On Monday, MDU Resources Group announced that due to low crude prices the company will be waiting until at least 2016 to attempt selling its North Dakota oil production division.
According to a report by Reuters, MDU had previously attempted to sell its Fidelity Exploration and Production division, but last month decided to postpone the sale. MDU is a conglomerate company which operates various firms such as a construction company and a utility which produces much of North Dakota’s electricity. But, due to the drop in crude oil prices and the global supply glut, the business has been less profitable. Any sale of assets at this point in time would be priced too inexpensive.
Because of the current market climate, any sale made by MDU would likely come after December, reports Reuters. MDU CEO Dave Goodin commented that the company will instead shift its focus to its existing divisions and will try to determine the appropriate timing for marketing its oil division. That exploration and production division anticipates producing 22 percent less oil this year compared to last. Also, this year it plans to spend $111 million on capital projects, considerably less than other producers in the Bakken.
Currently MDU is working with Calumet Specialty Products Partners on the construction of a refinery in Dickinson, North Dakota. The facility was originally scheduled to begin operations in December but poor weather conditions have caused construction delays. The company projects the facility will be online by June. The company is also considering building a refinery in the Minot area, but a decision isn’t expected to be made before next year.
The announcement of the delayed sale was made on the same day that MDU released its fourth-quarter net income of $84.1 million which equates to about 43 cents per share. This is an eight percent decrease from the same time last year. In the last six months, MDU shares have dropped in value by 27 percent and closed on Monday at $22.80.