WILLISTON, N.D., Feb 2 (Reuters) - MDU Resources Group Inc said on Monday it would wait until 2016 at the earliest to try and sell its North Dakota oil production division, citing low crude prices.
MDU, a conglomerate that also owns a construction company as wells as a utility that provides much of North Dakota’s electricity, had previously tried to sell its Fidelity Exploration and Production division arm before postponing the sale last month.
Crude oil prices have dropped sharply in recent months due to global oversupply, making the business far less profitable than even a year prior. A sale of any oil or natural gas asset now would likely come at a firesale price.
Given that, any sale now likely would come after December, the company said, with Chief Executive Dave Goodin noting that MDU’s focus will be on existing divisions and “determining the appropriate timing” of when to market the oil division.
Fidelity expects to produce 22 percent less oil this year compared to 2014 and to spend $111 million this year on capital projects.
The spending is low compared to peers in North Dakota’s Bakken shale formation. Fidelity, the 20th-largest North Dakota oil producer with daily output of roughly 10,000 barrels of oil equivalent, also operates in Texas and Wyoming.
The announcement came the same day MDU posted fourth-quarter net income of $84.1 million, or 43 cents per share, an 8 percent decrease from the year-ago period.
Together with Calumet Specialty Products Partners LP , MDU is building a refinery in Dickinson, North Dakota, the first U.S. refinery since the 1970s. The refinery was supposed to open by December, but was delayed due to weather-related construction delays and should be online by June, MDU said on Monday.
MDU is also considering building another refinery in Minot, North Dakota, near a large U.S. Air Force base, though executives said they don’t expect to make a decision before next year.
Shares of MDU have lost 27 percent of their value in the last six months, closing Monday at $22.80. (Reporting by Ernest Scheyder; Editing by Bernard Orr)