FORM 10-K

67

MDU RESOURCES G ROUP, INC.

Prior to the maturity of the Centennial credit agreements, Centennial expects that it will negotiate the extension or replacement of these

agreements, which provide credit support to access the capital markets. In the event Centennial was unable to successfully negotiate these

agreements, or in the event the fees on such facilities became too expensive, which Centennial does not currently anticipate, it would seek

alternative funding.

In order to borrow under Centennial's credit agreements and the Centennial uncommitted long-term master shelf agreement, Centennial

and certain of its subsidiaries must be in compliance with the applicable covenants and certain other conditions. For information on the

covenants and certain other conditions of Centennial's credit agreement, see Item 8 -- Note 10.

Certain of Centennial's financing agreements contain cross-default provisions. These provisions state that if Centennial or any subsidiary

of Centennial 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

applicable agreements will be in default. Certain of Centennial's financing agreements and Centennial's practices limit the amount of

subsidiary indebtedness.

Williston Basin Interstate Pipeline Company Williston Basin has an uncommitted long-term master shelf agreement that allows for

borrowings up to $100 million. Under the terms of the master shelf agreement, $80.0 million was outstanding at December 31, 2007.

The ability to request additional borrowings under this master shelf agreement expires on December 20, 2008.

In order to borrow under its uncommitted long-term master shelf agreement, Williston Basin must be in compliance with the applicable

covenants and certain other conditions. For information on the covenants and certain other conditions of the uncommitted long-term

master shelf agreement, see Item 8 -- Note 10.

Off balance sheet arrangements

In connection with the sale of MPX in June 2005 to Petrobras, an indirect wholly owned subsidiary of the Company has agreed to indemnify

Petrobras for 49 percent of any losses that Petrobras may incur from certain contingent liabilities specified in the purchase agreement. For

more information, see Item 8 -- Note 20.

Centennial continues to guarantee CEM's obligations under a construction contract for a 550-MW combined-cycle electric generating

facility near Hobbs, New Mexico. For more information, see Item 8 -- Note 20.

Contractual obligations and commercial commitments

For more information on the Company's contractual obligations on long-term debt, operating leases, purchase commitments and

uncertain tax positions, see Item 8 -- Notes 10, 15 and 20. At December 31, 2007, the Company's commitments under these obligations

were as follows:

2008

2009

2010

2011

2012

Thereafter

Total

(In millions)

Long-term debt

$ 161.7

$ 73.4

$ 7.3

$128.0

$135.5

$ 802.6

$1,308.5

Estimated interest payments*

70.8

63.5

61.7

56.4

51.3

335.5

639.2

Operating leases

20.3

16.0

13.7

10.3

8.4

48.8

117.5

Purchase commitments

479.2

340.0

233.4

163.7

105.6

323.1

1,645.0

$732.0

$492.9

$316.1

$358.4

$300.8

$1,510.0

$3,710.2

* Estimated interest payments are calculated based on the applicable rates and payment dates.

Not reflected in the table above are $3.7 million in uncertain tax positions for which the year of settlement is not reasonably possible

to determine.

EFFECTS OF INFL ATION

Inflation did not have a significant effect on the Company's operations in 2007, 2006 or 2005.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to the impact of market fluctuations associated with commodity prices, interest rates and foreign currency. The

Company has policies and procedures to assist in controlling these market risks and utilizes derivatives to manage a portion of its risk.

For more information on derivatives and the Company's derivative policies and procedures, see Item 8 -- Notes 1 and 7.

Commodity price risk

Fidelity utilizes derivative instruments to manage a portion of the market risk associated with fluctuations in the price of natural gas and oil

on its forecasted sales of natural gas and oil production. Cascade utilizes derivative instruments to manage a portion of the market risk

associated with fluctuations in the price of natural gas on its forecasted purchases of natural gas.