocky Mountain
48,832
1,287
56,553
74%
Mid-Continent/Gulf States
9,602
727
13,962
18
Offshore Gulf of Mexico
4,364
351
6,473
8
Total
62,798
2,365
76,988
100%
Well and Acreage Information Gross and net productive well counts and gross and net developed and undeveloped acreage related
to Fidelity's interests at December 31, 2007, were as follows:
Gross*
Net**
Productive wells:
Natural gas
3,978
3,180
Oil
3,797
233
Total
7,775
3,413
Developed acreage (000's)
751
379
Undeveloped acreage (000's)
1,039
481
* Reflects well or acreage in which an interest is owned.
** Reflects Fidelity's percentage of ownership.
Exploratory and Development Wells The following table reflects activities relating to Fidelity's natural gas and oil wells drilled and/or
tested during 2007, 2006 and 2005:
Net Exploratory
Net Development
Productive
Dry Holes
Total
Productive
Dry Holes
Total
Total
2007
4
5
9
317
16
333
342
2006
4
1
5
331
1
332
337
2005
2
3
5
312
25
337
342
At December 31, 2007, there were 170 gross (139 net) wells in the process of drilling or under evaluation, 160 of which were development
wells and 10 of which were exploratory wells. These wells are not included in the previous table. Fidelity expects to complete the drilling and
testing of the majority of these wells within the next 12 months.
The information in the table above should not be considered indicative of future performance nor should it be assumed that there is
necessarily any correlation between the number of productive wells drilled and quantities of reserves found or economic value. Productive
wells are those that produce commercial quantities of hydrocarbons whether or not they produce a reasonable rate of return.
Competition The natural gas and oil industry is highly competitive. Fidelity competes with a substantial number of major and independent
natural gas and oil companies in acquiring producing properties and new leases for future exploration and development, and in securing the
equipment, services and expertise necessary to explore, develop and operate its properties.
Environmental Matters Fidelity's natural gas and oil production operations are generally subject to federal, state and local environmental,
facility-siting, zoning and planning laws and regulations. Fidelity believes it is in substantial compliance with these regulations.
The ongoing operations of Fidelity are subject to the Clean Water Act, the Clean Air Act, and other federal and state environmental
regulations. Administration of many provisions of the federal laws has been delegated to the states where Fidelity operates, and permit
terms vary. Some permits have terms ranging from one to five years and others have no expiration date.
Detailed environmental assessments and/or environmental impact statements under federal and state laws are required as part of the
permitting process incidental to the commencement of drilling and production operations as well as in the closure, abandonment and
reclamation of facilities.
In connection with production operations, Fidelity has incurred certain capital expenditures related to water handling. For 2007, capital
expenditures for water handling in compliance with current laws and regulations were approximately $4.7 million and are estimated to be
approximately $3.7 million, $5.7 million and $4.5 million in 2008, 2009 and 2010, respectively. These water handling costs are primarily
related to the CBNG properties. For more information regarding CBNG legal proceedings, see Item 1A -- Risk Factors and Item 8 -- Note 20.
