FORM 10-K

66

MDU RESOURCES G ROUP, INC.

PART II

satisfying certain specified conditions, require that any debt issued under its Indenture become unsecured and rank equally with all of

the Company's other unsecured and unsubordinated debt (as of December 31, 2007, the only such debt outstanding under the Indenture

was $30.0 million in aggregate principal amount of the Company's 5.98% Senior Notes due in 2033).

The Company has entered into a Sales Agency Financing Agreement, as amended June 25, 2007, with Wells Fargo Securities, LLC with

respect to the issuance and sale of up to 3,000,000 shares of the Company's common stock, par value $1.00 per share, together with

preference share purchase rights appurtenant thereto. The common stock may be offered for sale, from time to time, in accordance with

the terms and conditions of the agreement, which terminates on December 1, 2008. Proceeds from the sale of shares of common stock

under the agreement are expected to be used for corporate development purposes and other general corporate purposes. The offering

would be made pursuant to the Company's shelf registration statement on Form S-3, as amended, which became effective on September

26, 2003, as supplemented by a prospectus supplement, dated June 28, 2007, filed with the SEC pursuant to Rule 424(b) under the

Securities Act of 1933, as amended. The Company has not issued any stock under the Sales Agency Financing Agreement through

December 31, 2007.

MDU Energy Capital, LLC On August 14, 2007, MDU Energy Capital entered into a $125 million master shelf agreement (dated as

of August 9, 2007), and borrowed $50 million under the agreement. On August 28, 2007, MDU Energy Capital borrowed an additional

$35 million under the master shelf agreement. MDU Energy Capital used the proceeds from the borrowings to repay a short-term

intercompany loan from the Company applicable to the acquisition of Cascade, as previously discussed.

The master shelf agreement contains customary covenants and provisions. For information on the covenants and certain other conditions

of the MDU Energy Capital master shelf agreement, see Item 8 -- Note 10.

Cascade Natural Gas Corporation Cascade has a revolving credit agreement with various banks totaling $50 million with certain

provisions allowing for increased borrowings, up to a maximum of $75 million. The $50 million credit agreement expires on December 28,

2012, with provisions allowing for an extension of up to two years upon consent of the banks. Cascade also has a $20 million uncommitted

line of credit which may be terminated by the bank or Cascade at any time. There was $1.7 million outstanding under the Cascade credit

agreements at December 31, 2007. The borrowings are classified as short-term borrowings as Cascade intends to repay the borrowings

within one year. As of December 31, 2007, there were outstanding letters of credit, as discussed in Item 8 -- Note 20, of which $1.9 million

reduced amounts available under the $50 million credit agreement.

In order to borrow under Cascade's $50 million credit agreement, Cascade must be in compliance with the applicable covenants and

certain other conditions. For information on the covenants and certain other conditions of Cascade's $50 million credit agreement,

see Item 8 -- Note 9.

Cascade's $50 million credit agreement contains cross-default provisions. These provisions state that if Cascade fails to make any

payment with respect to any indebtedness or contingent obligation, in excess of a specified amount, under any agreement that causes

such indebtedness to be due prior to its stated maturity or the contingent obligation to become payable, the agreement will be in default.

Certain of Cascade's financing agreements and Cascade's practices limit the amount of subsidiary indebtedness.

Centennial Energy Holdings, Inc. Centennial has a revolving credit agreement and an uncommitted line of credit with various banks and

institutions totaling $425 million with certain provisions allowing for increased borrowings. These credit agreements support Centennial's

$400 million commercial paper program. There were no outstanding borrowings under the Centennial credit agreements at December 31,

2007. Under the Centennial commercial paper program there was no amount outstanding at December 31, 2007. When Centennial has

commercial paper borrowings outstanding, the borrowings are classified as long-term debt as they are intended to be refinanced on a

long-term basis through continued Centennial commercial paper borrowings (supported by Centennial credit agreements). The revolving

credit agreement is for $400 million, which includes a provision for an increase, at the option of Centennial on stated conditions, up to

a maximum of $450 million and expires on December 13, 2012. The uncommitted line of credit for $25 million may be terminated by the

bank at any time. As of December 31, 2007, $56.6 million of letters of credit were outstanding, as discussed in Item 8 -- Note 20, of which

$44.0 million reduced amounts available under these agreements.

Centennial has an uncommitted long-term master shelf agreement that allows for borrowings of up to $550 million. Under the terms

of the master shelf agreement, $418.5 million was outstanding at December 31, 2007. The ability to request additional borrowings under

this master shelf agreement expires on May 8, 2009. To meet potential future financing needs, Centennial may pursue other financing

arrangements, including private and/or public financing.

Centennial's objective is to maintain acceptable credit ratings in order to access the capital markets through the issuance of commercial

paper. Minor fluctuations in Centennial's credit ratings have not limited, nor would they be expected to limit, Centennial's ability to access

the capital markets. In the event of a minor downgrade, Centennial may experience a nominal basis point increase in overall interest rates

with respect to its cost of borrowings. If Centennial were to experience a significant downgrade of its credit ratings, it may need to borrow

under its committed bank lines.