MDU Resources (MDU) Q3 2026 earnings review
MDU Resources approves its Bakken pipeline, but higher costs cut profit
MDU Resources, a regulated electric, natural gas and pipeline utility in the Northern Plains and Pacific Northwest, grew operating profit while net profit fell. Revenue rose 10% and electric utility profit jumped 24% on higher customer rates, data center demand and the Badger Wind Farm. Higher interest costs, a larger share count and a cancelled renewable gas project in Oregon wiped out those gains and pushed profit per share down. Chief executive Nicole A. Kivisto kept the full-year outlook unchanged, which by our math leaves profit per share rising about 12% in the fourth quarter.
| Operating revenues | $347.8M +10.4% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $0.08 $0.09 a year ago (−11%) |
| 2026 capital spending plan | Raised $65M to $594M after Bakken East approval |
| Full-year profit per share outlook | Unchanged $0.93–$1.00 (middle: +3.8%) |
⚖️ Verdict: 🟢 Bullish
The story got better because the board approved the $2.8 billion to $3.1 billion Bakken East Pipeline ahead of schedule and narrowed its cost estimate. That decision removed the risk of a project write-off and shifted $105 million of early planning costs into this year's pipeline capital budget. One caution: the utility still has not said how much of the pipeline it will sell to outside partners or how much new stock it will issue, while rising interest bills and share dilution continue to eat into quarterly earnings.
The question now is whether Bakken East and new data center contracts lift per-share growth above the company's 6% to 8% long-term target, or whether new share issuances and partner splits absorb the upside. If MDU Resources funds its share without heavy stock sales, per-share profit accelerates once construction finishes; if dilution stays high, growth stays near the current pace. November's five-year capital plan and financing update will tell.
🐂 Bull Case
Board Approves Bakken East Pipeline
Bakken East is a planned 350-mile natural gas pipeline across North Dakota with initial capacity of 1.4 billion cubic feet per day. On September 30, the board approved the project ahead of its fourth-quarter federal regulatory filing. Management narrowed the estimated construction cost to between $2.8 billion and $3.1 billion, compared with $2.7 billion to $3.2 billion previously, and expects the two phases to enter service in late 2029 and late 2030.
Board approval matters because it removes the risk that the utility would abandon the pipeline and write off its accumulated planning spend. Instead, the decision allowed MDU Resources to move those preliminary outlays into its 2026 capital budget, which lifted this year's planned pipeline spending from $60 million to $165 million.
What to watch: the Federal Energy Regulatory Commission (FERC) application in the fourth quarter and the five-year capital plan update in November. Those disclosures will show the year-by-year construction bill for 2027 through 2030.
New Rates and Data Centers Lift Electric Profit
The electric utility is MDU Resources' largest profit source in the summer and the home of its data center contracts. Segment profit rose 23.6% from a year ago to $26.5 million because regulators approved higher customer rates and data centers bought more power. The company follows a rule that "the customer that creates a cost should pay that cost", assigning dedicated grid upgrades to large-load buyers.
- New electric rates in North Dakota, Montana and Wyoming: $7.1 million of extra revenue
- Badger Wind Farm, acquired in late 2025: $3.2 million of quarterly profit
- Electricity sold to data centers: up 18.4% from a year ago, lifting commercial revenue 32.5%
- Active rate filings: North Dakota interim electric rates of $26.3 million a year began September 1, Oregon approved $12.2 million in gas rates for October 31, and Minnesota gas was filed October 30 for $4.5 million
What to watch: final regulatory rulings in North Dakota ($34.5 million requested) and Washington ($25.1 million requested for year one), plus the December 1 start of the $31 million pipeline rate increase. Those decisions set the revenue step-up for 2027.
🐻 Bear Case
Higher Costs and More Shares Cut Profit
Chief executive Nicole A. Kivisto said the utility continued to grow while "responsibly managing costs", and total operating income rose $7.8 million from a year ago to $47.6 million. Below the operating line, higher debt charges, lower investment returns and a larger share count wiped out that gain and pushed net income down 23.9% to $14.0 million.
- Operation and maintenance expense (day-to-day running and repair costs): $115.7 million, up 1.0 percentage point of revenue on higher payroll and a $2.1 million after-tax loss from cancelling the Knott Landfill renewable gas project in Oregon
- Interest expense: $32.6 million, up 23.5% from a year ago and up 1.0 percentage point of revenue on higher long-term debt
- Other income: $1.4 million, down $5.9 million on lower returns from employee benefit plan investments
- Diluted share count: 212.7 million, up 3.6% from a year ago after stock issuances, leaving profit per share excluding one-offs down 11.1% at $0.08
What to watch: fourth-quarter interest expense and share count. By our math, the full-year outlook requires fourth-quarter profit per share to grow about 12% at the middle of the range, up from $0.37 a year ago, as new winter gas and pipeline rates take effect.
Bakken East Funding Mix Is Still Undecided
"At the same time, we reached a significant milestone with our positive final investment decision on Bakken East, moving forward a project that we believe positions us well for long-term growth," Kivisto said. Yet the $2.8 billion to $3.1 billion pipeline equals MDU Resources' entire existing five-year capital plan, and the company has not said how much of the bill it will pay itself.
The energy group is evaluating financing options "including potential participation of financial or strategic investors, while maintaining its expectation that WBI Energy will retain majority ownership and operational control". Meanwhile, pre-construction advisory fees "that did not qualify for capitalization and were expensed during the quarter" trimmed $0.7 million before tax from pipeline earnings ($1.6 million over nine months), contributing to a 22.0% drop in pipeline net income.
What to watch: the exact ownership percentage WBI Energy keeps and the amount of new stock MDU Resources must issue. If outside partners take nearly half the project or the parent company sells heavy equity, per-share profit growth from the pipeline will shrink.
Risks this quarter didn't answer
Two standing watch items on customer ramp timing and share dilution did not get updated figures in the earnings release.
- Data center megawatts currently online: the release reported an 18.4% rise in data center sales but did not update the 240 megawatts of online load reported last quarter; the quarterly filing or conference call will show whether the second building at Ellendale began ramping on schedule.
- Remaining 2026 stock issuance: diluted shares rose another 1.0 million from the second quarter to 212.7 million, and the quarterly filing's equity footnote will show how many forward-sale shares were settled against the $150 million to $175 million annual target.
👓 Other Themes
Warmer Summer Lifted Cooling Demand
Weather swings drive quarterly utility volumes in the Northern Plains and Pacific Northwest. Warmer third-quarter temperatures increased air-conditioning demand and helped push retail electric volumes up 9.3% from a year ago, reversing last summer's weather drag and following a mild first-quarter winter that cut heating demand by $0.03 per share. Across its eight states, the utility grew its customer count by 1.5% from a year ago.
💲 Other KPIs
Cash generated from operations over the first nine months fell 11.5% from $392.8 million a year ago. However, the third quarter narrowed the first-half gap: by our math, third-quarter operating cash flow rose 42.1% from a year ago to $82.3 million, up from $57.9 million in the prior-year period.
Total debt rose 10.3% from $2,353 million a year ago and edged up $18 million from the second quarter as the utility borrowed to fund grid and pipeline construction. Because MDU Resources also issued common stock, debt as a share of total capital held nearly steady at 46.6%, compared with 46.4% a year ago.
Natural gas moved through the pipeline network rose 1.2% from a year ago to 162.3 million decatherms (MMdk, a measure of gas heating content) on new expansion projects and short-term contracts. Net gas injected into customer storage fell to 4.7 MMdk from 13.6 MMdk a year ago, weighing on quarterly pipeline revenue.
🔮 Guidance
Unchanged. The plan calls for full-year profit per share to grow about 3.8% at the middle of the range from $0.93 in 2025. With $0.55 earned over the first nine months ($0.57 excluding one-offs), by our math the middle of the range leaves about $0.415 for the fourth quarter, or 12.2% growth over last year's fourth quarter (6.8% if measured against nine-month profit excluding one-offs).
Raised. Planned 2026 capital spending moved up $65 million, or 12.3%, after declining from $565 million in the first quarter to $529 million in the second. Pipeline spending jumped by $105 million to $165 million "following the positive final investment decision and the resulting reclassification of preliminary investigation costs" on Bakken East, while electric and gas budgets fell by $27 million and $13 million on project timing and the cancelled Oregon renewable gas site.
Unchanged. The Northern Plains utility kept its long-term annual profit-per-share growth target at 6% to 8%, above the 3.8% growth implied by the middle of this year's outlook.
❓ Key Questions
What ownership share and equity need will fund Bakken East?
The board approved a $2.8 billion to $3.1 billion pipeline while still weighing outside investors. Per-share profit from the project depends on how much WBI Energy keeps above 50% and how much parent-company stock MDU Resources sells.
How many megawatts of data center load are online now?
Electric sales to data centers rose 18.4%, and the second building at the Ellendale site was scheduled to start ramping in the third quarter. The release did not update the 240 megawatts of online load disclosed in the second quarter.
Will the full-year EPS outlook be judged on adjusted figures?
MDU Resources introduced profit excluding one-offs this quarter after $3.3 million of after-tax charges for the cancelled Oregon gas project and pipeline advisory fees. The $0.02 per share gap changes the fourth-quarter growth needed to reach the middle of the outlook.
What caused the captive insurer loss in the Other segment?
The Other category lost $4.9 million, nearly triple last year's $1.7 million loss, because of higher insurance claims at the company's internal insurer and tax rate adjustments. Management did not state whether those claims were a one-time event.