FORM 10-K
68
MDU RESOURCES G ROUP, INC.
PART II
The following table summarizes hedge agreements entered into by Fidelity and Cascade as of December 31, 2007. These agreements call
for Fidelity to receive fixed prices and pay variable prices, and for Cascade to receive variable prices and pay fixed prices.
(Forward notional volume and fair value in thousands)
Weighted
Forward
Average
Notional
Fixed Price
Volume
(Per MMBtu)
(MMBtu)
Fair Value
Fidelity
Natural gas swap agreements maturing in 2008
$7.90
10,978
$ 8,035
Cascade core
Natural gas swap agreements maturing in 2008
$7.71
20,443
$(11,542)
Natural gas swap agreements maturing in 2009
$7.79
13,410
$ (195)
Natural gas swap agreements maturing in 2010
$7.72
5,902
$ 1,044
Cascade non-core
Natural gas swap agreements maturing in 2008
$7.35
1,391
$ (1,014)
Weighted
Average
Forward
Floor/Ceiling
Notional
Price
Volume
(Per MMBtu/Bbl)
(MMBtu/Bbl)
Fair Value
Fidelity
Natural gas collar agreements maturing in 2008
$7.25/$8.46
11,895
$ 3,574
Oil collar agreement maturing in 2008
$67.50/$78.70
73
$ (1,112)
The following table summarizes hedge agreements entered into by Fidelity as of December 31, 2006. These agreements call for Fidelity to
receive fixed prices and pay variable prices.
(Forward notional volume and fair value in thousands)
Weighted
Forward
Average
Notional
Fixed Price
Volume
(Per MMBtu)
(MMBtu)
Fair Value
Fidelity
Natural gas swap agreements maturing in 2007
$7.69
9,125
$14,845
Weighted
Average
Forward
Floor/Ceiling
Notional
Price
Volume
(Per MMBtu)
(MMBtu)
Fair Value
Fidelity
Natural gas collar agreements maturing in 2007
$7.87/$10.74
10,123
$17,256
Interest rate risk
The Company uses fixed and variable rate long-term debt to partially finance capital expenditures and mandatory debt retirements. These
debt agreements expose the Company to market risk related to changes in interest rates. The Company manages this risk by taking
advantage of market conditions when timing the placement of long-term or permanent financing. The Company also has historically used
interest rate swap agreements to manage a portion of the Company's interest rate risk and may take advantage of such agreements in the
future to minimize such risk. At December 31, 2007 and 2006, the Company had no outstanding interest rate hedges.
The following table shows the amount of debt, including current portion, and related weighted average interest rates, both by expected
maturity dates, as of December 31, 2007.
Fair
2008
2009
2010
2011
2012
Thereafter
Total
Value
(Dollars in millions)
Long-term debt:
Fixed rate
$161.7
$73.4
$7.3
$67.0
$135.5
$802.6
$1,247.5
$1,233.3
Weighted average interest rate
4.5%
6.1%
6.8%
7.1%
5.9%
5.9%
5.8%
--
Variable rate
--
--
--
$61.0
--
--
$ 61.0
$ 60.6
Weighted average interest rate
--
--
--
4.9%
--
--
4.9%
--
Foreign currency risk
MDU Brasil's equity method investments in the Brazilian Transmission Lines are exposed to market risks from changes in foreign currency
exchange rates between the U.S. dollar and the Brazilian Real. For further information, see Item 8 -- Note 4. At December 31, 2007 and
2006, the Company had no outstanding foreign currency hedges.
