Good morning. My name is Regina and I will be your conference facilitator. At this time I would like to welcome everyone to the MDU Resources Group’s First Quarter 2012, 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 p.m. Eastern time today through 11:59 p.m. Eastern time on May 15th. The conference I.D. number for the replay is 66804286. Again, the conference I.D. number for the replay is 66804286. The number to dial for the replay is 1-855-859-2056 or 404-537-3406. I would now like to 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.

Thank you and welcome to our Earnings Release Conference Call. Before I turn the presentation over to Terry Hildestad our President and Chief Executive Officer, I'd 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 would 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 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 and the Risk Factor section in our most recent Form 8-K. Our format today will include formal remarks by Terry, followed by a Q&A session. Other members of our management team who will be available to answer questions during the Q&A session of the conference call today are: Steven Bietz, President and CEO of WBI Holdings; Dave Goodin, President and CEO of Montana-Dakota, Great Plains Natural Gas, Cascade Natural Gas, and InterMountain Gas; John Harp, CEO of Knife River Corporation and MDU Contruction Services; Kent Wells, President and CEO of Fidelity Exploration of Production; Bill Schneider, Executive Vice President of Bakken Development; Nicole Kivisto, Vice President, Controller, and Chief Accounting Officer for MDU Resources. With that, I'll turn the presentation over to Terry for his formal remarks. Terry?

Thank you, Doran. Good morning. Thank you for joining us today to discuss our first quarter results. Our year is off to a solid start. Our businesses are performing well in spite of unseasonably warm temperatures and commodity price challenges. We believe this is a good indication of the strength of our diversified business and a solid base on which to continue to build. Consolidated earnings were $35.6 million, or $0.19 cents per share. That's at the top of our first quarter guidance range. This compares to $42.8 million, or $0.23 cents per share, in the first quarter of 2011. I need to point out that in 2011,earnings did reflect an approximate $4 million dollar income tax benefit. Now moving on to our individual companies, I'll begin with our E&P business. We are excited. Our increased rig activity is resulting in significant oil production growth. Oil production increased 19% over the same period last year. That's accounting for 36% of production for the quarter. We're well on our way to achieving our oil production goal of 20% to 30% growth for the year. We now have 10 rigs actively drilling, with all focused on oil- and liquid-rich plays. Eight rigs have been added in the past year. We did experience some oil and natural gas pricing challenges this year that negatively affected earnings by $6.5 million dollars. First, as it relates to oil, historically in the Bakken, we've experience a discount averaging around $10.00 compared to WTI prices. In March the spread widened to about $20.00. The good news is the spread narrowed in April to approximately $20.00 and the outlook is for the spread to continue to improve throughout the year. Averaged realized natural gas prices were 32% lower in the first quarter compared to a year ago. Our…

(Operator instructions) We will pause for just a moment to compile the Q & A roster. Your first question will come from the line of Paul Patterson with Glenrock.

Good morning. Can you hear me?

Good morning, Paul. I can hear you loud and clear.

The pipeline and energy services business, when we're looking at these lower storage services and what have you, how much of this is weather, and, I guess, when we look at the projects and everything that you have going on, how much do you think you'll be able to off-set that going forward, this year?

Paul, this is Steve Bietz. If you look at the decrease in storage, that's been driven largely by differentials between summer and winter prices. There just wasn't a financial incentive for companies to put gas in storage last year, so we saw little activity and we're kind of seeing the effects of that going forward. On the positive side is we've gotten in here, into April and now the first day of May. We've seen pretty good pickup in terms of interest in storage. I think for the month of April we've moved over 4 BCF of gas to storage so that's very encouraging and we'll kind of see how that continues as we go forward for the rest of the year.

Okay, and then on the electric side of the utility side, it looked like fuel and purchase power went up a lot more than revenues. I was just wondering what caused that sort of anomaly, or is that an anomaly? What caused that?

Good morning Paul, this is Dave. Basically that was a function of the MISO market is what we were seeing there. Again, we're more of a buyer today then we were several years ago so far as a net buyer of energy and that is really largely recovered through our fuel clause adjustment through our electric service territories. That's why the revenues are correspondingly up is because some of the wholesale prices were also up.

Okay. With respect to the construction services, it looks like a great improvement there. Anything in particular, any specific area, that's doing better there or is that just operating leverage? I mean, how should we think about that?

Yes Paul. The interesting thing about our quarter, if you look at all of our groups that are inside or outside our industrial and equipment site, all of our lines of business were up across the board for the quarter.

You're just seeing a better economy, right? I guess, is that how to think about it?

Well again, I've always said this, we have the best people in the industry, and we really think that's the difference with our group. If you look at some of our peers, they're obviously still dealing with a tough economy, but we had some projects that finished well in the first quarter and I think we've got very good managers operating our companies out there. We continue to look out for opportunities and we hope we are bouncing off of the bottom here with the construction market and time will tell.

Okay. Finally, the King creek, just in general, are you guys reappraising Paradox, in terms of CapEx? As I recall, it was only 10% of EMP CapEx for this year. Has that changed, have you guys thought about concentrating on it more with this development or how should we think of that?

Yes Paul, its Kent. Obviously the 262L's are very exciting and encouraging wells for us. We put together an appraisal program of drilling four wells and we will continue on with doing that but we are looking to expand upon that. Obviously, we've cracked a few concerns that we've had in the past that make this look more appealing. It's a little early to say but I think there's a lot of good things to come from this area.

Let's hope so. Thanks a lot

Thank you, Paul.

You're next question will come from the line of Timm Schneider with Citigroup.

Hey guys, how's it going?

Good morning Timm.

Hey, first question is a follow-up on the Paradox. You guys increased the upper band of DUR guidance pretty substantially to a million barrels. I was just wondering what was driving that?

Well, Tim, its Kent. Once again, you can tell from our announcement, it was a very prolific well that we see in the 26-2. I think the subtleties that are there, we only perforated 116-feet in a 1,000-foot lateral and it’s got enormous pressure behind it. There is a well 5 miles away that cumed 1.1 million barrels, it was drilled in 1962, and don't quote me on this, but I think it came on at a very similar rates to what our well did. We just felt that capping it at 500,000 barrels a day with that well, plus a couple of other wells that have cumed in the 600,000 barrels a day was being a little bit too conservative. We've upped that because we've learned a lot in the last six months here. We're going to learn some more and we think there's even additional upside as we better understand this reservoir through our 3D-seismic and our ability to drill and complete these wells efficiently.

Can you remind us what the completed well costs are in the Paradox?

They’re in the range of $6 million. I think as we get into development mode we can improve upon that. One of the things we’re learning is the 1.1 million barrel well was actually a vertical well, not a horizontal well. We believe that we will end up fully developing our 75,000 acres out here through a combination of vertical and horizontal wells. Obviously the vertical wells would be significantly cheaper than the $6 million range that I mentioned to you.

What’s the oil quality out there?

It’s good quality oil. The production issue we have to manage is paraffin and that was one of the issues that we resolved. We've got an injection string and we're pumping a paraffin inhibitor. It's kind of the reason that we're holding production down around 600 barrels a day, just to make sure we're really good at that. Until we get pipelines in to collect the associated gas, we don't want to have an overabundance of flaring in that area. Good quality oil, we just need to manage the paraffin associated with it.

I'm assuming the end market Utah refining plant at this point?

Yes. We're trucking it to Salt Lake right now.

Okay. Then just switching real quick over to the Bakken. Sorry, I jumped out a couple of minutes late. You guys said there were some operational issues in Stark County, is that correct? Is that why you don't have the results on those two other county wells?

Yes, on the Parker and the Costa Lucky, which are both very, very good wells. On the Parker well, we were about halfway through the 28-horizontal fracking of it and we screened out, so we had to switch to sliding sleeve to plug and perf. That did two things, it delayed it a month of us getting it completed and then because we had an obstruction that we are currently in the process of cleaning it out to get the full well on production. So we have had some production from the latter stages that we did during the plug and perf and it was a good rate but we haven't really got the whole well on production. The cost of Luck was slightly different in that the frack job went perfectly and as we were just starting a flow of that, we got an obstruction in our frack liner. But, it's a high pressure well, so we've been flowing it out the backside just to depressurize it so we can get rid of the obstruction and put it on production properly. During that phase, the well was flowing well over a 1,000 barrels-a-day initially. So these are going to be good wells, it's just we have had some operational challenges getting them on proper production.

Okay, got it. Thanks guys.

Thanks Paul.

Your next question will come from the line of John Hanson with Presidus. [sounds like] John Hanson - Presidus Good morning.

Good morning, John.

Just want to follow-up a little bit, you haven't talked much about Texas but you've been in Texas for awhile, are you pursuing things close by or some of the other areas of Texas?

We continue to run one rig in our South Texas operations which is primarily a vertical play, very prolific, works well for us. We are in another area of Texas that we haven't disclosed yet and I think in due course we will disclose that but it could be in the next quarter or two.

Your next question will come from the line of Paul Ridzon with KeyBanc.

Good morning.

Good morning, Paul.

What is your latest mix, public versus private at the construction businesses?

Very heavily weighted, particularly at the materials businesses, 80%/90% probably in the public works area. We are hoping that at some point that will bottom out and that the private work will come back but a lot of public works in that area. In the Constructions Services Group, quite frankly, that's much more private oriented, actually don't have the breakdown on that because I think it's almost, just the opposite of the materials side of the business. It's mostly private, investor-owned utilities and so they are basically two different operations when you look at the mix between public and private, between our two construction companies.

Has the material side hit an inflection point yet or is it still deteriorating?

Well, you know, obviously you can see on our report our asphalt and our aggregate volumes were down over the quarter of last year, although our Readi-mix was up primarily due to Western North Dakota. We are hoping we have hit the bottom here. We'll have a lot better understanding as we go into the second and third quarter which is normally our busiest time of the year. But again, we are trying to pursue as much as we can on the private side, trying to improve our margins. And if our volumes are going to be down, we just have to be smarter on where we are spending our time and our energy to improve those margins going forward.

What are you seeing with regards to highway funding in D.C?

Well, as you know, it's on another 3-month extension and I think there will be another small extension before the election. And then hopefully after the election, people can start looking at a long term solution to funding which obviously would help the economy and obviously help the construction business, but I don't look for anything beyond getting us through the election as an extension. And I think the current one runs out here in June. So, another just short window of extending that.

Good, thank you.

This marks the last call for questions. (Operator instructions) This call will be available for replay beginning at 2:00 p.m. Eastern time today through 11:59 p.m. Eastern time on May 15th. The conference I.D. number for the replay is 66804286. Again, the conference I.D. number for the replay is 66804286. Your next question will come from the line of Sam Arnold with Brookfield.

Hi guys. Just wondering, could tell me what your AFE-ing at your wells for and the Bakken wells, maybe by county?

Yes. This is Kent, Sam. Our AFE cost range in the $8 million to $9 million range for the 2-mile horizontal laterals.

Okay. And that's in all the different counties, the Stark, Richland and Montreal?

Yes. We'll ultimately be a little cheaper out in Richland but right now when we are sort of in the exploratory/appraisal phase, we do some additional testing. That's our fully equipped, what it takes to get them online, et cetera. So that's drilling, completion, facilities, clean-outs, et cetera.

Okay. That's all I had, thank you.

Your next question will come from the line of Timm Schneider with Citigroup.

Hey, just a quick follow-up, do you guys have a location yet and the land, and all that taken care of for the topping plant?

Yes, Tim, this is Steve. We have selected a site and proceeded to secure that site. So we are moving forward with that project. We are looking forward to continuing our efforts there.

Okay. What's the next regulatory milestone, kind of, as far as approvals go that we should look for?

Right now we've got some engineering work that we expect to be done here in the next week or two. We've engaged an outside firm, and are working through some of the permitting issues. I don't have any key dates for you on that, but we're working through those. So, maybe we can update you as we go.

Again, this does mark the last call for questions. (Operator instructions)This call will be available for replay beginning at 2:00 p.m. Eastern time today, through 11:59 p.m. Eastern time on May 15th. The conference I.D. number for the replay is 66804286. Again the conference I.D. number for the replay is 66804286. (Operator instructions) At the time there are no further questions. I would now like to turn the conference back over to management for closing remarks.

Thank you, we appreciate your participation on our call today. We are excited about 2012 and beyond in all of our companies. We'll keep you updated as we move through the year. We hope to have an opportunity to speak with you again soon. Thank you for your interest in MDU resources.

This concludes today's MDU resources group conference call. Thank you for your participation, you may now disconnect.