MDU RESOURCES GROUP, INC. MDU RESOURCES GROUP, INC. ELECTRIC AND NATURAL GAS UTILITIES Building a Strong America® PIPELINE AND ENERGY SERVICES EXPLORATION AND PRODUCTION We are a member of the 2012 Earnings* S&P MidCap 400 index. We Regulated provide value-added natural resource products and related 37% Construction** services that are essential to CONSTruCTION MATEriALS AND SERVICES 33% energy and transportation Exploration & infrastructure, including regulated Production utilities and pipelines, exploration 30% and production, and construction materials and services. * Based on consolidated earnings before discontinued operations and excluding write-downs of oil and natural gas properties. ** Includes Other operations of 2 percent. E&P Construcction Regulated 2012 Annual Report Form 10-K Proxy Statement MDU RESOURCES GROUP, INC. MDU RESOURCES GROUP, INC. ELECTRIC AND NATURAL GAS UTILITIES Building a Strong America® PIPELINE AND ENERGY SERVICES EXPLORATION AND PRODUCTION We are a member of the 2012 Earnings* S&P MidCap 400 index. We Regulated provide value-added natural resource products and related 37% Construction** services that are essential to CONSTruCTION MATEriALS AND SERVICES 33% energy and transportation Exploration & infrastructure, including regulated Production utilities and pipelines, exploration 30% and production, and construction materials and services. * Based on consolidated earnings before discontinued operations and excluding write-downs of oil and natural gas properties. ** Includes Other operations of 2 percent. E&P Construcction Regulated 2012 Annual Report Form 10-K Proxy Statement Territory Company Description 2012 Highlights Key Statistics A Look Ahead Electric and Natural Gas Utilities Electric and natural gas utility areas Electric generating stations States of operations MDU Resources Group utility companies serve more than 991,000 n Invested an all-time high of approximately $220 million in utility Revenues (millions) n Beginning construction on the $86 million, 88-megawatt customers. Montana-Dakota Utilities Co. generates, transmits and infrastructure, including $74 million to serve the growing Electric $236.9 natural gas-fired electric generating facility near Mandan, customer base associated with Bakken oil development and Natural gas $754.8 North Dakota. WA distributes electricity and distributes natural gas in Montana, North completing pipeline projects to enhance the Pacific Northwest Earnings (millions) MT ND n Upgrading pollution control technology on several electric MN Electric $30.6 OR ID Dakota, South Dakota and Wyoming. Great Plains Natural Gas Co. and Idaho systems. generating facilities, including a $125 million upgrade to Big Natural gas $29.4 SD distributes natural gas in western Minnesota and southeastern n Received approval for advance determination of prudence from Stone. WY Electric sales (million kWh) North Dakota. Cascade Natural Gas Corporation distributes natural the North Dakota Public Service Commission to construct an Retail 2,996.5 n Pursuing opportunities associated with potential development gas in Oregon and Washington. Intermountain Gas Company 88-megawatt natural gas-fired electric generating facility near Sales for resale 14.1 of high-voltage transmission lines and system enhancements Mandan, North Dakota. The estimated $86 million project is Natural gas distribution (MMdk) targeted toward delivering energy to major markets. distributes natural gas in southern Idaho. These operations also expected to be in service in late 2014. Sales 93.8 n Constructing a 30-mile natural gas pipeline to the Hanford D supply related value-added services. n Filed requests with the Montana Public Service Commission for a Transportation 132.0 Nuclear Site in Washington. E $3.5 million natural gas rate increase and the South Dakota Corporate earnings contribution n Continuing to meet the demands of the growing customer Public Utilities Commission for a $1.5 million natural gas rate Electric 13% base in western North Dakota and eastern Montana. increase. Natural gas 13% Pipeline and Energy Services Company storage fields Pipeline systems Interconnecting pipelines GULAT Midstream assets n Announced a joint project with Calumet Specialty Products Revenues (millions) $193.1 n Beginning construction of the 20,000-barrel-per-day diesel States of operations The pipeline and energy services segment provides natural gas E transportation, underground storage, processing and gathering Partners LP to explore building and operating a 20,000-barrel- Earnings (millions)* $26.6 topping plant in southwestern North Dakota, a joint project per-day diesel topping plant in southwestern North Dakota. Land with Calumet Specialty Products Partners LP, with an R Pipeline (MMdk) services, as well as oil gathering, through regulated and WA has been purchased; engineering studies, permitting and Transportation 137.7 in-service date in late 2014. ND MT nonregulated pipeline systems primarily in the Rocky Mountain and construction planning are under way. Gathering 47.1 n Constructing in 2014 a second pipeline to connect the ID SD northern Great Plains regions of the United States. It also provides n Purchased a 50 percent interest in Whiting Oil and Gas Corp.’s Corporate earnings contribution 11% planned Garden Creek II gas processing plant in northwestern WY cathodic protection and other energy-related management services. Pronghorn natural gas and oil midstream assets near Belfield, North Dakota to deliver gas into the Northern Border Pipeline. NE North Dakota, in the Bakken region. Facilities include a natural CO n Further investing approximately $20 million in the Pronghorn gas processing plant, natural gas gathering pipeline system, midstream facilities to enhance processing capabilities and natural gas residue line, crude oil gathering system, crude oil extend the gathering pipeline systems. storage terminal and crude oil pipeline. n Continuing to pursue expanding facilities and services offered n Effective July 1, Williston Basin Interstate Pipeline Company, to customers within the company’s geographic region, which is Bitter Creek Pipelines LLC and Total Corrosion Solutions changed * Includes a $15.0 million after-tax net benefit related to natural gas expanding most notably in the Bakken play in North Dakota their names to be part of the WBI Energy, Inc. group of companies. gathering operations litigation. and eastern Montana. Exploration and Production Areas of significant acreage ownership States of operations Fidelity Exploration & Production Company is engaged in oil and n Increased oil production by 36 percent. Oil production now Revenues (millions) $448.6 n Continuing to proceed systematically in the Paradox Basin, natural gas acquisition, exploration, development and production makes up 37 percent of total production, compared to 14 Earnings (millions)** $69.6 anticipating $70 million in capital expenditures in 2013 with percent in 2007. Production the potential to increase the investment based on results. activities in the Rocky Mountain and Mid-Continent regions of the n Acquired additional acres of leaseholds in Richland County, Oil (MBbls) 3,694 Estimated gross ultimate recovery rates per well range from MT ND United States and in and around the Gulf of Mexico. Montana, for a total of 60,000 net leasehold acres. The company Natural gas liquids (MBbls) 828 250,000 to 1 million barrels. now has approximately 127,000 net leasehold acres in the Natural gas (MMcf) 33,214 n Pursuing acquisitions of additional leaseholds, with a focus WY Bakken area. Proved reserves on expanding existing positions as well as seeking new NE Oil (MBbls) 33,453 opportunities. E&P UT n Continued exploratory drilling in the Paradox Basin Cane Creek Natural gas liquids (MBbls) 7,153 Federal Unit in Utah, where the company holds approximately Natural gas (MMcf) 239,278 83,000 net acres with an option to lease another 20,000 acres. Corporate earnings contribution 30% TX LA ** Excludes the effects of $246.8 million after-tax noncash charges relating to the write-downs of oil and natural gas properties. Construction Materials and Services Construction materials locations AK Construction services offices MDU Resources Group has a number of construction businesses. n Experienced an increase in the amount of construction materials Revenues (millions) n Continuing to pursue opportunities to expand work in energy States of operations for construction materials and Construction materials $1,617.4 authorized states of operations for construction services • Knife River Corporation mines aggregates and markets crushed private work versus public projects, with private work projects such as refineries, transmission, substations, utility Authorized states of operations for construction services representing 14 percent of the backlog at year-end compared to Construction services $938.6 services, solar, wind towers and geothermal. stone, sand, gravel and related construction materials, including Earnings (millions) TION WA ME 8 percent at year-end 2011. n Continuing to pursue higher-margin private construction work MT Construction materials $32.4 ND MN ready-mix concrete, cement, asphalt, liquid asphalt and other where available, with a focus on increasing margins and cash C n Congress passed a federal transportation bill that funds NY Construction services $38.4 OR ID SD WI value-added products. It also performs integrated contracting construction for highways, bridges and other transportation flow while maximizing the value