Good morning. My name is (Christie) and I will be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group Second Quarter 2011 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. (Operator Instructions) This call will be available for replay beginning at 2:00 PM Eastern Time today through 11:59 PM Eastern Time on August 16. The conference ID number for the replay is 73996248. Again, the conference ID number for the replay is 73996248. The number to dial for the replay is 1-800-642-1687 or 706-645-9291. I would now like to turn the conference over to Doran Schwartz, Vice President and Chief Financial Officer of MDU Resources Group. Thank you. Mr. Schwartz, you may begin your conference. Doran Schwartz – Vice President and Chief Financial Officer: Thank you. Good morning and welcome to our earnings release conference call. Before I turn the presentation over to Terry Hildestad, our President and Chief Executive Officer, I would like to mention that this conference call is being broadcast live to the public over the Internet and slides will accompany our remarks. If you’d like to view the slides, go to our website at www.mdu.com and follow the link to the conference call. Our earnings release is also available on our website. During the course of this presentation, we will make certain forward-looking statements within the meaning of the Section 21E of the Securities Exchange Act of 1934. Although the company believes that its expectations and beliefs are based on reasonable assumptions, actual results may differ materially. For a discussion of factors that may cause actual results to differ, refer to Item 1A, Risk Factors in our most recent Form 10-K, as…

(Operator Instructions) Your first question comes from the line of Steve Maresca of Morgan Stanley. Steve Maresca – Morgan Stanley: Good morning everybody.

Good morning, Steve. Steve Maresca – Morgan Stanley: I hope everything is getting better in North Dakota and you guys are doing as best you can so.

Thank you. Steve Maresca – Morgan Stanley: My question – a couple of questions, you made 20,000 acre purchase in the Bakken. Can you discuss what the landscape is like right now in terms of things available for purchase in the area?

Yeah, Kent Wells will take that question.

Yeah, Steve, good question. Obviously, the Bakken Basin is I think many would argue it’s probably the most prolific in economic basin going in the U.S. So, it’s highly contested. I think we understand the basin really well. We’re focused on certain areas. So, we were able to add still little over 20,000 acres and we’re continuing to pursue other blocks in the area. We’re committed to focus on driving our earnings, so we’re not going to go where it’s too expensive but we will go where we think we can make money. And so there is still some opportunities but it’s largely tied up at this point. Steve Maresca – Morgan Stanley: Okay. And it’s sounds like you guys have a fair bit of pipeline opportunities in the region you mentioned seems to be more on the gas than or maybe its more on the gas and the oil side. Can you discuss what possible opportunities are in the oil side and maybe just order of magnitude how much growth capital do you think is needed both gas and oil over the next couple of years on that region?

Steve, this is Steve Bietz. There is a lot of activity going on with the Bakken as you suggested our primary focus here to-date has been on dry gas process gas bringing that into an interstate system and moving that through our system. We’ve got a number of projects that we’ve announced kind of on a go forward basis and are looking to add to those in the future. We’ve also kind of talked internally about other opportunities to deal with more higher liquid gas and kind of what role we can play there and I guess we’re still kind of developing some of that and hope to move forward with that on a go forward basis. On the pure oil side, I think the, at least if you look at some of the information that’s been published by the State of North Dakota there would suggest anyway that there is sufficient oil takeaway capacity out of the area kind of ask things ramp up. There is a number of projects and expansion that have been announced by others. We certainly look and is there a way for us to participate in some of that as well. Steve Maresca – Morgan Stanley: Okay. Thanks a lot over that.

Thank you, Steve.

Your next question comes from the line of Timm Schneider of Citi. Timm Schneider – Citi: Hey guys. How is it going?

Good Tim. Good morning. Timm Schneider – Citi: Good morning. First question is on the oil production side, I see it’s now you expected to grow about 1% to 5% versus 5% to10% before. Is that just a function of the inclement weather in Q2?

Yeah, Tim, clearly the weather had an impact on 2Q and there is also a tailing effect there. The weather impacted the whole industry. Everyone was slowed down and so we have all got a little bit of a backlog to take care of as we go forward. Although I must have meant we’re in fidelity we’re in pretty good shape on that. So, it was the impact and I think what we need to do is ramp-up our activity level to hit at the higher levels of growth we’re looking for down the road. Timm Schneider – Citi: Got it. And it looks like you guys shuffled a couple of things between Mountrail and Stark. I think you’re now expecting to drill six wells and start versus 12 before. I know you took you are down a little bit in Stark and up slightly in Mountrail. Just wondering what the – what differences I guess you’re seeing so far in the two counties.

Yeah, that’s good to pickup on that. I think the real thing is we’re running two rigs in the Bakken. And we’ve got three areas with the Mountrail County, the Stark County, and then the recent acreage we picked up in Richland County, Montana. And what we’ll be doing is we’ll be adjusting where those two rigs go. But we’ll be running those rigs continuously and so the wells in each county could vary from time-to-time. I just wouldn’t read much into that. It’s just how we’re managing our logistics and our appraisal programs. Timm Schneider – Citi: Got it. Do you guys have any detail yet with respect to a difference in oil and costs kind of between those two areas or are those fairly similar?

You’re talking about from Mountrail to… Timm Schneider – Citi: Yeah, to Stark.

Yeah, I think Mountrail is clearly the better part of the basin, but as we’re finding in all the shale plays across the country, as we work in them longer, we’re able to improve them and we see the wells we’re offsetting today that were drilled a year and a half ago are doing significantly better. So, I think Mountrail, better part of the play. We’ve been there longer as an industry and so I would expect the other areas to improve with time as well. Timm Schneider – Citi: Okay, thanks. So I’ll get back in queue.

(Operator Instructions) Your next question comes from the line of Monroe Helm of Barrow, Hanley. Monroe Helm – Barrow, Hanley: Just a quick – couple of quick question to one on – you’re drilling the wells, you’ve completed Mountrail County. It looks like maybe you’re a little bit more aggressive on the lateral links in the frac stages, is that right and does that pretend to change in your drilling program?

Monroe, on the two wells I think you’re talking about the Behr and the Hill well, those were 1280 acre spacing wells, kind of two mile laterals is I’d like to refer to them. We did go with 30 stages in each, which I think not only for ourselves, but as industry we’re starting to see that that looks like a good quantity to go with for that length of lateral. And I think we’re very encouraged with the rates we got from those wells. So we will continue with that mindset as we go forward with the rest of our development there. Monroe Helm – Barrow, Hanley: Okay. And did you have any results to release in Stark County for the quarter?

No, we did not release that. We’ve got three wells down there. We’re in the early stage. When we first bring them on they plow and then we need to clean them out and put them on pump, and that has been one of the activities that’s been delayed with the bad weather. We had a lot of problems getting in the pumping unit and etcetera. So, we’re still in the process of getting them on pump so we can determine how well they’re doing. Monroe Helm – Barrow, Hanley: So, we could get the results of those wells in the next quarterly call?

We will keep you informed as we go forward. Monroe Helm – Barrow, Hanley: Okay. And is that mean you might release those results before the next quarterly call?

I didn’t say that. Monroe Helm – Barrow, Hanley: No, you didn’t. Had one other question has to do with in the pipeline side or your having these expansion projects that you mentioned I was just wondering how what kind of rate of return do you get on those kind of projects and how those rates are set are they competitive in the marketplace or that negotiated with regulators someway?

Really, those are set based on market their negotiated rates with the individual parties. Monroe Helm – Barrow, Hanley: All right.

And we look to earn a reasonable return on investment in all of those projects. Monroe Helm – Barrow, Hanley: Okay. Can you give us a range for what a reasonable rate of return would be?

Probably a typical kind of regulated return with hopefully some upside with the increase in volumes, so kind of a typical FERC regulated return. Monroe Helm – Barrow, Hanley: Okay, thank you.

Thank you.

Your next question comes from the line of Stephen Huang of Carlson Capital. Stephen Huang – Carlson Capital: Hi, good morning guys.

Good morning Stephen. Stephen Huang – Carlson Capital: I had a question just on with the expansion of the E&P business now even more so. Terry what were you thinking about the comp position of the business mixes and do you want to bring the other businesses back more in line at some point?

Steve, a good question, we talked about that in the past. We like a nice balance of regulated businesses and that’s certainly has been the trend over the last few years. I think right now regulated side of the business if you look at our earnings is now over 40% just a couple years ago and it slipped back as the other business units grew. So – and we like the base of regulated businesses with the growth upside potential of the non-regulated businesses. We’ve always been very opportunistic. We’ll have the good fortune to have a number of areas on the E&P side that we can evaluate and grow out and drill now. So, it appears right now that that’s where a little more capital is being spent and that’s because we got the opportunities to do that, but we’re looking for growth in all of our business lines. Stephen Huang – Carlson Capital: But I think in the past you guys have mentioned in the construction business that there were some opportunity that you thought that you might come about, has those presented itself with the market being the way it is for the construction materials business?

I’ll take a shot, but as we noted in the release and we’ve got some Greenfield projects going, we put in some ready-mix plants and asphalt plants; we put in a new facility to handle liquid asphalt and Bill can comment on this as well. We continue to look for acquisition opportunities. Again we are opportunistic and we are also very disciplined in our approach as we look at those opportunities. Bill, would you like to add anything to that?

No, I think Terry you hit the nail on the head. Right now, there are opportunities that are probably the most optimistic for us are Greenfield opportunities. The acquisition market that continues to be slow, we are looking I think at every deal that is – that comes on the market, but we are getting better returns from Greenfield versus the acquisitions. Stephen Huang – Carlson Capital: Great. And the last question I have for you is on construction services. When you guys say more electrical and equipment sales, whether it was like one time assets sales are can you help explain what that was?

No. We actually have a business unit that manufactures and specializes in pullers and tensioners that are used in the transmission arena and distribution. So we are a manufacturer of those equipments and that’s what we are referring to in the second quarter release. Stephen Huang – Carlson Capital: Okay, great. Thank you.

Your next question comes from the line of John Hanson of Praesidis. John Hanson – Praesidis: Good morning.

Good morning John. John Hanson – Praesidis: Could we have just an update on the Montana-Alberta line project. Just to what’s going on there?

Yeah. Currently that project is still being held up because of right away issues as you can remember in our call in March they had to get a piece of legislation through the Montana Legislature for eminent domain which did pass. Right now there is a group trying to get a petition to stop that new law going into effect. So the challenges are many when you’re dealing with the narrow line particularly when it comes to the land access and we haven’t had any activity, to speak up here in the second quarter and it’s really kind on hold. John Hanson – Praesidis: What kind of backlog do we have on that or is that, that’s now out of our backlog?

It is minimum backlog right now. John Hanson – Praesidis: Okay, thank you.

Your next question comes from the line is Timm Schneider of Citi. Timm Schneider – Citi: Follow-up on the wells you drilled in the Bakken if you have it hand did you have a 24 hour IP rate in the choke and casing pressure on those?

Yes, Tim. You’re more into these wells than I am even.

Well. If on the Behr well if my memory serves me right we came on in the first 24 hours at about 1500 barrels a say at somewhere over a couple of thousand PSI and then the Hill well was over 1600 barrels a day at around 1800 PSI. But I think as we compare from well to well it’s much more appropriate to look at the 30-day different companies have different philosophies, some will bring them on much stronger, we prefer not to do that. So, I think it’s more of a 30-day rate that’s the comparable one. Timm Schneider – Citi: Got it. And what’s your current Bakken production?

Its – well for second quarter we were between 37, 3800 barrels of oil per day. Timm Schneider – Citi: Got it. Thank you. And then just real quick on the material side, can you quantify what the impacts of weather was in the quarter?

Tim, we of course are getting back into some of the projects that have been negatively impacted, some of our new highway construction work is definitely slowed down. We can’t put a dollar and cents bigger too but we know by the end of the season for example our equipment cost and overtime cost will be up, but we can’t give you an exact dollar figure. It all depends of course on what kind of weather we have now through the end of the season. Timm Schneider – Citi: Okay, thanks. That’s it from me.

Your next question comes from the line of Chris Ellinghaus of Williams Capital. Chris Ellinghaus – Williams Capital: Hey, Bill. Can you just follow-up on that. Do you think you’d be able to catch up on any of the slowdown in the second quarter, in the third and fourth quarters?

Yes, we are optimistic Chris. One of the things that Terry didn’t mentioned in his opening comments because some of this stuff frankly is just happening over the last few days, but one of the things that is a positive force for the last half of the year is the flood repair work that we’re going to be doing in North Dakota as well as Iowa. As you probably know one was alluded to I think in the first question we got this morning, we are still in flood stage along the Missouri River and so whether it’s dike work, dike cleanup work or sandbags that you name it, there is a lot of rip-rap work. We’re procuring some of that work and we think that a lot of that work will help us out for the second half. Chris Ellinghaus – Williams Capital: Okay. Can you and John maybe address your backlogs and are you guys still being conservative? I’m kind of waiting for a turn on the backlogs. And we really haven’t seen that yet. Can you just address how you guys are treating the backlog these days?

Well I’ll jump in first and then let John go. Right now is the one thing that is really encouraging and here again Terry talked about it briefly in his opening remarks is the residential work in Northern California, our experience over the last 20 years, Chris has been is what happens in California really is a barometer for what will happen in surrounding states or maybe 12 to 18 months later. And so with this residential work, we have, I think four subdivisions that we’re working on right now, and that of course is a very, very good thing for us. But as we go forward, we think that maybe with some of the challenges on the Highway Bill side is that we’re going to make up not only in the residential market, but we’re going to continue to see just tremendous amounts of work in North Dakota. So, we’re bouncing on the bottom from the private side, but we think that the DOT works pending in North Dakota as well as this bounce back now in the residential side in California, I think that’s telling us that good days are ahead. The exact timing when we’ll lift off the bottom, I’m not exactly sure I can give you date on that right now. Chris Ellinghaus – Williams Capital: Okay. And just a followup on that before we get to John, is this the first quarter where you’ve actually started to show a material piece of the backlog from the private side?

We typically have been and for quite sometime I would say at least two years Chris our backlog has really been 90% plus on the public side and the balance in the private. And we think now here again with a lot of the work that’s happening in North Dakota, let me just talk about that just briefly for a second. There is just a tremendous amount of discussion not only on this call, but just in general about all the Bakken more. But what’s happening of course you imagine this and for those of you that have visited here you’ve seen this with your own eyes. But the infrastructure work not just on the highways, but dealing with all of the housing issues and right now, we are doing a lot of residential work now up for example in the Williston area and some of the subdivisions are substantially low. For example, Williston is a town of 15,000 and the subdivision that we’re working on right now has 2500 homes. So, we’re in there. We’re doing work in that area as well. So, we expect – to answer your question, we expect the private percentage of our backlog continue to grow and we’ll keep you up to date on that. Chris Ellinghaus – Williams Capital: Okay, good. John, you want to talk about the backlog?

Yeah, Chris, I’ve never been a top-line guy. I’m always a bottom-line guy and I’m always looking for margin. So, I’m not as concerned about my backlog is lot of other people just believe me. You can add that backlog which doesn’t mean you’re going to make any money Chris Ellinghaus – Williams Capital: Sure.

So, concentrate on your margins, concentrate on your costs make sure you got good people which you can execute and keep the customers happy. Chris Ellinghaus – Williams Capital: Okay, great. Can you talk about the Vegas market?

Well, actually visitor ship is up room rates are moving a little bit. We’re actually a project that was start in ‘09 on a huge power for seizures that we were working on as reached already here in the last couple of months. So we’ve got both of our electrical and mechanical operations working in there I mean Las Vegas is ground zero as far as the economy highest foreclosure rates probably the highest employment. So it’s a very tough area but we gradually or starting to see ourselves improve again a lot of our competitors are in tough shape. We have the best people in Las Vegas, Burnham (ph) and that’s always been our difference few good times and bad times. Chris Ellinghaus – Williams Capital: Okay, great. Thanks a lot guys.

Thanks Chris.

Your next question comes from the line of James Bellessa of DA Davidson. James Bellessa – DA Davidson: Good morning.

Good morning, Jim. James Bellessa – DA Davidson: The earnings in your first half have benefited from a lower tax rate than the earlier year but my calculation on a GAAP basis. You were down 630 basis points in tax rate what can you say about the tax rates going forward?

Jim, this is Nicole Kivisto. I’ll take that question we’ve got a couple of things influence in the tax rate both for the quarter and year-to-date. For the quarter we had an income tax benefit associated with the reduction in deferred taxes related to benefit and the second item which is more of a continuing item. We are continuing to see higher federal renewable energy credits and those relate to the wind farms that went into service in mid 2010. If you’re trying to get to from an annualized effective rate right now we estimating that would be in the 32% to 34% range. James Bellessa – DA Davidson: All-in tax rate for the year 32% to 33% did you say?

Yeah, around 32% to 34% for the year. Correct. James Bellessa – DA Davidson: 33, okay. And yet the first half was 29%. So, you’re expecting a higher second half tax rate obviously.

Right. We had some benefits that I just mentioned. The other one would be in the first quarter if you recollect on the first quarter call that was mentioned of an item. In the first quarter related to the favorable resolution of certain tax matters regarding our 2004 through 2006 audit cycle. So, we had a couple of items influenced in the year-to-date results. But on an annual basis, we’re thinking we’ll end up in the 32ish range. James Bellessa – DA Davidson: Okay. For construction services, the slide suggested that your mountain region margin had slipped. Is that primarily the manual issue?

Yes. James Bellessa – DA Davidson: Thank you very much.

(Operator Instructions) Your next question comes from the line of Monroe Helm of Barrow, Hanley. Monroe Helm – Barrow, Hanley: Just a follow-up given the increased capital expending in the E&P business which is historically for a lot of people were exploration productions not a great earnings generator maybe will be for you. But how should we think about your future and lot of the growing presence of E&P in the overall capital structure?

Monroe, that’s a good question. We paid dividends uninterrupted for 73 years. We continue to evaluate that dividend that’s part of the strategy of why our regulated business has grown and have grown significantly. So the dividend will continue to be an important part going forward that won’t change. Monroe Helm – Barrow, Hanley: It’s a dividend based just on the growth and the earnings of these regulated businesses or the unregulated business contributed to it?

The unregulated businesses contribute as well to the dividend. Monroe Helm – Barrow, Hanley: Thanks.

Thanks.

Your next question comes from the line of Stephen Huang of Carlson Capital. Stephen Huang – Carlson Capital: Hi guys. Just a follow-up on Bakken question here, I believe the base is spreads between Bakken and NYMEX is pretty wide now it is. How are you guys getting your oil out or are you guys trucking or railing it to that or do you guys have contract on the pipeline?

Yes, Steve. It actually the prices in the second quarter actually the differential narrowed. Again it was closer to $5 and we’re not seeing a dramatic change from now we’re early it was in the $10. So I think what we’re seeing is that the various transportation routes out of the basin or sort of keeping tab supply and demand is working and therefore we’ve seen that. So I think we’re not having any issues in getting our oil to market and we’re using various avenues that are available to us. Stephen Huang – Carlson Capital: And what’s the primary avenue that you guys use today. Are you guys using any truck, rail, pipes?

We’re using depending upon where our location is all of those, yes. Stephen Huang – Carlson Capital: When we look forward though I think the regional growth of oil production is faster than takeaway capacity, have you guys looked at some of your options as to while you guys are looking to send more through like Enbridge up north or the new one pipe proposal or how are you guys thinking about all that?

Well, we look at it from the industry perspective and I think I mean only time will tell as these projects go forward, but I think sufficient capacity is been developed over the next 18 months to keep track of or keep pace with the supply. So we’ll see if it all plays out that way. But it’s looking reasonable at this point. Stephen Huang – Carlson Capital: Okay, great. Thank you.

Your next question comes from the line of Timm Schneider of Citi. Timm Schneider – Citi: Hi, guys. This is my last follow-up. With respect to the Niobrara you bumped that up to four wells in ’11 from two earlier and then you’ve reduced 12 to 8 wells from 12, is that just a timing issue or is there something going on in the Niobrara that has let you guys to reduce your well counts there in ’12?

Yes, Timm, what we are doing is we’ll be moving our rig there in the fourth quarter and we are going to drill four what I’d call appraisal wells. We actually have three blocks in the Niobrara and we are going to drill two wells on each of the two southern blocks and based on how those wells go we’ll dictate what the development will be for there and then we will also look at what further appraisal work we do on the northern block. So I wouldn’t read too much in it. If we see some encouraging results from those appraisal wells which we’re expecting then we’ll look to add more activity in that area going forward. Timm Schneider – Citi: All right. And did you guys disclose how much you paid for the 20,000 acres in the Bakken?

I don’t believe so. Timm Schneider – Citi: Okay, all right. Thank you.

This marks the last call for questions. (Operator Instructions) This call will be available for replay beginning at 2:00 PM Eastern Time today through 11:59 PM Eastern Time on August 16. The conference ID number for the replay is 73996248. Again, the conference ID number for the replay is 73996248. Terry Hildestad – President and Chief Executive Officer: Okay. And I guess I’ll close it off with a thank you. We appreciate your participation on the call today. I remind everybody we have an analyst tour on the 17th and 18th. We’ll have presentations from all of the operating companies at that time. We’ll highlight the E&P Group will be in Denver. Look forward to speaking with you again soon.

This concludes today’s MDU Resources Group conference call. Thank you for your participation. You may now disconnect.