MDU announces potential sale of its E&P firm, Fidelity

By The Bakken Magazine Staff | December 12, 2014

MDU Resources announced plans to begin marketing its exploration and production firm Fidelity, in a move that could make a sale of the firm possible by early 2015.

David Goodin, president and CEO of MDU, said that although MDU continues to see attractive investment opportunities for Fidelity, the capital required to effectively grow the business would compromise MDU’s ability to fund substantial opportunities in other sectors. “We expect to grow our utility, pipeline and construction business units in a more meaningful way and pursue that growth with a lower overall business-risk profile,” he said.

MDU is working to set up a data room for potential investors to see Fidelity’s assets values, and taxed, initial production rates and other pertinent information. Fidelity will continue drilling and completing the majority of its programs in various plays until the sale concludes.

Fidelity has acreage ownership in North Dakota, Montana, Wyoming, Utah, Texas and Louisiana. As of Dec. 31, 2013, its total proved reserves were 80.7 million barrels of oil equivalent. The company currently produces 10.3 million barrels of oil equivalent per year and is running two rigs in North Dakota.

Current oil prices did not play a large role in MDU’s decision to sell Fidelity, according to Goodin. An internal review completed by board members and outside advisors concluded that other business segments of MDU would benefit more from money going into Fidelity.

Kent Wells, president and CEO of Fidelity, said that for the right investor, the exploration and production firm could offer a unique opportunity. “Put aside the oil price, it could be a unique opportunity for someone to move into the U.S. shales,” Wells said.

Proceeds from the sale of Fidelity have not yet been allocated to a specific business segment or purpose.

Overall activity in regards Bakken oil production and other industries serving the oil producing region is still brisk, according to Goodin and Wells. Although lower than normal crude prices could slow down investment, Wells expects development to continue as costs typically come down when investments do to level out the price differential.