10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ______________

Commission file number 1-03480

MDU RESOURCES GROUP INC

(Exact name of registrant as specified in its charter)

Delaware	30-1133956
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1200 West Century Avenue

P.O. Box 5650

Bismarck, North Dakota 58506-5650

(Address of principal executive offices)

(Zip Code)

(701) 530-1000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	MDU	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of July 26, 2019: 199,058,947 shares.

Index
	Page
Definitions	3
Forward-Looking Statements	5
Introduction	5
Part I -- Financial Information
Item 1. Financial Statements	6
Consolidated Statements of Income -- Three and Six Months Ended June 30, 2019 and 2018	6
Consolidated Statements of Comprehensive Income -- Three and Six Months Ended June 30, 2019 and 2018	7
Consolidated Balance Sheets -- June 30, 2019 and 2018, and December 31, 2018	8
Consolidated Statements of Equity -- Six Months Ended June 30, 2019 and 2018	9
Consolidated Statements of Cash Flows -- Six Months Ended June 30, 2019 and 2018	10
Notes to Consolidated Financial Statements	11
1. Basis of presentation	11
2. Seasonality of operations	11
3. Accounts receivable and allowance for doubtful accounts	11
4. Inventories and natural gas in storage	12
5. Earnings per share	12
6. New accounting standards	12
7. Accumulated other comprehensive income (loss)	14
8. Revenue from contracts with customers	15
9. Business combinations	18
10. Discontinued operations	19
11. Leases	20
12. Goodwill and other intangible assets	22
13. Regulatory assets and liabilities	24
14. Fair value measurements	25
15. Debt	27
16. Cash flow information	28
17. Business segment data	28
18. Employee benefit plans	31
19. Regulatory matters	31
20. Contingencies	33
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3. Quantitative and Qualitative Disclosures About Market Risk	53
Item 4. Controls and Procedures	53
Part II -- Other Information
Item 1. Legal Proceedings	54
Item 1A. Risk Factors	54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 4. Mine Safety Disclosures	54
Item 6. Exhibits	54
Exhibits Index	55
Signatures	56

2

Definitions

The following abbreviations and acronyms used in this Form 10-Q are defined below:

Abbreviation or Acronym
2018 Annual Report	Company's Annual Report on Form 10-K for the year ended December 31, 2018
AFUDC	Allowance for funds used during construction
ASC	FASB Accounting Standards Codification
ASU	FASB Accounting Standards Update
Brazilian Transmission Lines	Company's former investment in companies owning three electric transmission lines in Brazil
BSSE	345-kilovolt transmission line from Ellendale, North Dakota, to Big Stone City, South Dakota
Calumet	Calumet Specialty Products Partners, L.P.
Cascade	Cascade Natural Gas Corporation, an indirect wholly owned subsidiary of MDU Energy Capital
Centennial	Centennial Energy Holdings, Inc., a direct wholly owned subsidiary of the Company
Centennial Capital	Centennial Holdings Capital LLC, a direct wholly owned subsidiary of Centennial
Centennial Resources	Centennial Energy Resources LLC, a direct wholly owned subsidiary of Centennial
Company	MDU Resources Group, Inc. (formerly known as MDUR Newco), which, as the context requires, refers to the previous MDU Resources Group, Inc. prior to January 1, 2019, and the new holding company of the same name after January 1, 2019
Coyote Creek	Coyote Creek Mining Company, LLC, a subsidiary of The North American Coal Corporation
Coyote Station	427-MW coal-fired electric generating facility near Beulah, North Dakota (25 percent ownership)
Dakota Prairie Refinery	20,000-barrel-per-day diesel topping plant built by Dakota Prairie Refining in southwestern North Dakota
Dakota Prairie Refining	Dakota Prairie Refining, LLC, a limited liability company previously owned by WBI Energy and Calumet (previously included in the Company's refining segment)
dk	Decatherm
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act
EPA	United States Environmental Protection Agency
Exchange Act	Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
Fidelity	Fidelity Exploration & Production Company, a direct wholly owned subsidiary of WBI Holdings (previously referred to as the Company's exploration and production segment)
GAAP	Accounting principles generally accepted in the United States of America
GHG	Greenhouse gas
Great Plains	Great Plains Natural Gas Co., a public utility division of the Company prior to the closing of the Holding Company Reorganization and a public utility division of Montana-Dakota as of January 1, 2019
Holding Company Reorganization	The internal holding company reorganization completed on January 1, 2019, pursuant to the agreement and plan of merger, dated as of December 31, 2018, by and among Montana-Dakota, the Company and MDUR Newco Sub, which resulted in the Company becoming a holding company and owning all of the outstanding capital stock of Montana-Dakota
Intermountain	Intermountain Gas Company, an indirect wholly owned subsidiary of MDU Energy Capital
Knife River	Knife River Corporation, a direct wholly owned subsidiary of Centennial
Knife River - Northwest	Knife River Corporation - Northwest, an indirect wholly owned subsidiary of Knife River
kWh	Kilowatt-hour
LIBOR	London Inter-bank Offered Rate
LWG	Lower Willamette Group
MD&A	Management's Discussion and Analysis of Financial Condition and Results of Operations
MDU Construction Services	MDU Construction Services Group, Inc., a direct wholly owned subsidiary of Centennial

3

MDU Energy Capital	MDU Energy Capital, LLC, a direct wholly owned subsidiary of the Company
MDUR Newco	MDUR Newco, Inc., a public holding company created by implementing the Holding Company Reorganization, now known as the Company
MDUR Newco Sub	MDUR Newco Sub, Inc., a direct, wholly owned subsidiary of MDUR Newco, which was merged with and into Montana-Dakota in the Holding Company Reorganization
MMcf	Million cubic feet
MMdk	Million dk
MNPUC	Minnesota Public Utilities Commission
Montana-Dakota	Montana-Dakota Utilities Co., (formerly known as MDU Resources Group, Inc.), a public utility division of the Company prior to the closing of the Holding Company Reorganization and a direct wholly owned subsidiary of MDU Energy Capital as of January 1, 2019
MTPSC	Montana Public Service Commission
MW	Megawatt
NDPSC	North Dakota Public Service Commission
Non-GAAP	Not in accordance with GAAP
OPUC	Oregon Public Utility Commission
Oregon DEQ	Oregon State Department of Environmental Quality
PRP	Potentially Responsible Party
ROD	Record of Decision
SEC	United States Securities and Exchange Commission
Securities Act	Securities Act of 1933, as amended
TCJA	Tax Cuts and Jobs Act
Tesoro	Tesoro Refining & Marketing Company LLC
VIE	Variable interest entity
Washington DOE	Washington State Department of Ecology
WBI Energy	WBI Energy, Inc., a direct wholly owned subsidiary of WBI Holdings
WBI Energy Transmission	WBI Energy Transmission, Inc., an indirect wholly owned subsidiary of WBI Holdings
WBI Holdings	WBI Holdings, Inc., a direct wholly owned subsidiary of Centennial
WUTC	Washington Utilities and Transportation Commission
WYPSC	Wyoming Public Service Commission

4

Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Exchange Act. Forward-looking statements are all statements other than statements of historical fact, including without limitation those statements that are identified by the words "anticipates," "estimates," "expects," "intends," "plans," "predicts" and similar expressions, and include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions (many of which are based, in turn, upon further assumptions) and other statements that are not statements of historical facts. From time to time, the Company may publish or otherwise make available forward-looking statements of this nature, including statements contained within Part I, Item 2 - MD&A - Business Segment Financial and Operating Data.

Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitation, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties. Nonetheless, the Company's expectations, beliefs or projections may not be achieved or accomplished.

Any forward-looking statement contained in this document speaks only as of the date on which the statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all the factors, nor can it assess the effect of each factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements, whether written or oral and whether made by or on behalf of the Company, are expressly qualified by the risk factors and cautionary statements reported in Part I, Item 1A - Risk Factors in the 2018 Annual Report and subsequent filings with the SEC.

Introduction

The Company is a regulated energy delivery and construction materials and services business. Montana-Dakota was incorporated under the laws of the state of Delaware in 1924. The Company was incorporated under the laws of the state of Delaware in 2018. Its principal executive offices are at 1200 West Century Avenue, P.O. Box 5650, Bismarck, North Dakota 58506-5650, telephone (701) 530-1000.

On January 2, 2019, the Company announced the completion of the Holding Company Reorganization, which resulted in Montana-Dakota becoming a subsidiary of the Company. The merger was conducted pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, which provides for the formation of a holding company without a vote of the stockholders of the constituent corporation. Immediately after consummation of the Holding Company Reorganization, the Company had, on a consolidated basis, the same assets, businesses and operations as Montana-Dakota had immediately prior to the consummation of the Holding Company Reorganization. As a result of the Holding Company Reorganization, the Company became the successor issuer to Montana-Dakota pursuant to Rule 12g-3(a) of the Exchange Act, and as a result, the Company's common stock was deemed registered under Section 12(b) of the Exchange Act.

The Company, through its wholly owned subsidiary, MDU Energy Capital, owns Montana-Dakota, Cascade and Intermountain. Montana-Dakota, Cascade and Intermountain are the natural gas distribution segment. Montana-Dakota also comprises the electric segment.

The Company, through its wholly owned subsidiary, Centennial, owns WBI Holdings, Knife River, MDU Construction Services, Centennial Resources and Centennial Capital. WBI Holdings is the pipeline and midstream segment, Knife River is the construction materials and contracting segment, MDU Construction Services is the construction services segment, and Centennial Resources and Centennial Capital are both reflected in the Other category.

For more information on the Company's business segments, see Note 17 of the Notes to Consolidated Financial Statements.

5

Part I -- Financial Information

Item 1. Financial Statements

MDU Resources Group, Inc.
Consolidated Statements of Income
(Unaudited)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands, except per share amounts)
Operating revenues:
Electric, natural gas distribution and regulated pipeline and midstream	$	236,247		$	226,684		$	675,864		$	651,143
Nonregulated pipeline and midstream, construction materials and contracting, construction services and other	1,067,326			837,913			1,718,900			1,389,747
Total operating revenues	1,303,573			1,064,597			2,394,764			2,040,890
Operating expenses:
Operation and maintenance:
Electric, natural gas distribution and regulated pipeline and midstream	88,415			83,928			176,186			170,042
Nonregulated pipeline and midstream, construction materials and contracting, construction services and other	932,616			738,156			1,547,759			1,252,898
Total operation and maintenance	1,021,031			822,084			1,723,945			1,422,940
Purchased natural gas sold	54,866			56,228			238,695			238,196
Depreciation, depletion and amortization	63,019			53,553			122,916			106,282
Taxes, other than income	47,953			40,757			101,982			89,610
Electric fuel and purchased power	19,393			17,983			45,696			40,494
Total operating expenses	1,206,262			990,605			2,233,234			1,897,522
Operating income	97,311			73,992			161,530			143,368
Other income	1,615			1,599			9,208			2,181
Interest expense	25,429			20,800			48,836			41,246
Income before income taxes	73,497			54,791			121,902			104,303
Income taxes	10,352			10,716			17,668			18,267
Income from continuing operations	63,145			44,075			104,234			86,036
Income (loss) from discontinued operations, net of tax (Note 10)	(1,320		)	(273		)	(1,483		)	203
Net income	$	61,825		$	43,802		$	102,751		$	86,239
Earnings per share - basic:
Income from continuing operations	$	.32		$	.22		$	.53		$	.44
Discontinued operations, net of tax	(.01		)	—			(.01		)	—
Earnings per share - basic	$	.31		$	.22		$	.52		$	.44
Earnings per share - diluted:
Income from continuing operations	$	.32		$	.22		$	.53		$	.44
Discontinued operations, net of tax	(.01		)	—			(.01		)	—
Earnings per share - diluted	$	.31		$	.22		$	.52		$	.44
Weighted average common shares outstanding - basic	198,270			195,524			197,341			195,415
Weighted average common shares outstanding - diluted	198,287			196,169			197,356			196,077

The accompanying notes are an integral part of these consolidated financial statements.

6

MDU Resources Group, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019		2018
	(In thousands)
Net income	$	61,825	$	43,802		$	102,751	$	86,239
Other comprehensive income:
Reclassification adjustment for loss on derivative instruments included in net income, net of tax of $36 and $53 for the three months ended and $(213) and $109 for the six months ended in 2019 and 2018, respectively	111		95			508		187
Amortization of postretirement liability losses included in net periodic benefit cost, net of tax of $89 and $145 for the three months ended and $189 and $300 for the six months ended in 2019 and 2018, respectively	276		449			586		867
Foreign currency translation adjustment:
Foreign currency translation adjustment recognized during the period, net of tax of $0 and $(13) for the three months ended and $0 and $(14) for the six months ended in 2019 and 2018, respectively	—		(59		)	—		(61		)
Reclassification adjustment for foreign currency translation adjustment included in net income, net of tax of $0 and $75 for the three months ended and $0 and $75 for the six months ended in 2019 and 2018, respectively	—		249			—		249
Foreign currency translation adjustment	—		190			—		188
Net unrealized gain (loss) on available-for-sale investments:
Net unrealized gain (loss) on available-for-sale investments arising during the period, net of tax of $21 and $(12) for the three months ended and $31 and $(39) for the six months ended in 2019 and 2018, respectively	79		(43		)	118		(148		)
Reclassification adjustment for loss on available-for-sale investments included in net income, net of tax of $3 and $10 for the three months ended and $10 and $17 for the six months ended in 2019 and 2018, respectively	12		34			40		64
Net unrealized gain (loss) on available-for-sale investments	91		(9		)	158		(84		)
Other comprehensive income	478		725			1,252		1,158
Comprehensive income attributable to common stockholders	$	62,303	$	44,527		$	104,003	$	87,397

The accompanying notes are an integral part of these consolidated financial statements.

7

MDU Resources Group, Inc.
Consolidated Balance Sheets
(Unaudited)
	June 30, 2019			June 30, 2018			December 31, 2018
(In thousands, except shares and per share amounts)
Assets
Current assets:
Cash and cash equivalents	$	71,966		$	41,659		$	53,948
Receivables, net	890,579			743,687			722,945
Inventories	325,944			278,239			287,309
Prepayments and other current assets	155,893			52,035			119,500
Current assets held for sale	428			572			430
Total current assets	1,444,810			1,116,192			1,184,132
Investments	145,746			140,053			138,620
Property, plant and equipment	7,625,654			6,975,919			7,397,321
Less accumulated depreciation, depletion and amortization	2,903,274			2,758,163			2,818,644
Net property, plant and equipment	4,722,380			4,217,756			4,578,677
Deferred charges and other assets:
Goodwill	679,395			642,374			664,922
Other intangible assets, net	11,323			4,190			10,815
Operating lease right-of-use assets (Note 11)	118,795			—			—
Other	466,957			409,407			408,857
Noncurrent assets held for sale	2,087			3,998			2,087
Total deferred charges and other assets	1,278,557			1,059,969			1,086,681
Total assets	$	7,591,493		$	6,533,970		$	6,988,110
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings	$	89,983		$	—		$	—
Long-term debt due within one year	51,822			109,199			251,854
Accounts payable	356,059			330,926			358,505
Taxes payable	46,731			47,803			41,929
Dividends payable	40,225			38,714			39,695
Accrued compensation	71,508			53,933			69,007
Current operating lease liabilities (Note 11)	31,615			—			—
Other accrued liabilities	218,442			208,696			221,059
Current liabilities held for sale	6,217			11,713			4,001
Total current liabilities	912,602			800,984			986,050
Long-term debt	2,327,984			1,743,711			1,856,841
Deferred credits and other liabilities:
Deferred income taxes	457,588			362,896			430,085
Noncurrent operating lease liabilities (Note 11)	87,172			—			—
Other	1,145,846			1,175,301			1,148,359
Total deferred credits and other liabilities	1,690,606			1,538,197			1,578,444
Commitments and contingencies
Stockholders' equity:
Common stock
Authorized - 500,000,000 shares, $1.00 par value Shares issued - 199,539,110 at June 30, 2019, 196,557,245 at June 30, 2018 and 196,564,907 at December 31, 2018	199,539			196,557			196,565
Other paid-in capital	1,315,511			1,245,858			1,248,576
Retained earnings	1,185,967			1,056,424			1,163,602
Accumulated other comprehensive loss	(37,090		)	(44,135		)	(38,342		)
Treasury stock at cost - 538,921 shares	(3,626		)	(3,626		)	(3,626		)
Total stockholders' equity	2,660,301			2,451,078			2,566,775
Total liabilities and stockholders' equity	$	7,591,493		$	6,533,970		$	6,988,110

The accompanying notes are an integral part of these consolidated financial statements.

8

MDU Resources Group, Inc.
Consolidated Statements of Equity
(Unaudited)
Six Months Ended June 30, 2019
				Other Paid-in Capital			Retained Earnings			Accumu-lated Other Compre-hensive Loss
	Common Stock												Treasury Stock
	Shares	Amount											Shares		Amount			Total
	(In thousands, except shares)
At December 31, 2018	196,564,907	$	196,565	$	1,248,576		$	1,163,602		$	(38,342	)	(538,921	)	$	(3,626	)	$	2,566,775
Net income	—	—		—			40,926			—			—		—			40,926
Other comprehensive income	—	—		—			—			774			—		—			774
Dividends declared on common stock	—	—		—			(40,019		)	—			—		—			(40,019		)
Stock-based compensation	—	—		1,617			—			—			—		—			1,617
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	246,214	246		(3,261		)	—			—			—		—			(3,015		)
Issuance of common stock	1,505,687	1,506		37,128			—			—			—		—			38,634
At March 31, 2019	198,316,808	$	198,317	$	1,284,060		$	1,164,509		$	(37,568	)	(538,921	)	$	(3,626	)	$	2,605,692
Net income	—	—		—			61,825			—			—		—			61,825
Other comprehensive income	—	—		—			—			478			—		—			478
Dividends declared on common stock	—	—		—			(40,367		)	—			—		—			(40,367		)
Stock-based compensation	—	—		1,742			—			—			—		—			1,742
Issuance of common stock	1,222,302	1,222		29,709			—			—			—		—			30,931
At June 30, 2019	199,539,110	$	199,539	$	1,315,511		$	1,185,967		$	(37,090	)	(538,921	)	$	(3,626	)	$	2,660,301

Six Months Ended June 30, 2018
				Other Paid-in Capital			Retained Earnings			Accumu-lated Other Compre-hensive Loss
	Common Stock												Treasury Stock
	Shares	Amount											Shares		Amount			Total
	(In thousands, except shares)
At December 31, 2017	195,843,297	$	195,843	$	1,233,412		$	1,040,748		$	(37,334	)	(538,921	)	$	(3,626	)	$	2,429,043
Cumulative effect of adoption of ASU 2014-09	—	—		—			(970		)	—			—		—			(970		)
Adjusted balance at January 1, 2018	195,843,297	195,843		1,233,412			1,039,778			(37,334		)	(538,921	)	(3,626		)	2,428,073
Net income	—	—		—			42,437			—			—		—			42,437
Other comprehensive income	—	—		—			—			433			—		—			433
Reclassification of certain prior period tax effects from accumulated other comprehensive loss	—	—		—			7,959			(7,959		)	—		—			—
Dividends declared on common stock	—	—		—			(38,705		)	—			—		—			(38,705		)
Stock-based compensation	—	—		1,223			—			—			—		—			1,223
Repurchase of common stock	—	—		—			—			—			(182,424	)	(5,020		)	(5,020		)
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	—	—		(7,350		)	—			—			182,424		5,020			(2,330		)
At March 31, 2018	195,843,297	$	195,843	$	1,227,285		$	1,051,469		$	(44,860	)	(538,921	)	$	(3,626	)	$	2,426,111
Net income	—	—		—			43,802			—			—		—			43,802
Other comprehensive income	—	—		—			—			725			—		—			725
Dividends declared on common stock	—	—		—			(38,847		)	—			—		—			(38,847		)
Stock-based compensation	—	—		1,294			—			—			—		—			1,294
Issuance of common stock	713,948	714		17,279			—			—			—		—			17,993
At June 30, 2018	196,557,245	$	196,557	$	1,245,858		$	1,056,424		$	(44,135	)	(538,921	)	$	(3,626	)	$	2,451,078

9

MDU Resources Group, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
	Six Months Ended
	June 30,
	2019			2018
	(In thousands)
Operating activities:
Net income	$	102,751		$	86,239
Income (loss) from discontinued operations, net of tax	(1,483		)	203
Income from continuing operations	104,234			86,036
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization	122,916			106,282
Deferred income taxes	22,753			4,186
Changes in current assets and liabilities, net of acquisitions:
Receivables	(171,304		)	(13,853		)
Inventories	(36,302		)	(47,396		)
Other current assets	(32,088		)	29,072
Accounts payable	1,398			15,748
Other current liabilities	15,585			7,849
Other noncurrent changes	(50,822		)	(11,566		)
Net cash provided by (used in) continuing operations	(23,630		)	176,358
Net cash provided by discontinued operations	735			224
Net cash provided by (used in) operating activities	(22,895		)	176,582
Investing activities:
Capital expenditures	(281,674		)	(210,612		)
Acquisitions, net of cash acquired	(30,868		)	(20,009		)
Net proceeds from sale or disposition of property and other	8,197			9,286
Investments	(713		)	(916		)
Net cash used in investing activities	(305,058		)	(222,251		)
Financing activities:
Issuance of short-term borrowings	119,977			—
Repayment of short-term borrowings	(30,000		)	—
Issuance of long-term debt	368,975			240,746
Repayment of long-term debt	(99,961		)	(103,521		)
Proceeds from issuance of common stock	69,565			—
Dividends paid	(79,570		)	(77,145		)
Repurchase of common stock	—			(5,020		)
Tax withholding on stock-based compensation	(3,015		)	(2,330		)
Net cash provided by financing activities	345,971			52,730
Effect of exchange rate changes on cash and cash equivalents	—			(1		)
Increase in cash and cash equivalents	18,018			7,060
Cash and cash equivalents -- beginning of year	53,948			34,599
Cash and cash equivalents -- end of period	$	71,966		$	41,659

The accompanying notes are an integral part of these consolidated financial statements.

10

MDU Resources Group, Inc.

Notes to Consolidated

Financial Statements

June 30, 2019 and 2018

(Unaudited)

Note 1 - Basis of presentation

The accompanying consolidated interim financial statements were prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Interim financial statements do not include all disclosures provided in annual financial statements and, accordingly, these financial statements should be read in conjunction with those appearing in the 2018 Annual Report. The information is unaudited but includes all adjustments that are, in the opinion of management, necessary for a fair presentation of the accompanying consolidated interim financial statements and are of a normal recurring nature. Depreciation, depletion and amortization expense is reported separately on the Consolidated Statements of Income and therefore is excluded from the other line items within operating expenses.

On January 2, 2019, the Company announced the completion of the Holding Company Reorganization, which resulted in Montana-Dakota becoming a subsidiary of the Company. The purpose of the reorganization was to make the public utility division into a subsidiary of the holding company, just as the other operating companies are wholly owned subsidiaries.

Effective January 1, 2019, the Company adopted the requirements of the ASU on leases, as further discussed in Notes 6 and 11. As such, results for reporting periods beginning January 1, 2019, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting for leases.

The assets and liabilities for the Company's discontinued operations have been classified as held for sale and the results of operations are shown in income (loss) from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. At the time the assets were classified as held for sale, depreciation, depletion and amortization expense was no longer recorded. Unless otherwise indicated, the amounts presented in the accompanying notes to the consolidated financial statements relate to the Company's continuing operations. For more information on the Company's discontinued operations, see Note 10.

Management has also evaluated the impact of events occurring after June 30, 2019, up to the date of issuance of these consolidated interim financial statements.

Note 2 - Seasonality of operations

Some of the Company's operations are highly seasonal and revenues from, and certain expenses for, such operations may fluctuate significantly among quarterly periods. Accordingly, the interim results for particular businesses, and for the Company as a whole, may not be indicative of results for the full fiscal year.

Note 3 - Accounts receivable and allowance for doubtful accounts

Accounts receivable consists primarily of trade receivables from the sale of goods and services which are recorded at the invoiced amount net of allowance for doubtful accounts, and costs and estimated earnings in excess of billings on uncompleted contracts. The total balance of receivables past due 90 days or more was $47.2 million, $36.6 million and $30.0 million at June 30, 2019 and 2018, and December 31, 2018, respectively.

The allowance for doubtful accounts is determined through a review of past due balances and other specific account data. Account balances are written off when management determines the amounts to be uncollectible. The Company's allowance for doubtful accounts at June 30, 2019 and 2018, and December 31, 2018, was $8.2 million, $7.8 million and $8.9 million, respectively.

11

Note 4 - Inventories and natural gas in storage

Natural gas in storage for the Company's regulated operations is generally carried at lower of cost or net realizable value, or cost using the last-in, first-out method. All other inventories are stated at the lower of cost or net realizable value. The portion of the cost of natural gas in storage expected to be used within one year was included in inventories. Inventories on the Consolidated Balance Sheets were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Aggregates held for resale	$	147,030	$	131,784	$	139,681
Asphalt oil	80,418		64,560		54,741
Materials and supplies	28,746		24,688		23,611
Merchandise for resale	27,167		17,502		22,552
Natural gas in storage (current)	15,841		13,774		22,117
Other	26,742		25,931		24,607
Total	$	325,944	$	278,239	$	287,309

The remainder of natural gas in storage, which largely represents the cost of gas required to maintain pressure levels for normal operating purposes, was included in deferred charges and other assets - other and was $48.2 million, $47.8 million and $48.5 million at June 30, 2019 and 2018, and December 31, 2018, respectively.

Note 5 - Earnings per share

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share is computed by dividing net income by the total of the weighted average number of shares of common stock outstanding during the applicable period, plus the effect of nonvested performance share awards and restricted stock units. Common stock outstanding includes issued shares less shares held in treasury. Net income was the same for both the basic and diluted earnings per share calculations. A reconciliation of the weighted average common shares outstanding used in the basic and diluted earnings per share calculations follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands, except per share amounts)
Weighted average common shares outstanding - basic	198,270		195,524		197,341		195,415
Effect of dilutive performance share awards and restricted stock units	17		645		15		662
Weighted average common shares outstanding - diluted	198,287		196,169		197,356		196,077
Shares excluded from the calculation of diluted earnings per share	—		—		93		—
Dividends declared per common share	$	.2025	$	.1975	$	.4050	$	.3950

Note 6 - New accounting standards

Recently adopted accounting standards

ASU 2016-02 - Leases In February 2016, the FASB issued guidance regarding leases. The guidance required lessees to recognize a lease liability and a right-of-use asset on the balance sheet for operating and financing leases. The guidance remained largely the same for lessors, although some changes were made to better align lessor accounting with the new lessee accounting and to align with the revenue recognition standard. The guidance also required additional disclosures, both quantitative and qualitative, related to operating and financing leases for the lessee and sales-type, direct financing and operating leases for the lessor. The Company adopted the standard on January 1, 2019.

In July 2018, the FASB issued ASU 2018-11 - Leases: Targeted Improvements, an accounting standard update to ASU 2016-02. This ASU provided an entity the option to adopt the guidance using one of two modified retrospective approaches. An entity could adopt the guidance using the modified retrospective transition approach beginning in the earliest year presented in the financial statements. This method of adoption would have required the restatement of prior periods reported and the presentation of lease disclosures under the new guidance for all periods reported. The additional transition method of adoption, introduced by ASU 2018-11, allowed entities the option to apply the guidance on the date of adoption by recognizing a cumulative effect adjustment to retained earnings during the period of adoption and did not require prior comparative periods to be restated.

The Company adopted the standard on January 1, 2019, utilizing the additional transition method of adoption applied on the date of adoption and the practical expedient that allowed the Company to not reassess whether an expired or existing contract contained a lease, the classification of leases or initial direct costs. The Company did not identify any cumulative effect

12

adjustments. The Company also adopted a short-term leasing policy as the lessee where leases with a term of 12 months or less are not included on the Consolidated Balance Sheet.

As a practical expedient, a lessee may choose not to separate nonlease components from lease components and instead account for lease and nonlease components as a single lease component. The election shall be made by asset class. The Company has elected to adopt the lease/nonlease component practical expedient for all asset classes as the lessee. The Company did not elect the practical expedient to use hindsight when assessing the lease term or impairment of right-of-use assets for the existing leases on the date of adoption.

In January 2018, the FASB issued a practical expedient for land easements under the new lease guidance. The practical expedient permits an entity to elect the option to not evaluate land easements under the new guidance if they existed or expired before the adoption of the new lease guidance and were not previously accounted for as leases under the previous lease guidance. Once an entity adopts the new guidance, the entity should apply the new guidance on a prospective basis to all new or modified land easements. The Company has adopted this practical expedient.

The Company formed a lease implementation team to review and assess existing contracts to identify and evaluate those containing leases. Additionally, the team implemented new and revised existing software to meet the reporting and disclosure requirements of the standard. The Company also assessed the impact the standard had on its processes and internal controls and identified new and updated existing internal controls and processes to ensure compliance with the new lease standard; such modifications were not deemed to be significant. During the assessment phase, the Company used various surveys, reconciliations and analytic methodologies to ensure the completeness of the lease inventory. The Company determined that most of the current operating leases were subject to the guidance and were recognized as operating lease liabilities and right-of-use assets on the Consolidated Balance Sheet upon adoption. On January 1, 2019, the Company recorded approximately $112 million to right-of-use assets and lease liabilities as a result of the initial adoption of the guidance. In addition, the Company evaluated the impact the new guidance had on lease contracts where the Company is the lessor and determined it did not have a significant impact to the Company's financial statements.

ASU 2018-15 - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract In August 2018, the FASB issued guidance on the accounting for implementation costs of a hosting arrangement that is a service contract. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract similar to the costs incurred to develop or obtain internal-use software and such capitalized costs to be expensed over the term of the hosting arrangement. Costs incurred during the preliminary and postimplementation stages should continue to be expensed as activities are performed. The capitalized costs are required to be presented on the balance sheet in the same line the prepayment for the fees associated with the hosting arrangement would be presented. In addition, the expense related to the capitalized implementation costs should be presented in the same line on the income statement as the fees associated with the hosting element of the arrangements. The Company adopted the guidance effective January 1, 2019, on a prospective basis. The adoption of the guidance did not have a material impact on its results of operations, financial position, cash flows, and disclosures.

Recently issued accounting standards not yet adopted

ASU 2016-13 - Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance on the measurement of credit losses on certain financial instruments. The guidance introduces a new impairment model known as the current expected credit loss model that will replace the incurred loss impairment methodology currently included under GAAP. This guidance requires entities to present certain investments in debt securities, trade accounts receivable and other financial assets at their net carrying value of the amount expected to be collected on the financial statements. The guidance will be effective for the Company on January 1, 2020, and must be applied on a modified retrospective basis with early adoption permitted. The Company does not expect the guidance to have a material impact on its results of operations, financial position, cash flows and disclosures.

ASU 2017-04 - Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued guidance on simplifying the test for goodwill impairment by eliminating Step 2, which required an entity to measure the amount of impairment loss by comparing the implied fair value of reporting unit goodwill with the carrying amount of such goodwill. This guidance requires entities to perform a quantitative impairment test, previously Step 1, to identify both the existence of impairment and the amount of impairment loss by comparing the fair value of a reporting unit to its carrying amount. Entities will continue to have the option of performing a qualitative assessment to determine if the quantitative impairment test is necessary. The guidance also requires additional disclosures if an entity has one or more reporting units with zero or negative carrying amounts of net assets. The guidance will be effective for the Company on January 1, 2020, and must be applied on a prospective basis with early adoption permitted. The Company is evaluating the guidance and does not expect it to have a material impact on its results of operations, financial position, cash flows and disclosures.

ASU 2018-13 - Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the FASB issued guidance on modifying the disclosure requirements on fair value measurements as part of the disclosure framework project. The guidance modifies, among other things, the disclosures required for Level 3 fair value measurements, including the range and weighted average of significant unobservable inputs. The guidance removes, among other things, the disclosure requirement to disclose transfers between Levels 1 and 2. The guidance will be effective for the Company on January 1, 2020, including interim periods,

13

with early adoption permitted. Level 3 fair value measurement disclosures should be applied prospectively while all other amendments should be applied retrospectively. The Company is evaluating the effects the adoption of the new guidance will have on its disclosures.

ASU 2018-14 - Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued guidance on modifying the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans as part of the disclosure framework project. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. The guidance adds, among other things, the requirement to include an explanation for significant gains and losses related to changes in benefit obligations for the period. The guidance removes, among other things, the disclosure requirement to disclose the amount of net periodic benefit costs to be amortized over the next fiscal year from accumulated other comprehensive income (loss) and the effects a one percentage point change in assumed health care cost trend rates will have on certain benefit components. The guidance will be effective for the Company on January 1, 2021, and must be applied on a retrospective basis with early adoption permitted. The Company is evaluating the effects the adoption of the new guidance will have on its disclosures.

Note 7 - Accumulated other comprehensive income (loss)

The after-tax changes in the components of accumulated other comprehensive income (loss) were as follows:

Six Months Ended June 30, 2019	Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Hedges			Postretirement Liability Adjustment			Net Unrealized Gain (Loss) on Available-for-sale Investments			Total Accumulated Other Comprehensive Loss
	(In thousands)
At December 31, 2018	$	(2,161	)	$	(36,069	)	$	(112	)	$	(38,342	)
Other comprehensive income before reclassifications	—			—			39			39
Amounts reclassified from accumulated other comprehensive loss	397			310			28			735
Net current-period other comprehensive income	397			310			67			774
At March 31, 2019	$	(1,764	)	$	(35,759	)	$	(45	)	$	(37,568	)
Other comprehensive income before reclassifications	—			—			79			79
Amounts reclassified from accumulated other comprehensive loss	111			276			12			399
Net current-period other comprehensive income	111			276			91			478
At June 30, 2019	$	(1,653	)	$	(35,483	)	$	46		$	(37,090	)

Six Months Ended June 30, 2018	Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Hedges			Postretirement Liability Adjustment			Foreign Currency Translation Adjustment			Net Unrealized Gain (Loss) on Available-for-sale Investments			Total Accumulated Other Comprehensive Loss
	(In thousands)
At December 31, 2017	$	(1,934	)	$	(35,163	)	$	(155	)	$	(82	)	$	(37,334	)
Other comprehensive loss before reclassifications	—			—			(2		)	(105		)	(107		)
Amounts reclassified from accumulated other comprehensive loss	92			418			—			30			540
Net current-period other comprehensive income (loss)	92			418			(2		)	(75		)	433
Reclassification adjustment of prior period tax effects related to TCJA included in accumulated other comprehensive loss	(389		)	(7,520		)	(33		)	(17		)	(7,959		)
At March 31, 2018	$	(2,231	)	$	(42,265	)	$	(190	)	$	(174	)	$	(44,860	)
Other comprehensive loss before reclassifications	—			—			(59		)	(43		)	(102		)
Amounts reclassified from accumulated other comprehensive loss	95			449			249			34			827
Net current-period other comprehensive income (loss)	95			449			190			(9		)	725
At June 30, 2018	$	(2,136	)	$	(41,816	)	$	—		$	(183	)	$	(44,135	)

14

The following amounts were reclassified out of accumulated other comprehensive loss into net income. The amounts presented in parenthesis indicate a decrease to net income on the Consolidated Statements of Income. The reclassifications were as follows:

	Three Months Ended						Six Months Ended						Location on Consolidated Statements of Income
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Reclassification adjustment for loss on derivative instruments included in net income	$	(147	)	$	(148	)	$	(295	)	$	(296	)	Interest expense
	36			53			(213		)	109			Income taxes
	(111		)	(95		)	(508		)	(187		)
Amortization of postretirement liability losses included in net periodic benefit cost (credit)	(365		)	(594		)	(775		)	(1,167		)	Other income
	89			145			189			300			Income taxes
	(276		)	(449		)	(586		)	(867		)
Reclassification adjustment for loss on foreign currency translation adjustment included in net income	—			(324		)	—			(324		)	Other income
	—			75			—			75			Income taxes
	—			(249		)	—			(249		)
Reclassification adjustment on available-for-sale investments included in net income	(15		)	(44		)	(50		)	(81		)	Other income
	3			10			10			17			Income taxes
	(12		)	(34		)	(40		)	(64		)
Total reclassifications	$	(399	)	$	(827	)	$	(1,134	)	$	(1,367	)

Note 8 - Revenue from contracts with customers

Revenue is recognized when a performance obligation is satisfied by transferring control over a product or service to a customer. Revenue is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company is considered an agent for certain taxes collected from customers. As such, the Company presents revenues net of these taxes at the time of sale to be remitted to governmental authorities, including sales and use taxes.

As part of the adoption of ASC 606 - Revenue from Contracts with Customers, the Company elected the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less.

15

Disaggregation

In the following table, revenue is disaggregated by the type of customer or service provided. The Company believes this level of disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The table also includes a reconciliation of the disaggregated revenue by reportable segments. For more information on the Company's business segments, see Note 17.

Three Months Ended June 30, 2019	Electric		Natural gas distribution		Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	26,437	$	71,010	$	—		$	—		$	—		$	—		$	97,447
Commercial utility sales	33,231		41,250		—			—			—			—			74,481
Industrial utility sales	9,344		5,577		—			—			—			—			14,921
Other utility sales	1,879		—		—			—			—			—			1,879
Natural gas transportation	—		10,706		24,804			—			—			—			35,510
Natural gas gathering	—		—		2,396			—			—			—			2,396
Natural gas storage	—		—		2,623			—			—			—			2,623
Contracting services	—		—		—			297,124			—			—			297,124
Construction materials	—		—		—			444,768			—			—			444,768
Intrasegment eliminations*	—		—		—			(145,925		)	—			—			(145,925		)
Inside specialty contracting	—		—		—			—			319,276			—			319,276
Outside specialty contracting	—		—		—			—			133,288			—			133,288
Other	8,417		2,923		6,293			—			9			2,903			20,545
Intersegment eliminations	—		—		(7,513		)	(168		)	(721		)	(2,879		)	(11,281		)
Revenues from contracts with customers	79,308		131,466		28,603			595,799			451,852			24			1,287,052
Revenues out of scope	1,703		2,401		77			—			12,340			—			16,521
Total external operating revenues	$	81,011	$	133,867	$	28,680		$	595,799		$	464,192		$	24		$	1,303,573

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Three Months Ended June 30, 2018	Electric		Natural gas distribution		Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	26,752	$	68,688	$	—		$	—		$	—		$	—		$	95,440
Commercial utility sales	32,676		40,820		—			—			—			—			73,496
Industrial utility sales	8,226		5,227		—			—			—			—			13,453
Other utility sales	1,874		—		—			—			—			—			1,874
Natural gas transportation	—		10,084		21,287			—			—			—			31,371
Natural gas gathering	—		—		2,310			—			—			—			2,310
Natural gas storage	—		—		2,634			—			—			—			2,634
Contracting services	—		—		—			247,558			—			—			247,558
Construction materials	—		—		—			387,632			—			—			387,632
Intrasegment eliminations*	—		—		—			(125,567		)	—			—			(125,567		)
Inside specialty contracting	—		—		—			—			216,371			—			216,371
Outside specialty contracting	—		—		—			—			95,261			—			95,261
Other	8,425		3,614		4,326			—			103			2,757			19,225
Intersegment eliminations	—		—		(6,539		)	(235		)	(540		)	(2,667		)	(9,981		)
Revenues from contracts with customers	77,953		128,433		24,018			509,388			311,195			90			1,051,077
Revenues out of scope	546		1,107		42			—			11,825			—			13,520
Total external operating revenues	$	78,499	$	129,540	$	24,060		$	509,388		$	323,020		$	90		$	1,064,597

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

16

Six Months Ended June 30, 2019	Electric		Natural gas distribution			Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	62,993	$	271,619		$	—		$	—		$	—		$	—		$	334,612
Commercial utility sales	68,902		163,043			—			—			—			—			231,945
Industrial utility sales	18,228		14,188			—			—			—			—			32,416
Other utility sales	3,678		—			—			—			—			—			3,678
Natural gas transportation	—		22,276			49,862			—			—			—			72,138
Natural gas gathering	—		—			4,517			—			—			—			4,517
Natural gas storage	—		—			5,269			—			—			—			5,269
Contracting services	—		—			—			380,164			—			—			380,164
Construction materials	—		—			—			624,077			—			—			624,077
Intrasegment eliminations*	—		—			—			(181,066		)	—			—			(181,066		)
Inside specialty contracting	—		—			—			—			618,805			—			618,805
Outside specialty contracting	—		—			—			—			240,686			—			240,686
Other	17,538		6,836			8,989			—			26			10,747			44,136
Intersegment eliminations	—		—			(31,468		)	(264		)	(849		)	(10,704		)	(43,285		)
Revenues from contracts with customers	171,339		477,962			37,169			822,911			858,668			43			2,368,092
Revenues out of scope	2,239		(1,948		)	124			—			26,257			—			26,672
Total external operating revenues	$	173,578	$	476,014		$	37,293		$	822,911		$	884,925		$	43		$	2,394,764

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Six Months Ended June 30, 2018	Electric			Natural gas distribution		Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	61,935		$	261,574	$	—		$	—		$	—		$	—		$	323,509
Commercial utility sales	67,377			157,711		—			—			—			—			225,088
Industrial utility sales	16,996			13,036		—			—			—			—			30,032
Other utility sales	3,710			—		—			—			—			—			3,710
Natural gas transportation	—			21,263		43,105			—			—			—			64,368
Natural gas gathering	—			—		4,580			—			—			—			4,580
Natural gas storage	—			—		5,768			—			—			—			5,768
Contracting services	—			—		—			321,622			—			—			321,622
Construction materials	—			—		—			561,223			—			—			561,223
Intrasegment eliminations*	—			—		—			(159,837		)	—			—			(159,837		)
Inside specialty contracting	—			—		—			—			450,192			—			450,192
Outside specialty contracting	—			—		—			—			182,442			—			182,442
Other	16,678			7,613		7,652			—			17			5,452			37,412
Intersegment eliminations	—			—		(28,298		)	(336		)	(550		)	(5,306		)	(34,490		)
Revenues from contracts with customers	166,696			461,197		32,807			722,672			632,101			146			2,015,619
Revenues out of scope	(792		)	1,007		86			—			24,970			—			25,271
Total external operating revenues	$	165,904		$	462,204	$	32,893		$	722,672		$	657,071		$	146		$	2,040,890

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

17

Contract balances

The timing of revenue recognition may differ from the timing of invoicing to customers. The timing of invoicing to customers does not necessarily correlate with the timing of revenues being recognized under the cost‐to‐cost method of accounting. Contracts from contracting services are billed as work progresses in accordance with agreed upon contractual terms. Generally, billing to the customer occurs contemporaneous to revenue recognition. A variance in timing of the billings may result in a contract asset or a contract liability. A contract asset occurs when revenues are recognized under the cost-to-cost measure of progress, which exceeds amounts billed on uncompleted contracts. Such amounts will be billed as standard contract terms allow, usually based on various measures of performance or achievement. A contract liability occurs when there are billings in excess of revenues recognized under the cost-to-cost measure of progress on uncompleted contracts. Contract liabilities decrease as revenue is recognized from the satisfaction of the related performance obligation. The changes in contract assets and liabilities were as follows:

	June 30, 2019			December 31, 2018			Change		Location on Consolidated Balance Sheets
	(In thousands)
Contract assets	$	153,641		$	104,239		$	49,402	Receivables, net
Contract liabilities - current	(90,031		)	(93,901		)	3,870		Accounts payable
Contract liabilities - noncurrent	(25		)	(135		)	110		Deferred credits and other liabilities - other
Net contract assets	$	63,585		$	10,203		$	53,382

The Company recognized $22.6 million and $79.0 million in revenue for the three and six months ended June 30, 2019, respectively, which was previously included in contract liabilities at December 31, 2018. The Company recognized $16.9 million and $68.9 million in revenue for the three and six months ended June 30, 2018, respectively, which was previously included in contract liabilities at December 31, 2017.

The Company recognized a net increase in revenues of $20.6 million and $32.5 million for the three and six months ended June 30, 2019, respectively, from performance obligations satisfied in prior periods. The Company recognized a net increase in revenues of $2.6 million and $5.3 million for the three and six months ended June 30, 2018, respectively, from performance obligations satisfied in prior periods.

Remaining performance obligations

The remaining performance obligations at the construction materials and contracting and construction services segments include unrecognized revenues the Company reasonably expects to be realized which includes projects that have a written award, a letter of intent, a notice to proceed, an agreed upon work order to perform work on mutually accepted terms and conditions and change orders or claims to the extent management believes additional contract revenues will be earned and are deemed probable of collection. Excluded from remaining performance obligations are potential orders under master service agreements. The remaining performance obligations at the pipeline and midstream segment include firm transportation and storage contracts with fixed pricing and fixed volumes.

At June 30, 2019, the Company's remaining performance obligations were $2.3 billion. The Company expects to recognize the following revenue amounts in future periods related to these remaining performance obligations: $1.8 billion within the next 12 months; $269.4 million within the next 13 to 24 months; and $248.6 million thereafter.

The majority of the Company's construction contracts have an original duration of less than two years. The Company's firm transportation and firm storage contracts have weighted average remaining durations of approximately five and three years, respectively.

Note 9 - Business combinations

In March 2019, the Company acquired Viesko Redi-Mix, Inc., a provider of ready-mixed concrete in Oregon. The gross aggregate consideration for this acquisition was $32.1 million, subject to certain adjustments, which includes $1.2 million of debt assumed. The acquisition is subject to customary adjustments based on, among other things, the amount of cash, debt and working capital in the business as of the closing date. The amounts included in the Consolidated Balance Sheet for these adjustments are considered provisional until final settlement has occurred.

The purchase price adjustments for all business combinations that occurred during 2018 have been settled and the purchase price allocations are considered final; except for Sweetman Construction Company, which was acquired in October 2018. No material adjustments were made to the provisional accounting for the business combinations.

Business combinations were accounted for in accordance with ASC 805 - Business Combinations. The results of the acquired businesses have been included in the Company's construction materials and contracting segment and Consolidated Financial Statements beginning on the acquisition date. Pro forma financial amounts reflecting the effects of the business combinations are not presented, as these business combinations were not material to the Company's financial position or results of operations.

For all business combinations, the Company preliminarily allocates the purchase price of the acquisitions to the assets acquired

18

and liabilities assumed based on their estimated fair values as of the acquisition dates and are considered provisional until final fair values are determined, or the measurement period has passed. The Company expects to record adjustments as it accumulates the information needed to estimate the fair value of assets acquired and liabilities assumed, including working capital balances, estimated fair value of identifiable intangible assets, property, plant and equipment, total consideration and goodwill. The excess of the purchase price over the aggregate fair values is recorded as goodwill. The Company calculated the fair value of the assets acquired in 2019 and 2018 using a market or cost approach (or a combination of both). Fair values for some of the assets were determined based on Level 3 inputs including estimated future cash flows, discount rates, growth rates, sales projections, retention rates and terminal values, all of which require significant management judgment and are susceptible to change. The final fair value of the net assets acquired may result in adjustments to the assets and liabilities, including goodwill, and will be made as soon as practical, but no later than one year from the respective acquisition dates. However, any subsequent measurement period adjustments are not expected to have a material impact on the Company's results of operations.

Note 10 - Discontinued operations

The assets and liabilities of the Company's discontinued operations have been classified as held for sale and the results of operations are shown in income (loss) from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. At the time the assets were classified as held for sale, depreciation, depletion and amortization expense was no longer recorded.

Dakota Prairie Refining On June 24, 2016, WBI Energy entered into a membership interest purchase agreement with Tesoro to sell all the outstanding membership interests in Dakota Prairie Refining to Tesoro. WBI Energy and Calumet each previously owned 50 percent of the Dakota Prairie Refining membership interests and were equal members in building and operating Dakota Prairie Refinery. To effectuate the sale, WBI Energy acquired Calumet’s 50 percent membership interest in Dakota Prairie Refining on June 27, 2016. The sale of the membership interests to Tesoro closed on June 27, 2016. The sale of Dakota Prairie Refining reduced the Company’s risk by decreasing exposure to commodity prices.

In connection with the sale of Dakota Prairie Refining, Centennial guaranteed certain debt obligations of Dakota Prairie Refining and Tesoro agreed to indemnify Centennial for any losses and litigation expenses arising from the guarantee. On October 17, 2018, Centennial was released of any further liabilities or obligations under this guarantee.

Fidelity In the second quarter of 2015, the Company began the marketing and sale process of Fidelity with an anticipated sale to occur within one year. Between September 2015 and March 2016, the Company entered into purchase and sale agreements to sell substantially all of Fidelity's oil and natural gas assets. The completion of these sales occurred between October 2015 and April 2016. In July 2018, the Company completed the sale of a majority of the remaining property, plant and equipment. The sale of Fidelity was part of the Company's strategic plan to grow its capital investments in the remaining business segments and to focus on creating a greater long-term value.

19

Dakota Prairie Refining and Fidelity The carrying amounts of the major classes of assets and liabilities classified as held for sale on the Consolidated Balance Sheets were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Assets
Current assets:
Receivables, net	$	428	$	572	$	430
Income taxes receivable (a)	—		1,689		—
Total current assets held for sale	428		2,261		430
Noncurrent assets:
Net property, plant and equipment	—		1,236		—
Deferred income taxes	1,926		2,637		1,926
Other	161		162		161
Total noncurrent assets held for sale	2,087		4,035		2,087
Total assets held for sale	$	2,515	$	6,296	$	2,517
Liabilities
Current liabilities:
Accounts payable	$	82	$	—	$	80
Taxes payable	3,114		10,656		1,451
Other accrued liabilities	3,021		2,746		2,470
Total current liabilities held for sale	6,217		13,402		4,001
Noncurrent liabilities:
Deferred income taxes (b)	—		37		—
Total noncurrent liabilities held for sale	—		37		—
Total liabilities held for sale	$	6,217	$	13,439	$	4,001

(a) On the Company's Consolidated Balance Sheets, these amounts were reclassified to taxes payable and are reflected in current liabilities held for sale.

(b) On the Company's Consolidated Balance Sheets, these amounts were reclassified to deferred charges and other assets - deferred income taxes and are reflected in noncurrent assets held for sale.

The reconciliation of the major classes of income and expense constituting pretax loss from discontinued operations to the after-tax income (loss) from discontinued operations on the Consolidated Statements of Income was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Operating revenues	$	37		$	75		$	67		$	140
Operating expenses	1,778			435			2,023			609
Operating loss	(1,741		)	(360		)	(1,956		)	(469		)
Other income	—			—			—			12
Interest expense	—			—			—			575
Loss from discontinued operations before income taxes	(1,741		)	(360		)	(1,956		)	(1,032		)
Income taxes	(421		)	(87		)	(473		)	(1,235		)
Income (loss) from discontinued operations	$	(1,320	)	$	(273	)	$	(1,483	)	$	203

Note 11 - Leases

Most of the leases the Company enters into are for equipment, buildings, easements and vehicles as part of their ongoing operations. The Company also leases certain equipment to third parties through its utility and construction services segments. The Company determines if an arrangement contains a lease at inception of a contract and accounts for all leases in accordance with ASC 842 - Leases. For more information on the adoption of ASC 842, see Note 6.

The recognition of leases requires the Company to make estimates and assumptions that affect the lease classification and the assets and liabilities recorded. The accuracy of lease assets and liabilities reported on the Consolidated Financial Statements depends on, among other things, management's estimates of interest rates used to discount the lease assets and liabilities to their present value, as well as the lease terms based on the unique facts and circumstances of each lease.

20

Lessee accounting

The leases the Company has entered into as part of its ongoing operations are considered operating leases and are recognized on the balance sheet as right-of-use assets, current lease liabilities and, if applicable, noncurrent lease liabilities. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The Company determines the lease term based on the non-cancelable and cancelable periods in each contract. The non-cancelable period consists of the term of the contract that is legally enforceable and cannot be canceled by either party without incurring a significant penalty. The cancelable period is determined by various factors that are based on who has the right to cancel a contract. If only the lessor has the right to cancel the contract, the Company will assume the contract will continue. If the lessee is the only party that has the right to cancel the contract, the Company looks to asset, entity and market-based factors. If both the lessor and the lessee have the right to cancel the contract, the Company assumes the contract will not continue.

Generally, the leases for vehicles and equipment have a term of five years or less and buildings and easements have a longer term of up to 35 years or more. To date, the Company does not have any residual value guarantee amounts probable of being owed to a lessor, financing leases or material agreements with related parties.

The Company has elected to recognize leases with an original lease term of 12 months or less in income on a straight-line basis over the term of the lease and not recognize a corresponding right-of-use asset or lease liability. Lease costs are included in operation and maintenance expense on the Company's Consolidated Statements of Income. The discount rate used to calculate the present value of the lease liabilities is based upon the implied rate within each contract. If the rate is unknown or cannot be determined, the Company uses an incremental borrowing rate which is determined by the length of the contract, asset class and the Company's borrowing rates as of the commencement date of the contract.

The following tables provide information on the Company's operating leases:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019		2019
	(In thousands)
Lease costs:
Operating lease cost	$	10,387	$	21,908
Variable lease cost	400		799
Short-term lease cost	40,474		57,712
Total lease costs	$	51,261	$	80,419

	June 30, 2019
	(Dollars in thousands)
Weighted average remaining lease term	3.02 years
Weighted average discount rate	4.46		%
Cash paid for amounts included in the measurement of lease liabilities	$	21,798

The reconciliation of the future undiscounted cash flows to the operating lease liabilities presented on the Company's Consolidated Balance Sheet is as follows:

	June 30, 2019
	(In thousands)
Remainder of 2019	$	19,276
2020	30,065
2021	22,850
2022	14,816
2023	8,941
Thereafter	51,335
Total	147,283
Less discount	28,496
Total operating lease liabilities	$	118,787

21

As previously disclosed in the 2018 Annual Report, the undiscounted annual minimum lease payments due under the Company's leases following the previous lease accounting standard as of December 31, 2018, were as follows:

	2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Operating leases	$	37,740	$	26,255	$	17,868	$	11,647	$	7,278	$	49,098

Lessor accounting

The Company leases certain equipment to third parties which are considered operating leases. The Company recognized revenue from operating leases of $12.5 million and $26.5 million for the three and six months ended June 30, 2019, respectively.

The majority of the Company's operating leases are short-term leases of less than 12 months. At June 30, 2019, the Company had $10.6 million of lease receivables with a majority due within 12 months.

Note 12 - Goodwill and other intangible assets

The changes in the carrying amount of goodwill were as follows:

Six Months Ended June 30, 2019	Balance at January 1, 2019		Goodwill Acquired During  the Year		Balance at June 30, 2019
	(In thousands)
Natural gas distribution	$	345,736	$	—	$	345,736
Construction materials and contracting	209,421		14,473		223,894
Construction services	109,765		—		109,765
Total	$	664,922	$	14,473	$	679,395

Six Months Ended June 30, 2018	Balance at January 1, 2018		Goodwill Acquired During  the Year		Balance at June 30, 2018
	(In thousands)
Natural gas distribution	$	345,736	$	—	$	345,736
Construction materials and contracting	176,290		10,583		186,873
Construction services	109,765		—		109,765
Total	$	631,791	$	10,583	$	642,374

Year Ended December 31, 2018	Balance at January 1, 2018		Goodwill Acquired During  the Year		Balance at December 31, 2018
	(In thousands)
Natural gas distribution	$	345,736	$	—	$	345,736
Construction materials and contracting	176,290		33,131		209,421
Construction services	109,765		—		109,765
Total	$	631,791	$	33,131	$	664,922

During 2019 and 2018, the Company completed one and four business combinations, respectively, and the results of the acquired businesses have been included in the Company's construction materials and contracting segment. These business combinations increased the construction materials and contracting segment's goodwill balance at June 30, 2019 and 2018, and December 31, 2018, as noted in the previous tables. As a result of the business combinations, other intangible assets increased $1.6 million at June 30, 2019, compared to December 31, 2018. For more information related to business combinations, see Note 9.

22

Other amortizable intangible assets were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Customer relationships	$	14,601	$	15,587	$	22,720
Less accumulated amortization	5,629		13,191		13,535
	8,972		2,396		9,185
Noncompete agreements	3,179		2,546		2,605
Less accumulated amortization	1,798		1,877		1,956
	1,381		669		649
Other	6,578		6,458		6,458
Less accumulated amortization	5,608		5,333		5,477
	970		1,125		981
Total	$	11,323	$	4,190	$	10,815

Amortization expense for amortizable intangible assets for the three and six months ended June 30, 2019, was $500,000 and $1.1 million, respectively. Amortization expense for amortizable intangible assets for the three and six months ended June 30, 2018, was $300,000 and $700,000, respectively. Estimated amortization expense for identifiable intangible assets as of June 30, 2019, was:

	Remainder of 2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Amortization expense	$	938	$	1,644	$	1,254	$	1,231	$	1,249	$	5,007

23

Note 13 - Regulatory assets and liabilities

The following table summarizes the individual components of unamortized regulatory assets and liabilities:

	Estimated Recovery Period	*	June 30, 2019			December 31, 2018
			(In thousands)
Regulatory assets:
Pension and postretirement benefits (a)	(e)		$	165,861		$	165,898
Natural gas costs recoverable through rate adjustments (a) (b)	Up to 3 years		94,543			42,652
Asset retirement obligations (a)	Over plant lives		64,215			60,097
Cost recovery mechanisms (a) (b)	Up to 4 years		18,488			17,948
Manufactured gas plant site remediation (a)	-		15,619			17,068
Taxes recoverable from customers (a)	Over plant lives		11,755			11,946
Plants to be retired (a)	-		16,933			—
Conservation programs (b)	Up to 1 year		7,627			7,494
Long-term debt refinancing costs (a)	Up to 19 years		4,592			4,898
Costs related to identifying generation development (a)	Up to 8 years		2,280			2,508
Other (a) (b)	Up to 20 years		5,761			9,608
Total regulatory assets			$	407,674		$	340,117
Regulatory liabilities:
Taxes refundable to customers (c) (d)			$	264,025		$	277,833
Plant removal and decommissioning costs (c) (d)			175,003			173,143
Natural gas costs refundable through rate adjustments (d)			25,737			29,995
Pension and postretirement benefits (c)			12,967			15,264
Other (c) (d)			27,955			25,197
Total regulatory liabilities			$	505,687		$	521,432
Net regulatory position			$	(98,013	)	$	(181,315	)

* Estimated recovery period for regulatory assets currently being recovered in rates charged to customers.

(a) Included in deferred charges and other assets - other on the Consolidated Balance Sheets.

(b) Included in prepayments and other current assets on the Consolidated Balance Sheets.

(c) Included in deferred credits and other liabilities - other on the Consolidated Balance Sheets.

(d) Included in other accrued liabilities on the Consolidated Balance Sheets.

(e) Recovered as expense is incurred or cash contributions are made.

The regulatory assets are expected to be recovered in rates charged to customers. A portion of the Company's regulatory assets are not earning a return; however, these regulatory assets are expected to be recovered from customers in future rates. As of June 30, 2019 and December 31, 2018, approximately $290.5 million and $313.5 million, respectively, of regulatory assets were not earning a rate of return.

During the first quarter of 2019 and the fourth quarter of 2018, the Company experienced increased natural gas costs in certain jurisdictions where it supplies natural gas. The Company has recorded these natural gas costs as regulatory assets as they are expected to be recovered from customers, as discussed in Note 19.

In February 2019, the Company announced that it intends to retire three aging coal-fired electric generation units within the next three years. The Company has accelerated the depreciation related to these facilities in property, plant and equipment and has recorded the difference between the accelerated depreciation, in accordance with GAAP, and the depreciation approved for rate-making purposes as regulatory assets. The Company expects to recover the regulatory assets related to the plants to be retired in future rates.

If, for any reason, the Company's regulated businesses cease to meet the criteria for application of regulatory accounting for all or part of their operations, the regulatory assets and liabilities relating to those portions ceasing to meet such criteria would be removed from the balance sheet and included in the statement of income or accumulated other comprehensive income (loss) in the period in which the discontinuance of regulatory accounting occurs.

24

Note 14 - Fair value measurements

The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income. The Company anticipates using these investments, which consist of an insurance contract, to satisfy its obligations under its unfunded, nonqualified benefit plans for executive officers and certain key management employees, and invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation. These investments, which totaled $83.1 million, $78.3 million and $73.8 million, at June 30, 2019 and 2018, and December 31, 2018, respectively, are classified as investments on the Consolidated Balance Sheets. The net unrealized gains on these investments were $2.9 million and $9.3 million for the three and six months ended June 30, 2019, respectively. The net unrealized gains on these investments were $1.4 million and $900,000 for the three and six months ended June 30, 2018, respectively. The change in fair value, which is considered part of the cost of the plan, is classified in other income on the Consolidated Statements of Income.

The Company did not elect the fair value option, which records gains and losses in income, for its available-for-sale securities. The available-for-sale securities include mortgage-backed securities and U.S. Treasury securities. These available-for-sale securities are recorded at fair value and are classified as investments on the Consolidated Balance Sheets. Unrealized gains or losses are recorded in accumulated other comprehensive loss. Details of available-for-sale securities were as follows:

June 30, 2019	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed securities	$	10,771	$	94	$	35	$	10,830
U.S. Treasury securities	180		—		—		180
Total	$	10,951	$	94	$	35	$	11,010

June 30, 2018	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed securities	$	10,015	$	6	$	236	$	9,785
U.S. Treasury securities	242		—		2		240
Total	$	10,257	$	6	$	238	$	10,025

December 31, 2018	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed securities	$	10,473	$	21	$	162	$	10,332
U.S. Treasury securities	179		—		—		179
Total	$	10,652	$	21	$	162	$	10,511

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The fair value ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach. The Company's Level 2 money market funds are valued at the net asset value of shares held at the end of the quarter, based on published market quotations on active markets, or using other known sources including pricing from outside sources. The estimated fair value of the Company's Level 2 mortgage-backed securities and U.S. Treasury securities are based on comparable market transactions, other observable inputs or other sources, including pricing from outside sources. The estimated fair value of the Company's Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data.

Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the six months ended June 30, 2019 and 2018, there were no transfers between Levels 1 and 2.

25

The Company's assets and liabilities measured at fair value on a recurring basis were as follows:

	Fair Value Measurements at June 30, 2019, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2019
	(In thousands)
Assets:
Money market funds	$	—	$	10,816	$	—	$	10,816
Insurance contract*	—		83,134		—		83,134
Available-for-sale securities:
Mortgage-backed securities	—		10,830		—		10,830
U.S. Treasury securities	—		180		—		180
Total assets measured at fair value	$	—	$	104,960	$	—	$	104,960

* The insurance contract invests approximately 51 percent in fixed-income investments, 22 percent in common stock of large-cap companies, 12 percent in common stock of mid-cap companies, 10 percent in common stock of small-cap companies, 4 percent in target date investments and 1 percent in cash equivalents.

	Fair Value Measurements at June 30, 2018, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2018
	(In thousands)
Assets:
Money market funds	$	—	$	9,904	$	—	$	9,904
Insurance contract*	—		78,312		—		78,312
Available-for-sale securities:
Mortgage-backed securities	—		9,785		—		9,785
U.S. Treasury securities	—		240		—		240
Total assets measured at fair value	$	—	$	98,241	$	—	$	98,241

* The insurance contract invests approximately 48 percent in fixed-income investments, 23 percent in common stock of large-cap companies, 13 percent in common stock of mid-cap companies, 11 percent in common stock of small-cap companies, 3 percent in target date investments and 2 percent in cash equivalents.

	Fair Value Measurements at December 31, 2018, Using
	Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs  (Level 3)		Balance at December 31, 2018
	(In thousands)
Assets:
Money market funds	$	—	$	10,799	$	—	$	10,799
Insurance contract*	—		73,838		—		73,838
Available-for-sale securities:
Mortgage-backed securities	—		10,332		—		10,332
U.S. Treasury securities	—		179		—		179
Total assets measured at fair value	$	—	$	95,148	$	—	$	95,148

* The insurance contract invests approximately 53 percent in fixed-income investments, 21 percent in common stock of large-cap companies, 11 percent in common stock of mid-cap companies, 10 percent in common stock of small-cap companies, 3 percent in target date investments and 2 percent in cash equivalents.

The Company applies the provisions of the fair value measurement standard to its nonrecurring, non-financial measurements, including long-lived asset impairments. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. The Company reviews the carrying value of its long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying amounts may not be recoverable.

26

In the second quarter of 2019, the Company reviewed a non-utility investment at its electric and natural gas distribution segments for impairment. This was a cost-method investment and was written down to zero using the income approach to determine its fair value, requiring the Company to record a write-down of $2.0 million, before tax. The fair value of this investment was categorized as Level 3 in the fair value hierarchy. The reduction is reflected in investments on the Company's Consolidated Balance Sheet, as well as within other income on the Consolidated Statements of Income.

The Company's long-term debt is not measured at fair value on the Consolidated Balance Sheets and the fair value is being provided for disclosure purposes only. The fair value was based on discounted future cash flows using current market interest rates. The estimated fair value of the Company's Level 2 long-term debt was as follows:

	Carrying Amount		Fair Value
	(In thousands)
Long-term debt at June 30, 2019	$	2,379,806	$	2,521,325
Long-term debt at June 30, 2018	$	1,852,910	$	1,949,564
Long-term debt at December 31, 2018	$	2,108,695	$	2,183,819

The carrying amounts of the Company's remaining financial instruments included in current assets and current liabilities approximate their fair values.

Note 15 - Debt

Certain debt instruments of the Company's subsidiaries contain restrictive covenants and cross-default provisions. In order to borrow under the respective debt instruments, the subsidiary companies must be in compliance with the applicable covenants and certain other conditions all of which the subsidiaries, as applicable, were in compliance with at June 30, 2019. In the event the Company's subsidiaries do not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued.

Montana-Dakota's and Centennial's respective commercial paper programs are supported by revolving credit agreements. While the amount of commercial paper outstanding does not reduce available capacity under the respective revolving credit agreements, Montana-Dakota and Centennial do not issue commercial paper in an aggregate amount exceeding the available capacity under their respective credit agreements. The commercial paper borrowings may vary during the period, largely the result of fluctuations in working capital requirements due to the seasonality of the construction businesses.

Short-term debt

The following describes certain transactions during the three and six months ended June 30, 2019, included in outstanding short-term debt:

• On March 22, 2019, Cascade entered into a $40.0 million term loan agreement with a variable interest rate and a maturity date of December 31, 2019.

• On April 12, 2019, Centennial entered into a $50.0 million term loan agreement with a variable interest rate and a maturity date of April 11, 2020.

Long-term debt

The following describes certain transactions during the three and six months ended June 30, 2019, included in outstanding long-term debt:

• On April 4, 2019, Centennial issued $150.0 million of senior notes with maturity dates ranging from April 4, 2029 to April 4, 2034, at a weighted average interest rate of 4.60 percent.

• On June 7, 2019, Cascade amended its revolving credit agreement to increase the borrowing limit from $75.0 million to $100.0 million and extend the termination date from April 24, 2020 to June 7, 2024.

• On June 7, 2019, Intermountain amended its revolving credit agreement to extend the termination date from April 24, 2020 to June 7, 2024.

• On June 13, 2019, Cascade issued $75.0 million of senior notes with maturity dates ranging from June 13, 2029 to June 13, 2049, at a weighted average interest rate of 3.93 percent.

• On June 13, 2019, Intermountain issued $50.0 million of senior notes with maturity dates ranging from June 13, 2029 to June 13, 2049, at a weighted average interest rate of 3.92 percent.

27

Long-term Debt Outstanding Long-term debt outstanding was as follows:

	Weighted Average Interest Rate at June 30, 2019		June 30, 2019		December 31, 2018
			(In thousands)
Senior notes due on dates ranging from July 1, 2019 to January 15, 2055	4.52	%	$	1,656,000	$	1,381,000
Commercial paper supported by revolving credit agreements	2.77	%	433,350		338,100
Term loan agreements due on dates ranging from October 17, 2019 to September 3, 2032	2.75	%	209,800		209,800
Credit agreements due on June 7, 2024	5.50	%	11,075		110,100
Medium-term notes due on dates ranging from September 1, 2020 to March 16, 2029	6.68	%	50,000		50,000
Other notes due on dates ranging from January 2, 2022 to November 30, 2038	5.01	%	26,105		25,229
Less unamortized debt issuance costs			6,164		5,207
Less discount			360		327
Total long-term debt			2,379,806		2,108,695
Less current maturities			51,822		251,854
Net long-term debt			$	2,327,984	$	1,856,841

Schedule of Debt Maturities Long-term debt maturities, which excludes unamortized debt issuance costs and discount, as of June 30, 2019, were as follows:

	Remainder of 2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Long-term debt maturities	$	51,761	$	15,926	$	386,430	$	147,434	$	125,188	$	1,659,591

Note 16 - Cash flow information

Cash expenditures for interest and income taxes were as follows:

	Six Months Ended
	June 30,
	2019		2018
	(In thousands)
Interest, net*	$	45,702	$	39,467
Income taxes paid, net**	$	4,124	$	4,034

* AFUDC - borrowed was $1.2 million and $1.0 million for the six months ended June 30, 2019 and 2018, respectively.

** Income taxes paid, net of discontinued operations, were $2.0 million and $3.1 million for the six months ended June 30, 2019 and 2018, respectively.

Noncash investing and financing transactions were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Right-of-use assets obtained in exchange for new operating lease liabilities	$	24,990	$	—	$	—
Property, plant and equipment additions in accounts payable	$	27,312	$	30,985	$	42,355
Debt assumed in connection with a business combination	$	1,163	$	—	$	—
Issuance of common stock in connection with a business combination	$	—	$	17,993	$	18,186

Note 17 - Business segment data

The Company's reportable segments are those that are based on the Company's method of internal reporting, which generally segregates the strategic business units due to differences in products, services and regulation. The internal reporting of these operating segments is defined based on the reporting and review process used by the Company's chief executive officer. The vast majority of the Company's operations are located within the United States.

28

The electric segment generates, transmits and distributes electricity in Montana, North Dakota, South Dakota and Wyoming. The natural gas distribution segment distributes natural gas in those states, as well as in Idaho, Minnesota, Oregon and Washington. These operations also supply related value-added services.

The pipeline and midstream segment provides natural gas transportation, underground storage and gathering services through regulated and nonregulated pipeline systems primarily in the Rocky Mountain and northern Great Plains regions of the United States. This segment also provides cathodic protection and other energy-related services.

The construction materials and contracting segment mines, processes and sells construction aggregates (crushed stone, sand and gravel); produces and sells asphalt mix; and supplies ready-mixed concrete. This segment focuses on vertical integration of its contracting services with its construction materials to support the aggregate based product lines including aggregate placement, asphalt and concrete paving, and site development and grading. Although not common to all locations, other products include the sale of cement, liquid asphalt for various commercial and roadway applications, various finished concrete products and other building materials and related contracting services. This segment operates in the central, southern and western United States and Alaska and Hawaii.

The construction services segment provides inside and outside specialty contracting services. Its inside services include design, construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, and mechanical piping and services. Its outside services include design, construction and maintenance of overhead and underground electrical distribution and transmission lines, substations, external lighting, traffic signalization, and gas pipelines, as well as utility excavation and the manufacture and distribution of transmission line construction equipment. This segment also constructs and maintains renewable energy projects. These specialty contracting services are provided to utilities and large manufacturing, commercial, industrial, institutional and governmental customers.

The Other category includes the activities of Centennial Capital, which, through its subsidiary InterSource Insurance Company, insures various types of risks as a captive insurer for certain of the Company's subsidiaries. The function of the captive insurer is to fund the self-insured layers of the insured Company's general liability, automobile liability, pollution liability and other coverages. Centennial Capital also owns certain real and personal property. In addition, the Other category includes certain assets, liabilities and tax adjustments of the holding company primarily associated with corporate functions and certain general and administrative costs (reflected in operation and maintenance expense) and interest expense which were previously allocated to the refining business and Fidelity that do not meet the criteria for income (loss) from discontinued operations. The Other category also includes Centennial Resources' former investment in Brazil.

Discontinued operations include the results and supporting activities of Dakota Prairie Refining and Fidelity other than certain general and administrative costs and interest expense as described above. For more information on discontinued operations, see Note 10.

The information below follows the same accounting policies as described in Note 1 of the Company's Notes to Consolidated Financial Statements in the 2018 Annual Report. Information on the Company's segments was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands)
External operating revenues:
Regulated operations:
Electric	$	81,011	$	78,499	$	173,578	$	165,904
Natural gas distribution	133,867		129,540		476,014		462,204
Pipeline and midstream	21,369		18,645		26,272		23,035
	236,247		226,684		675,864		651,143
Nonregulated operations:
Pipeline and midstream	7,311		5,415		11,021		9,858
Construction materials and contracting	595,799		509,388		822,911		722,672
Construction services	464,192		323,020		884,925		657,071
Other	24		90		43		146
	1,067,326		837,913		1,718,900		1,389,747
Total external operating revenues	$	1,303,573	$	1,064,597	$	2,394,764	$	2,040,890

29

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Intersegment operating revenues:
Regulated operations:
Electric	$	—		$	—		$	—		$	—
Natural gas distribution	—			—			—			—
Pipeline and midstream	7,426			6,446			31,349			28,182
	7,426			6,446			31,349			28,182
Nonregulated operations:
Pipeline and midstream	87			93			119			116
Construction materials and contracting	168			235			264			336
Construction services	721			540			849			550
Other	2,879			2,667			10,704			5,306
	3,855			3,535			11,936			6,308
Intersegment eliminations	(11,281		)	(9,981		)	(43,285		)	(34,490		)
Total intersegment operating revenues	$	—		$	—		$	—		$	—
Operating income (loss):
Electric	$	9,791		$	13,027		$	27,779		$	31,182
Natural gas distribution	(2,621		)	(4,371		)	47,696			44,169
Pipeline and midstream	10,698			8,482			20,602			16,650
Construction materials and contracting	46,178			37,301			4,597			10,992
Construction services	31,966			19,356			59,431			39,990
Other	1,299			197			1,425			385
Total operating income	$	97,311		$	73,992		$	161,530		$	143,368
Net income (loss):
Regulated operations:
Electric	$	7,471		$	9,133		$	22,976		$	22,216
Natural gas distribution	(6,252		)	(6,852		)	30,248			25,771
Pipeline and midstream	6,378			5,240			13,382			10,699
	7,597			7,521			66,606			58,686
Nonregulated operations:
Pipeline and midstream	742			467			579			288
Construction materials and contracting	29,166			24,336			(5,283		)	815
Construction services	22,845			14,088			42,869			29,179
Other	2,795			(2,337		)	(537		)	(2,932		)
	55,548			36,554			37,628			27,350
Income from continuing operations	63,145			44,075			104,234			86,036
Income (loss) from discontinued operations, net of tax	(1,320		)	(273		)	(1,483		)	203
Net income	$	61,825		$	43,802		$	102,751		$	86,239

30

Note 18 - Employee benefit plans

Pension and other postretirement plans

The Company has noncontributory qualified defined benefit pension plans and other postretirement benefit plans for certain eligible employees. Components of net periodic benefit cost (credit) for the Company's pension and other postretirement benefit plans were as follows:

	Pension Benefits						Other Postretirement Benefits
Three Months Ended June 30,	2019			2018			2019			2018
	(In thousands)
Components of net periodic benefit cost (credit):
Service cost	$	—		$	—		$	227		$	340
Interest cost	3,840			3,488			713			672
Expected return on assets	(3,998		)	(5,379		)	(1,182		)	(1,266		)
Amortization of prior service credit	—			—			(228		)	(348		)
Amortization of net actuarial (gain) loss	1,418			1,721			(42		)	82
Net periodic benefit cost (credit), including amount capitalized	1,260			(170		)	(512		)	(520		)
Less amount capitalized	—			—			27			43
Net periodic benefit cost (credit)	$	1,260		$	(170	)	$	(539	)	$	(563	)

	Pension Benefits						Other Postretirement Benefits
Six Months Ended June 30,	2019			2018			2019			2018
	(In thousands)
Components of net periodic benefit cost (credit):
Service cost	$	—		$	—		$	571		$	747
Interest cost	7,613			7,295			1,493			1,450
Expected return on assets	(9,118		)	(10,377		)	(2,402		)	(2,433		)
Amortization of prior service credit	—			—			(577		)	(697		)
Amortization of net actuarial loss	2,773			3,503			55			320
Net periodic benefit cost (credit), including amount capitalized	1,268			421			(860		)	(613		)
Less amount capitalized	—			—			58			83
Net periodic benefit cost (credit)	$	1,268		$	421		$	(918	)	$	(696	)

The components of net periodic benefit cost (credit), other than the service cost component, are included in other income on the Consolidated Statements of Income. The service cost component is included in operation and maintenance expense on the Consolidated Statements of Income.

Nonqualified defined benefit plans

In addition to the qualified defined benefit pension plans reflected in the table at the beginning of this note, the Company also has unfunded, nonqualified defined benefit plans for executive officers and certain key management employees. The Company's net periodic benefit cost for these plans for the three and six months ended June 30, 2019, was $1.1 million and $2.2 million, respectively. The Company's net periodic benefit cost for these plans for the three and six months ended June 30, 2018, was $1.1 million and $2.2 million, respectively. The components of net periodic benefit cost for these plans, which does not contain any service costs, are included in other income on the Consolidated Statements of Income.

Note 19 - Regulatory matters

The Company regularly reviews the need for electric and natural gas rate changes in each of the jurisdictions in which service is provided. The Company files for rate adjustments to seek recovery of operating costs and capital investments, as well as reasonable returns as allowed by regulators. The Company's most recent cases by jurisdiction are discussed in the following paragraphs.

MNPUC

On April 18, 2019, the MNPUC approved a decrease in rates for Great Plains of $400,000 on an annual basis to reflect TCJA impacts effective May 1, 2019, as well as a one-time TCJA refund of approximately $600,000, to be issued within 120 days of the implementation of new rates, for the period from January 1, 2018 through April 30, 2019.

MTPSC

On September 28, 2018, Montana-Dakota filed an application with the MTPSC for an electric rate increase of approximately $11.9 million annually or approximately 18.9 percent above current rates. The requested increase was primarily to recover

31

investments in facilities to enhance safety and reliability and the depreciation and taxes associated with the increase in investment. The requested increase was partially offset by tax savings related to the TCJA. On March 7, 2019, the MTPSC issued an interim order authorizing an interim increase of $7.9 million or approximately 12.8 percent, subject to refund, to be effective with service rendered on or after April 1, 2019. On April 24, 2019, Montana-Dakota submitted a settlement agreement reflecting a $9.0 million annual increase to be implemented in the first 12 months following the date of approval and an additional $300,000 annual increase to be implemented beginning 12 months after the date of approval. On June 18, 2019, the MTPSC voted to approve the settlement as filed.

NDPSC

On January 23, 2019, the NDPSC approved a $168,000 reduction in annual revenues for Great Plains to reflect TCJA impacts effective February 1, 2019, along with the refund plan that provided for approximately $200,000 in refunds that were credited to customers' bills on April 12, 2019.

On July 19, 2019, Montana-Dakota filed an update with the NDPSC to recover approximately $1.5 million annually for the revenue requirements on certain electric transmission projects through its transmission cost adjustment rate. This matter is pending before the NDPSC.

OPUC

On December 29, 2017, Cascade filed a request with the OPUC to use deferral accounting for the 2018 net benefits associated with the implementation of the TCJA. The deferral request was renewed on December 28, 2018. This matter is pending before the OPUC.

On May 31, 2018, Cascade filed a general rate case with the OPUC requesting an overall increase to Cascade's natural gas rates of approximately $2.3 million or 3.5 percent on an annual basis, which incorporated the impact of the TCJA. On January 22, 2019, Cascade filed a stipulation with the OPUC for an annual increase in revenues of $1.7 million with a $500,000 reduction for excess deferred income taxes, for a net increase of $1.2 million. On March 14, 2019, the OPUC approved the settlement with rates effective April 1, 2019.

On June 14, 2019, Cascade filed a request with the OPUC to implement a new pipeline safety cost recovery mechanism to recover investments to replace Cascade's highest risk infrastructure. If approved, Cascade would file a report annually with the OPUC detailing actual projects undertaken and costs incurred for the year on November 1, seeking recovery for investments from January 1 through December 31 of that same year. This matter is pending before the OPUC.

WUTC

On March 28, 2019, the WUTC approved an increase to Cascade's natural gas rates through an out-of-period purchased gas adjustment surcharge. The increase of approximately $48.0 million reflected unrecovered purchased gas costs from October 2018 through the end of January 2019 as a result of the rupture of the Enbridge pipeline in Canada on October 9, 2018, causing increased natural gas costs. The WUTC approved this amount, including interest, to be collected over three years beginning April 1, 2019.

On March 29, 2019, Cascade filed a general rate case with the WUTC requesting an increase in annual revenue of $12.7 million or approximately 5.5 percent. This matter is pending before the WUTC. The WUTC has 11 months to process the request and issue an order.

On May 31, 2019, Cascade filed its annual pipeline cost recovery mechanism requesting an increase in revenue of approximately $1.6 million or approximately 0.7 percent. This matter is pending before the WUTC.

WYPSC

On April 4, 2019, Montana-Dakota submitted compliance rates to the WYPSC reflecting a decrease in annual revenues of approximately $1.1 million or approximately 4.2 percent to reflect TCJA impacts. On April 8, 2019, the WYPSC approved the Company's requested decrease in electric rates and required a refund to customers for the period from January 1, 2018 through the date prior to the implementation of the rates within 90 days of the effective date of the new rates. The new rates were implemented for service rendered on and after May 1, 2019, and the refunds of approximately $1.6 million were credited to customers' bills on July 25, 2019.

On March 30, 2018, Montana-Dakota reported its natural gas earnings do not support a decrease in rates and requested the WYPSC allow the impacts of the TCJA be addressed in a natural gas rate case to be submitted by June 1, 2019. On July 16, 2019, the WYPSC ruled in a hearing for Montana-Dakota to provide for a one-time refund of approximately $190,000 to be credited to customers' bills by November 1, 2019, for the TCJA impacts from January 1, 2018 through June 30, 2019. This matter is pending before the WYPSC.

32

On May 23, 2019, Montana-Dakota filed an application with the WYPSC for a natural gas rate increase of approximately $1.1 million annually or approximately 7.0 percent above current rates. The requested increase was to recover increased operating expenses and investments in distribution facilities to improve system safety and reliability. This matter is pending before the WYPSC.

FERC

In accordance with WBI Energy Transmission’s offer of settlement and stipulation and agreement with the FERC dated June 4, 2014, the Company was to make a filing with new proposed rates to be effective no later than May 1, 2019. On October 31, 2018, the Company filed a rate case with the FERC. Following negotiations between FERC staff, customers and the Company, on May 30, 2019, the FERC granted the Company's request to place interim settlement rates into effect May 1, 2019, subject to refund or surcharge, and pending the FERC's consideration of the filing of a settlement agreement. Based on as filed volumes and settlement rates, the revenue increase is approximately $4.5 million annually. Included in the revenue increase are the impacts from higher depreciation rates agreed to in the settlement, as well as the impacts of the TCJA. On June 28, 2019, the Company filed a final settlement agreement and related documents with the FERC. This matter is pending before the FERC.

Note 20 - Contingencies

The Company is party to claims and lawsuits arising out of its business and that of its consolidated subsidiaries, which may include, but are not limited to, matters involving property damage, personal injury, and environmental, contractual, statutory and regulatory obligations. The Company accrues a liability for those contingencies when the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss. Accruals are based on the best information available, but in certain situations management is unable to estimate an amount or range of a reasonably possible loss including, but not limited to when: (1) the damages are unsubstantiated or indeterminate, (2) the proceedings are in the early stages, (3) numerous parties are involved, or (4) the matter involves novel or unsettled legal theories.

The Company has accrued liabilities of $32.1 million, $31.1 million and $30.4 million, which have not been discounted, including liabilities held for sale, for contingencies, including litigation, production taxes, royalty claims and environmental matters at June 30, 2019 and 2018, and December 31, 2018, respectively. This includes amounts that have been accrued for matters discussed in Environmental matters within this note. The Company will continue to monitor each matter and adjust accruals as might be warranted based on new information and further developments. Management believes that the outcomes with respect to probable and reasonably possible losses in excess of the amounts accrued, net of insurance recoveries, while uncertain, either cannot be estimated or will not have a material effect upon the Company's financial position, results of operations or cash flows. Unless otherwise required by GAAP, legal costs are expensed as they are incurred.

Environmental matters

Portland Harbor Site In December 2000, Knife River - Northwest was named by the EPA as a PRP in connection with the cleanup of the Willamette River site adjacent to a commercial property site acquired by Knife River - Northwest from Georgia-Pacific West, Inc. The riverbed site is part of the Portland, Oregon, Harbor Superfund Site where the EPA wants responsible parties to share in the costs of cleanup. To date, costs of the overall remedial investigation and feasibility study of the harbor site are being recorded, and initially paid, through an administrative consent order by the LWG. Investigative costs are indicated to be in excess of $100 million. Remediation is expected to take up to 13 years with a present value cost estimate of approximately $1 billion. Corrective action will not be taken until remedial design/remedial action plans are approved by the EPA. Knife River - Northwest was also notified that the Portland Harbor Natural Resource Trustee Council intends to perform an injury assessment to natural resources resulting from the release of hazardous substances at the Harbor Superfund Site. It is not possible to estimate the costs of natural resource damages until an assessment is completed and allocations are undertaken.

At this time, Knife River - Northwest does not believe it is a responsible party and has notified Georgia-Pacific West, Inc., that it intends to seek indemnity for liabilities incurred in relation to the above matters pursuant to the terms of their sale agreement. Knife River - Northwest has entered into an agreement tolling the statute of limitations in connection with the LWG's potential claim for contribution to the costs of the remedial investigation and feasibility study. LWG has stated its intent to file suit against Knife River - Northwest and others to recover LWG's investigation costs to the extent Knife River - Northwest cannot demonstrate its non-liability for the contamination or is unwilling to participate in an alternative dispute resolution process that has been established to address the matter. At this time, Knife River - Northwest has agreed to participate in the alternative dispute resolution process.

The Company believes it is not probable that it will incur any material environmental remediation costs or damages in relation to the above referenced matter.

33

Manufactured Gas Plant Sites There are three claims against Cascade for cleanup of environmental contamination at manufactured gas plant sites operated by Cascade's predecessors, and one against Montana-Dakota at a site operated by Montana-Dakota or its predecessors. Any accruals related to these claims are reflected in regulatory assets. For more information, see Note 13.

The first claim against Cascade is for contamination at a site in Eugene, Oregon, which was received in 1995. The Oregon DEQ released an ROD in January 2015 that selected a remediation alternative for the site as recommended in an earlier staff report. In the second quarter of 2019, site field work for the design was completed which resulted in reducing the total estimated cost for the selected remediation, including long-term maintenance, to approximately $2.4 million of which $400,000 has been incurred. Cascade and other PRPs are finalizing a proposed consent judgment with the Oregon DEQ by which the PRPs agree to perform the recommended remediation and long-term maintenance for the site. Cascade and other PRPs will share in the cleanup and maintenance costs with Cascade to pay 50 percent of such costs. Cascade has an accrual balance of $1.0 million for remediation and maintenance of this site. In January 2013, the OPUC approved Cascade's application to defer environmental remediation costs at the Eugene site for a period of 12 months starting November 30, 2012. Cascade received orders reauthorizing the deferred accounting.

The second claim against Cascade is for contamination at the Bremerton Gasworks Superfund Site in Bremerton, Washington, which was received in 1997. A preliminary investigation has found soil and groundwater at the site contain contaminants requiring further investigation and cleanup. The EPA conducted a Targeted Brownfields Assessment of the site and released a report summarizing the results of that assessment in August 2009. The assessment confirms that contaminants have affected soil and groundwater at the site, as well as sediments in the adjacent Port Washington Narrows. Alternative remediation options have been identified with preliminary cost estimates ranging from $340,000 to $6.4 million. Data developed through the assessment and previous investigations indicates the contamination likely derived from multiple, different sources and multiple current and former owners of properties and businesses in the vicinity of the site may be responsible for the contamination. In April 2010, the Washington DOE issued notice it considered Cascade a PRP for hazardous substances at the site. In May 2012, the EPA added the site to the National Priorities List of Superfund sites. Cascade has entered into an administrative settlement agreement and consent order with the EPA regarding the scope and schedule for a remedial investigation and feasibility study for the site. Current estimates for the cost to complete the remedial investigation and feasibility study are approximately $7.6 million of which $3.6 million has been incurred. Cascade has accrued $4.0 million for the remedial investigation and feasibility study, as well as $6.4 million for remediation of this site; however, the accrual for remediation costs will be reviewed and adjusted, if necessary, after completion of the remedial investigation and feasibility study. In April 2010, Cascade filed a petition with the WUTC for authority to defer the costs incurred in relation to the environmental remediation of this site. The WUTC approved the petition in September 2010, subject to conditions set forth in the order.

The third claim against Cascade is for contamination at a site in Bellingham, Washington. Cascade received notice from a party in May 2008 that Cascade may be a PRP, along with other parties, for contamination from a manufactured gas plant owned by Cascade and its predecessor from about 1946 to 1962. Other PRPs reached an agreed order and work plan with the Washington DOE for completion of a remedial investigation and feasibility study for the site. A feasibility study prepared for one of the PRPs in March 2018 identifies five cleanup action alternatives for the site with estimated costs ranging from $8.0 million to $20.4 million with a selected preferred alternative having an estimated total cost of $9.3 million. The other PRPs will develop a cleanup action plan and, after public review of the cleanup action plan, develop design documents. Cascade believes its proportional share of any liability will be relatively small in comparison to other PRPs. The plant manufactured gas from coal between approximately 1890 and 1946. In 1946, shortly after Cascade's predecessor acquired the plant, it converted the plant to a propane-air gas facility. There are no documented wastes or by-products resulting from the mixing or distribution of propane-air gas. Cascade has recorded an accrual for this site for an amount that is not material.

Cascade has received notices from and entered into agreement with certain of its insurance carriers that they will participate in defense of Cascade for certain of the contamination claims subject to full and complete reservations of rights and defenses to insurance coverage. To the extent these claims are not covered by insurance, Cascade intends to seek recovery through the OPUC and WUTC of remediation costs in its natural gas rates charged to customers.

Demand has been made of Montana-Dakota to participate in investigation and remediation of environmental contamination at a site in Missoula, Montana. The site operated as a former manufactured gas plant from approximately 1907 to 1938 when it was converted to a butane-air plant that operated until 1956. Montana-Dakota or its predecessors owned or controlled the site for a period of the time it operated as a manufactured gas plant and Montana-Dakota operated the butane-air plant from 1940 to 1951, at which time it sold the plant. There are no documented wastes or by-products resulting from the mixing or distribution of butane-air gas. Preliminary assessment of a portion of the site provided a recommended remedial alternative for that portion of approximately $560,000. However, the recommended remediation would not address any potential contamination to adjacent parcels that may be impacted by contamination from the manufactured gas plant. Montana-Dakota and another party have tentatively agreed to voluntarily investigate and remediate the site and that Montana-Dakota will pay two-thirds of the costs for further investigation and remediation of the site.

34

Guarantees

In 2009, multiple sale agreements were signed to sell the Company's ownership interests in the Brazilian Transmission Lines. In connection with the sale, Centennial agreed to guarantee payment of any indemnity obligations of certain of the Company's indirect wholly owned subsidiaries who were the sellers in three purchase and sale agreements for periods ranging up to 10 years from the date of sale. The guarantees were required by the buyers as a condition to the sale of the Brazilian Transmission Lines.

Certain subsidiaries of the Company have outstanding guarantees to third parties that guarantee the performance of other subsidiaries of the Company. These guarantees are related to construction contracts, insurance deductibles and loss limits, and certain other guarantees. At June 30, 2019, the fixed maximum amounts guaranteed under these agreements aggregated $274.2 million. The amounts of scheduled expiration of the maximum amounts guaranteed under these agreements aggregate to $85.5 million in 2019; $181.4 million in 2020; $700,000 in 2021; $500,000 in 2022; $500,000 in 2023; $1.6 million thereafter; and $4.0 million, which has no scheduled maturity date. There were no amounts outstanding under the above guarantees at June 30, 2019. In the event of default under these guarantee obligations, the subsidiary issuing the guarantee for that particular obligation would be required to make payments under its guarantee.

Certain subsidiaries have outstanding letters of credit to third parties related to insurance policies and other agreements, some of which are guaranteed by other subsidiaries of the Company. At June 30, 2019, the fixed maximum amounts guaranteed under these letters of credit aggregated $32.8 million. The amounts of scheduled expiration of the maximum amounts guaranteed under these letters of credit aggregate to $29.4 million in 2019 and $3.4 million in 2020. There were no amounts outstanding under the above letters of credit at June 30, 2019. In the event of default under these letter of credit obligations, the subsidiary guaranteeing the letter of credit would be obligated for reimbursement of payments made under the letter of credit.

In addition, Centennial, Knife River and MDU Construction Services have issued guarantees to third parties related to the routine purchase of maintenance items, materials and lease obligations for which no fixed maximum amounts have been specified. These guarantees have no scheduled maturity date. In the event a subsidiary of the Company defaults under these obligations, Centennial, Knife River or MDU Construction Services would be required to make payments under these guarantees. Any amounts outstanding by subsidiaries of the Company were reflected on the Consolidated Balance Sheet at June 30, 2019.

In the normal course of business, Centennial has surety bonds related to construction contracts and reclamation obligations of its subsidiaries. In the event a subsidiary of Centennial does not fulfill a bonded obligation, Centennial would be responsible to the surety bond company for completion of the bonded contract or obligation. A large portion of the surety bonds is expected to expire within the next 12 months; however, Centennial will likely continue to enter into surety bonds for its subsidiaries in the future. At June 30, 2019, approximately $1.1 billion of surety bonds were outstanding, which were not reflected on the Consolidated Balance Sheet.

Variable interest entities

The Company evaluates its arrangements and contracts with other entities to determine if they are VIEs and if so, if the Company is the primary beneficiary.

Fuel Contract Coyote Station entered into a coal supply agreement with Coyote Creek that provides for the purchase of coal necessary to supply the coal requirements of the Coyote Station for the period May 2016 through December 2040. Coal purchased under the coal supply agreement is reflected in inventories on the Company's Consolidated Balance Sheets and is recovered from customers as a component of electric fuel and purchased power.

The coal supply agreement creates a variable interest in Coyote Creek due to the transfer of all operating and economic risk to the Coyote Station owners, as the agreement is structured so that the price of the coal will cover all costs of operations, as well as future reclamation costs. The Coyote Station owners are also providing a guarantee of the value of the assets of Coyote Creek as they would be required to buy the assets at book value should they terminate the contract prior to the end of the contract term and are providing a guarantee of the value of the equity of Coyote Creek in that they are required to buy the entity at the end of the contract term at equity value. Although the Company has determined that Coyote Creek is a VIE, the Company has concluded that it is not the primary beneficiary of Coyote Creek because the authority to direct the activities of the entity is shared by the four unrelated owners of the Coyote Station, with no primary beneficiary existing. As a result, Coyote Creek is not required to be consolidated in the Company's financial statements.

At June 30, 2019, the Company's exposure to loss as a result of the Company's involvement with the VIE, based on the Company's ownership percentage, was $37.3 million.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

On January 2, 2019, the Company announced the completion of the Holding Company Reorganization, which resulted in Montana-Dakota becoming a subsidiary of the Company. The merger was conducted pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, which provides for the formation of a holding company without a vote of the stockholders of the constituent corporation. Immediately after consummation of the Holding Company Reorganization, the Company had, on a consolidated basis, the same assets, businesses and operations as Montana-Dakota had immediately prior to the consummation of the Holding Company Reorganization. As a result of the Holding Company Reorganization, the Company

35

became the successor issuer to Montana-Dakota pursuant to Rule 12g-3(a) of the Exchange Act, and as a result, the Company's common stock was deemed registered under Section 12(b) of the Exchange Act.

The Company operates with a two-platform business model. Its regulated energy delivery platform and its construction materials and services platform are each comprised of different operating segments. Some of these segments experience seasonality related to the industries in which they operate. The two-platform approach helps balance this seasonality and the risk associated with each type of industry. Through its regulated energy delivery platform, the Company provides electric and natural gas services to customers; generates, transmits and distributes electricity; and provides natural gas transportation, storage and gathering services. These businesses are regulated by state public service commissions and/or the FERC. The construction materials and services platform provides construction services to a variety of customers, including commercial, industrial and governmental industries, and provides construction materials through aggregate mining and marketing of related products, such as ready-mixed concrete and asphalt.

The Company is organized into five reportable business segments. These business segments include: electric, natural gas distribution, pipeline and midstream, construction materials and contracting, and construction services. The Company's business segments are determined based on the Company's method of internal reporting, which generally segregates the strategic business units due to differences in products, services and regulation. The internal reporting of these segments is defined based on the reporting and review process used by the Company's chief executive officer.

The Company's strategy is to apply its expertise in the regulated energy delivery and construction materials and services businesses to increase market share, increase profitability and enhance shareholder value through organic growth opportunities and strategic acquisitions. The Company is focused on a disciplined approach to the acquisition of well-managed companies and properties.

The Company has capabilities to fund its growth and operations through various sources, including internally generated funds, commercial paper facilities, revolving credit facilities, term loans and the issuance from time to time of debt and equity securities. For more information on the Company's capital expenditures and funding sources, see Liquidity and Capital Commitments.

Consolidated Earnings Overview

The following table summarizes the contribution to the consolidated earnings by each of the Company's business segments.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In millions, except per share amounts)
Electric	$	7.5		$	9.1		$	23.0		$	22.2
Natural gas distribution	(6.3		)	(6.8		)	30.3			25.8
Pipeline and midstream	7.1			5.7			14.0			11.0
Construction materials and contracting	29.2			24.3			(5.3		)	.8
Construction services	22.8			14.1			42.9			29.2
Other	2.8			(2.3		)	(.7		)	(3.0		)
Income from continuing operations	63.1			44.1			104.2			86.0
Income (loss) from discontinued operations, net of tax	(1.3		)	(.3		)	(1.5		)	.2
Net income	$	61.8		$	43.8		$	102.7		$	86.2
Earnings per share - basic:
Income from continuing operations	$	.32		$	.22		$	.53		$	.44
Discontinued operations, net of tax	(.01		)	—			(.01		)	—
Earnings per share - basic	$	.31		$	.22		$	.52		$	.44
Earnings per share - diluted:
Income from continuing operations	$	.32		$	.22		$	.53		$	.44
Discontinued operations, net of tax	(.01		)	—			(.01		)	—
Earnings per share - diluted	$	.31		$	.22		$	.52		$	.44

Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018 The Company recognized consolidated earnings of $61.8 million for the quarter ended June 30, 2019, compared to $43.8 million for the same period in 2018.

Positively impacting the Company's earnings was an increase in gross margins at the construction services business, primarily the result of higher inside and outside specialty contracting workloads, and at the construction materials and contracting business, largely resulting from strong economic environments in certain states. At the pipeline and midstream business, increased volumes of natural gas being transported through its pipeline as a result of organic growth projects completed in 2018 also contributed to

36

the increased earnings. Partially offsetting these increases was higher operation and maintenance expense at the electric business.

Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018 The Company recognized consolidated earnings of $102.7 million for the six months ended June 30, 2019, compared to $86.2 million for the same period in 2018.

Positively impacting the Company's earnings was an increase in gross margin at the construction services business, largely the result of higher inside and outside specialty contracting workloads. Also contributing to the increased earnings was approved rate recovery and higher retail sales volumes at the natural gas distribution business and increased volumes of natural gas being transported at the pipeline and midstream business. Partially offsetting these increases were decreased earnings at the construction materials and contracting business, primarily resulting from seasonal negative gross margins associated with businesses acquired since the second quarter of 2018.

A discussion of key financial data from the Company's business segments follows.

Business Segment Financial and Operating Data

Following are key financial and operating data for each of the Company's business segments. Also included are highlights on key growth strategies, projections and certain assumptions for the Company and its subsidiaries and other matters of the Company's business segments. Many of these highlighted points are "forward-looking statements." For more information, see Forward-Looking Statements. There is no assurance that the Company's projections, including estimates for growth and changes in earnings, will in fact be achieved. Please refer to assumptions contained in this section, as well as the various important factors listed in Part I, Item 1A - Risk Factors in the 2018 Annual Report. Changes in such assumptions and factors could cause actual future results to differ materially from the Company's growth and earnings projections.

For information pertinent to various commitments and contingencies, see the Notes to Consolidated Financial Statements. For a summary of the Company's business segments, see Note 17 of the Notes to Consolidated Financial Statements.

Electric and Natural Gas Distribution

Strategy and challenges The electric and natural gas distribution segments provide electric and natural gas distribution services to customers, as discussed in Note 17. Both segments strive to be a top performing utility company measured by integrity, safety, employee satisfaction, customer service and shareholder return, while continuing to focus on providing safe, environmentally friendly, reliable and competitively priced energy and related services to customers. The Company continues to monitor opportunities for these segments to retain, grow and expand their customer base through extensions of existing operations, including building and upgrading electric generation, transmission and distribution and natural gas systems, and through selected acquisitions of companies and properties at prices that will provide stable cash flows and an opportunity to earn a competitive return on investment. The continued efforts to create operational improvements and efficiencies across both segments promotes the Company's business integration strategy. The primary factors that impact the results of these segments are the ability to earn authorized rates of return, cost of natural gas, cost of electric fuel and purchased power, weather, competitive factors in the energy industry, population growth and economic conditions in the segments' service areas.

The electric and natural gas distribution segments are subject to extensive regulation in the jurisdictions where they conduct operations with respect to costs, timely recovery of investments and permitted returns on investment, as well as certain operational, environmental and system integrity regulations. To assist in the reduction of regulatory lag with the increase in investments, tracking mechanisms have been implemented in certain jurisdictions. Legislative and regulatory initiatives to increase renewable energy resources and reduce GHG emissions could impact the price and demand for electricity and natural gas, as well as increase costs to produce electricity and natural gas. Although the current administration has slowed environmental regulations, the segments continue to invest in facility upgrades to be in compliance with the existing and future regulations.

Tariff increases on steel and aluminum materials could negatively affect the segments' construction projects and maintenance work. The Company continues to monitor the impact of tariffs on raw material costs. The natural gas distribution segment is also facing increased lead times on delivery of certain raw materials used in pipeline projects. In addition to the effect of tariffs, long lead times are attributable to increased demand for steel products from pipeline companies as they respond to the United States Department of Transportation Pipeline System Safety and Integrity Plan. The Company continues to monitor the material lead times and is working with manufacturers to proactively order such materials to help mitigate the risk of delays due to extended lead times.

The ability to grow through acquisitions is subject to significant competition and acquisition premiums. In addition, the ability of the segments to grow their service territory and customer base is affected by the economic environment of the markets served and competition from other energy providers and fuels. The construction of any new electric generating facilities, transmission lines and other service facilities is subject to increasing cost and lead time, extensive permitting procedures, and federal and state legislative and regulatory initiatives, which will likely necessitate increases in electric energy prices.

Revenues are impacted by both customer growth and usage, the latter of which is primarily impacted by weather. Very cold winters increase demand for natural gas and to a lesser extent, electricity, while warmer than normal summers increase demand for

37

electricity, especially among residential and commercial customers. Average consumption among natural gas customers has tended to decline as more efficient appliances and furnaces are installed, and as the Company has implemented conservation programs. Natural gas decoupling mechanisms in certain jurisdictions have been implemented to largely mitigate the effect that would otherwise be caused by variations in volumes sold to these customers due to weather and changing consumption patterns on the Company's distribution margins.

Earnings overview - The following information summarizes the performance of the electric segment.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(Dollars in millions, where applicable)
Operating revenues	$	81.0		$	78.5		$	173.6		$	165.9
Electric fuel and purchased power	19.4			18.0			45.7			40.5
Taxes, other than income	.1			.2			.3			.4
Adjusted gross margin	61.5			60.3			127.6			125.0
Operating expenses:
Operation and maintenance	33.6			31.1			63.8			61.2
Depreciation, depletion and amortization	13.9			12.5			27.6			25.1
Taxes, other than income	4.2			3.7			8.4			7.5
Total operating expenses	51.7			47.3			99.8			93.8
Operating income	9.8			13.0			27.8			31.2
Other income (expense)	(.1		)	.9			2.1			1.3
Interest expense	6.2			6.5			12.7			13.1
Income before income taxes	3.5			7.4			17.2			19.4
Income taxes	(4.0		)	(1.7		)	(5.8		)	(2.8		)
Net income	$	7.5		$	9.1		$	23.0		$	22.2
Retail sales (million kWh):
Residential	226.6			246.1			606.2			620.1
Commercial	336.7			355.1			742.9			757.4
Industrial	136.2			131.5			275.7			273.9
Other	22.1			23.4			44.0			46.0
	721.6			756.1			1,668.8			1,697.4
Average cost of electric fuel and purchased power per kWh	$	.024		$	.022		$	.025		$	.022

Adjusted gross margin is a non-GAAP financial measure. For additional information and reconciliation of the non-GAAP adjusted gross margin attributable to the electric segment, see the Non-GAAP Financial Measures section later in this Item.

Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018 Electric earnings decreased $1.6 million (18 percent) as a result of:

Adjusted gross margin: Increase of $1.2 million, primarily due to increased revenues associated with regulatory mechanisms which include approved Montana interim rates effective April 1, 2019, and recovery of the investment in the Thunder Spirit Wind farm expansion placed into service in the fourth quarter of 2018. These increases were partially offset by lower retail sales volumes of approximately 5 percent, primarily to residential and commercial customers.

Operation and maintenance: Increase of $2.5 million, largely due to higher contract services, primarily driven by a maintenance outage at Coyote Station, and higher payroll-related costs.

Depreciation, depletion and amortization: Increase of $1.4 million as a result of increased property, plant and equipment balances including the Thunder Spirit Wind farm expansion, as previously discussed, and other capital projects.

Taxes, other than income: Increase of $500,000, primarily from higher property taxes in certain jurisdictions.

Other income (expense): Decrease in income of $1.0 million, primarily the write-down of a non-utility investment, as discussed in Note 14, partially offset by higher returns on the Company's benefit plan investments. Also contributing to the decrease was higher pension expense, as discussed in Defined benefit pension plans later in this Item.

Interest expense: Comparable to the same period in prior year.

Income taxes: Increase in income tax benefits of $2.3 million, largely resulting from increased production tax credits.

38

Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018 Electric earnings increased $800,000 (3 percent) as a result of:

Adjusted gross margin: Increase of $2.6 million, primarily due to increased revenues associated with regulatory mechanisms which include recovery of the investment in the Thunder Spirit Wind farm expansion placed into service in the fourth quarter of 2018, approved Montana interim rates effective April 1, 2019, and recovery of the investment in the BSSE project placed into service in the first quarter of 2019. These increases were partially offset by lower retail sales volumes of approximately 2 percent, primarily to residential and commercial customers.

Operation and maintenance: Increase of $2.6 million, largely due to higher contract services, primarily driven by a maintenance outage at Coyote Station, and higher payroll-related costs.

Depreciation, depletion and amortization: Increase of $2.5 million as a result of increased property, plant and equipment balances including the Thunder Spirit Wind farm expansion, as previously discussed, and other capital projects.

Taxes, other than income: Increase of $900,000, primarily from higher property taxes in certain jurisdictions.

Other income: Increase of $800,000, primarily the result of higher returns on the Company's benefit plan investments, partially offset by the write-down of a non-utility investment, as discussed in Note 14. Also partially offsetting the increase was higher pension expense, as discussed in Defined benefit pension plans later in this Item.

Interest expense: Comparable to the same period in prior year.

Income taxes: Increase in income tax benefits of $3.0 million, largely resulting from increased production tax credits and other permanent tax benefits.

39

Earnings overview - The following information summarizes the performance of the natural gas distribution segment.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019		2018
	(Dollars in millions, where applicable)
Operating revenues	$	133.9		$	129.5		$	476.0	$	462.2
Purchased natural gas sold	62.3			62.7			270.0		266.4
Taxes, other than income	5.3			5.6			17.4		17.8
Adjusted gross margin	66.3			61.2			188.6		178.0
Operating expenses:
Operation and maintenance	43.6			42.5			90.0		87.2
Depreciation, depletion and amortization	19.7			17.7			39.1		35.4
Taxes, other than income	5.6			5.4			11.8		11.2
Total operating expenses	68.9			65.6			140.9		133.8
Operating income (loss)	(2.6		)	(4.4		)	47.7		44.2
Other income	.8			.9			3.7		1.3
Interest expense	8.8			7.3			17.1		14.9
Income (loss) before income taxes	(10.6		)	(10.8		)	34.3		30.6
Income taxes	(4.3		)	(4.0		)	4.0		4.8
Net income (loss)	$	(6.3	)	$	(6.8	)	$	30.3	$	25.8
Volumes (MMdk)
Retail sales:
Residential	8.8			8.3			40.2		36.4
Commercial	6.4			6.3			27.3		25.0
Industrial	1.1			1.0			2.7		2.4
	16.3			15.6			70.2		63.8
Transportation sales:
Commercial	.4			.4			1.2		1.1
Industrial	31.6			29.4			72.2		66.2
	32.0			29.8			73.4		67.3
Total throughput	48.3			45.4			143.6		131.1
Average cost of natural gas per dk	$	3.83		$	4.01		$	3.85	$	4.18

Adjusted gross margin is a non-GAAP financial measure. For additional information and reconciliation of the non-GAAP adjusted gross margin attributable to the natural gas distribution segment, see the Non-GAAP Financial Measures section later in this Item.

Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018 Natural gas distribution's seasonal loss decreased $500,000 (9 percent) as a result of:

Adjusted gross margin: Increase of $5.1 million primarily due to approved rate recovery in certain jurisdictions, increased retail sales volumes of 4 percent related to all customer classes and weather normalization and conservation adjustments in certain jurisdictions.

Operation and maintenance: Increase of $1.1 million, largely due to higher payroll-related costs, partially offset by lower contract services due to the absence of the prior year's recognition of a non-recurring expense related to the approved WUTC general rate case settlement in the second quarter of 2018.

Depreciation, depletion and amortization: Increase of $2.0 million, primarily as a result of increased property, plant and equipment balances.

Taxes, other than income: Comparable to the same period in prior year.

Other income: Decrease of $100,000, primarily the write-down of a non-utility investment, as discussed in Note 14, largely offset by increased interest income related to higher gas costs to be collected from customers, as discussed in Notes 13 and 19, and higher returns on the Company's benefit plan investments. Also contributing to the decrease was higher pension expense, as discussed in Defined benefit pension plans later in this Item.

Interest expense: Increase of $1.5 million, largely resulting from increased debt balances to finance higher gas costs to be collected from customers.

40

Income taxes: Comparable to the same period in prior year.

Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018 Natural gas distribution earnings increased $4.5 million (17 percent) as a result of:

Adjusted gross margin: Increase of $10.6 million primarily due to an increase in retail sales volumes of 10 percent related to all customer classes due to colder weather, offset in part by weather normalization and conservation adjustments in certain jurisdictions, and approved rate recovery in certain jurisdictions. The adjusted gross margins were also positively impacted by higher rate realization due to higher conservation revenue, which offsets the conservation expense in operation and maintenance expense.

Operation and maintenance: Increase of $2.8 million, largely resulting from higher payroll-related costs and conservation expenses being recovered in revenue, partially offset by lower contract services due to the absence of the prior year's recognition of a non-recurring expense related to the approved WUTC general rate case settlement in the second quarter of 2018.

Depreciation, depletion and amortization: Increase of $3.7 million, primarily as a result of increased property, plant and equipment balances.

Taxes, other than income: Increase of $600,000, primarily from higher property taxes in certain jurisdictions.

Other income: Increase of $2.4 million, largely resulting from higher returns on the Company's benefit plan investments and increased interest income related to higher gas costs to be collected from customers, as discussed in Notes 13 and 19. Partially offsetting these increases are higher pension expense, as discussed in Defined benefit pension plans later in this Item, and the write-down of a non-utility investment, as discussed in Note 14.

Interest expense: Increase of $2.2 million, largely resulting from increased debt balances to finance higher gas costs to be collected from customers.

Income taxes: Decrease of $800,000 resulting from increased permanent tax benefits, partially offset by higher income taxes due to higher income before taxes.

Outlook The Company expects these segments will grow rate base by approximately 5 percent annually over the next five years on a compound basis. Operations are spread across eight states where the Company expects customer growth to be higher than the national average. Customer growth is expected to grow by 1 percent to 2 percent per year. This customer growth, along with system upgrades and replacements needed to supply safe and reliable service, will require investments in new and replacement electric generation and transmission and natural gas systems.

In February 2019, the Company announced that it intends to retire three aging coal-fired electric generation units within the next three years, resulting from the Company's analysis showing that the plants are no longer expected to be cost competitive for customers. The retirements are expected to be in late 2020 for Lewis & Clark Station in Sidney, Montana, and in late 2021 for units 1 and 2 at Heskett Station in Mandan, North Dakota. In addition, the Company announced that it intends to construct a new 88-MW simple-cycle natural gas combustion turbine peaking unit at the existing plant site in Mandan, North Dakota. The simple-cycle turbine was included in the Company's recently submitted integrated resource plan. The Company expects to file an advanced determination of prudence with the NDPSC during the third quarter of 2019 for the new simple-cycle turbine. If approved, the simple-cycle turbine is expected to be placed into service in 2023. Deferred accounting orders on the remaining Lewis & Clark and Heskett property, plant and equipment balances will also be filed in the necessary jurisdictions.

The Company continues to be focused on the regulatory recovery of its investments. The Company files for rate adjustments to seek recovery of operating costs and capital investments, as well as reasonable returns as allowed by regulators. The Company also continues to propose pipeline safety cost recovery mechanisms in certain jurisdictions focusing on the safety of its infrastructure. The Company's most recent cases by jurisdiction are discussed in Note 19.

Pipeline and Midstream

Strategy and challenges The pipeline and midstream segment provides natural gas transportation, gathering and underground storage services, as discussed in Note 17. The segment focuses on utilizing its extensive expertise in the design, construction and operation of energy infrastructure and related services to increase market share and profitability through optimization of existing operations, organic growth and investments in energy-related assets within or in close proximity to its current operating areas. The segment focuses on the continual safety and reliability of its systems, which entails building, operating and maintaining safe natural gas pipelines and facilities. The segment continues to evaluate growth opportunities including the expansion of existing storage, gathering and transmission facilities; incremental pipeline projects; and expansion of energy-related services leveraging on its core competencies.

The segment is exposed to energy price volatility which is impacted by the fluctuations in pricing, production and basis differentials of the energy market's commodities. Legislative and regulatory initiatives to increase pipeline safety regulations and reduce methane emissions could also impact the price and demand for natural gas.

41

Tariff increases on steel and aluminum materials could negatively affect the segment's construction projects and maintenance work. The Company continues to monitor the impact of tariffs on raw material costs. The segment experiences extended lead times on raw materials that are critical to the segment's construction and maintenance work. Long lead times on materials could delay maintenance work and project construction potentially causing lost revenues and/or increased costs. The Company continues to proactively monitor and plan for the material lead times, as well as work with manufacturers and suppliers to help mitigate the risk of delays due to extended lead times.

The pipeline and midstream segment is subject to extensive regulation including certain operational, system integrity and environmental regulations, as well as various permit terms and operational compliance conditions. The segment is charged with the ongoing process of reviewing existing permits and easements, as well as securing new permits and easements as necessary to meet current demand and future growth opportunities. Exposure to pipeline opposition groups could also cause negative impacts on the segment with increased costs and potential delays to project completion.

The segment focuses on the recruitment and retention of a skilled workforce to remain competitive and provide services to its customers. The industry in which it operates relies on a skilled workforce to construct energy infrastructure and operate existing infrastructure in a safe manner. A shortage of skilled personnel can create a competitive labor market which could increase costs incurred by the segment. Competition from other pipeline and midstream companies can also have a negative impact on the segment.

Earnings overview - The following information summarizes the performance of the pipeline and midstream segment.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019			2018
	(Dollars in millions)
Operating revenues	$	36.2	$	30.6	$	68.8		$	61.2
Operating expenses:
Operation and maintenance	16.9		14.6		31.5			29.7
Depreciation, depletion and amortization	5.3		4.4		10.1			8.7
Taxes, other than income	3.3		3.1		6.6			6.2
Total operating expenses	25.5		22.1		48.2			44.6
Operating income	10.7		8.5		20.6			16.6
Other income	.2		.4		.8			.5
Interest expense	1.8		1.3		3.6			2.5
Income before income taxes	9.1		7.6		17.8			14.6
Income taxes	2.0		1.9		3.8			3.6
Net income	$	7.1	$	5.7	$	14.0		$	11.0
Transportation volumes (MMdk)	110.1		88.2		208.8			166.5
Natural gas gathering volumes (MMdk)	3.5		3.7		6.9			7.4
Customer natural gas storage balance (MMdk):
Beginning of period	2.3		7.7		13.9			22.4
Net injection (withdrawal)	9.1		8.5		(2.5		)	(6.2		)
End of period	11.4		16.2		11.4			16.2

Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018 Pipeline and midstream earnings increased $1.4 million (25 percent) as a result of:

Revenues: Increase of $5.6 million, largely attributable to increased volumes of natural gas transported through its system as a result of organic growth projects completed in 2018 and increased rates effective May 1, 2019, due to the rate case recently filed with the FERC, as discussed in Note 19. Revenue was also positively impacted by higher nonregulated project revenue.

Operation and maintenance: Increase of $2.3 million, primarily from higher nonregulated project costs as a result of increased nonregulated project revenue, as previously discussed, and higher payroll-related costs.

Depreciation, depletion and amortization: Increase of $900,000, primarily increased property, plant and equipment balances, largely the result of organic growth projects that have been placed into service, and higher depreciation rates effective May 1, 2019, due to the recently filed rate case with the FERC, as discussed in Note 19.

Taxes, other than income: Comparable to the same period in prior year.

Other income: Comparable to the same period in prior year.

42

Interest expense: Increase of $500,000, largely resulting from higher debt balances to finance the organic growth projects completed during 2018, as previously discussed.

Income taxes: Comparable to the same period in the prior year.

Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018 Pipeline and midstream earnings increased $3.0 million (27 percent) as a result of:

Revenues: Increase of $7.6 million, largely attributable to increased volumes of natural gas transported through its system as a result of organic growth projects completed in 2018 and increased rates effective May 1, 2019, due to the rate case recently filed with the FERC, as discussed in Note 19. Revenue was also positively impacted by higher nonregulated project revenue. Partially offsetting these increases was lower storage revenue due to narrow natural gas pricing spreads, as discussed in the Outlook section.

Operation and maintenance: Increase of $1.8 million, largely from higher nonregulated project costs as a result of increased nonregulated project revenue, as previously discussed, and higher payroll-related costs.

Depreciation, depletion and amortization: Increase of $1.4 million, primarily increased property, plant and equipment balances, largely the result of organic growth projects that have been placed into service.

Taxes, other than income: Increase of $400,000, primarily due to higher property taxes in certain jurisdictions.

Other income: Comparable to the same period in prior year.

Interest expense: Increase of $1.1 million, largely resulting from higher debt balances to finance the organic growth projects completed during 2018, as previously discussed.

Income taxes: Comparable to the same period in the prior year.

Outlook The Company has continued to experience the effects of natural gas production at record levels, which has provided opportunities for organic growth projects and increased demand. The completion of organic growth projects has contributed to the Company transporting increasing volumes of natural gas through its system. The record levels of natural gas supply have moderated the need for storage services and put downward pressure on natural gas prices and minimized pricing volatility. Both natural gas production levels and pressure on natural gas prices are expected to continue in the near term. The Company continues to focus on growth and improving existing operations through organic projects in all areas in which it operates. The following describes recent growth projects.

In 2019, the Company plans to complete two additional natural gas pipeline growth projects, the Demicks Lake project and Line Section 22 Expansion project. The Company has signed long-term contracts supporting both projects. The Demicks Lake project, which includes approximately 14 miles of 20-inch pipe and is designed to increase capacity by 175 MMcf per day, is located in McKenzie County, North Dakota. Construction began in April of 2019 with an in-service date in the fall of 2019. The Company began construction on the Line Section 22 Expansion project in the Billings, Montana, area in May of 2019 with an expected in-service date in late 2019. The project is designed to increase capacity by 22.5 MMcf per day to serve incremental demand in Billings, Montana.

Additionally, the Company expects to begin construction on the Demicks Lake Expansion project, located in McKenzie County, North Dakota, in the third quarter of 2019. The Company has signed a long-term contract supporting this project, which is designed to increase capacity by 175 MMcf per day. The Demicks Lake Expansion project is expected to be in-service in early 2020.

In January 2019, the Company announced the North Bakken Expansion project, which includes construction of a new pipeline, compression and ancillary facilities to transport natural gas from core Bakken production areas near Tioga, North Dakota, and extend to a new connection with Northern Border Pipeline in McKenzie County, North Dakota. The Company has secured long-term customer commitments to support the project at an increased design capacity of 300 MMcf per day. Construction is expected to begin in early 2021 with an estimated completion date late in 2021, which is dependent on regulatory and environmental permitting. On June 28, 2019, the Company filed with the FERC a request to initiate the pre-filing process and received FERC approval of the pre-filing request on July 3, 2019.

Construction Materials and Contracting

Strategy and challenges The construction materials and contracting segment provides an integrated set of aggregate-based construction services, as discussed in Note 17. The segment focuses on high-growth strategic markets located near major transportation corridors and desirable mid-sized metropolitan areas; strengthening the long-term, strategic aggregate reserve position through available purchase and/or lease opportunities; enhancing profitability through cost containment, margin discipline and vertical integration of the segment's operations; development and recruitment of talented employees; and continued growth through organic and acquisition opportunities.

43

A key element of the Company's long-term strategy for this business is to further expand its market presence in the higher-margin materials business (rock, sand, gravel, liquid asphalt, asphalt concrete, ready-mixed concrete and related products), complementing and expanding on the segment's expertise. The Company's acquisition activity supports this strategy.

As one of the country's largest sand and gravel producers, the segment continues to strategically manage its approximately 1.0 billion tons of aggregate reserves in all its markets, as well as take further advantage of being vertically integrated. The segment's vertical integration allows the segment to manage operations from aggregate mining to final lay-down of concrete and asphalt, with control of and access to permitted aggregate reserves being significant. The Company's aggregate reserves are naturally declining and as a result, the Company seeks acquisition opportunities to replace the reserves. In 2018, the Company's aggregate reserves increased by approximately 50 million tons primarily due to acquisition activity.

The construction materials and contracting segment faces challenges that are not under the direct control of the business. The segment operates in geographically diverse and highly competitive markets. Competition can put negative pressure on the segment's operating margins. The segment is also subject to volatility in the cost of raw materials such as diesel fuel, gasoline, liquid asphalt, cement and steel. Although it is difficult to determine the split between inflation and supply/demand increases, diesel fuel costs remained fairly stable for the first six months of 2019, while asphalt oil costs have trended higher in 2019 compared to 2018. Such volatility can have a negative impact on the segment's margins. Other variables that can impact the segment's margins include adverse weather conditions, the timing of project starts or completion and declines or delays in new and existing projects due to the cyclical nature of the construction industry and governmental infrastructure spending.

The segment also faces challenges in the recruitment and retention of employees. Trends in the labor market include an aging workforce and availability issues. The segment continues to face increasing pressure to control costs, as well as find and train a skilled workforce to meet the needs of increasing demand and seasonal work.

Earnings overview - The following information summarizes the performance of the construction materials and contracting segment.

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
	(Dollars in millions)
Operating revenues	$	596.0	$	509.6		$	823.2		$	723.0
Cost of sales:
Operation and maintenance	494.7		426.0			715.5			624.9
Depreciation, depletion and amortization	18.7		14.0			35.5			27.0
Taxes, other than income	13.0		11.2			21.4			19.0
Total cost of sales	526.4		451.2			772.4			670.9
Gross margin	69.6		58.4			50.8			52.1
Selling, general and administrative expense:
Operation and maintenance	21.8		19.6			41.8			37.2
Depreciation, depletion and amortization	.7		.5			1.5			1.2
Taxes, other than income	.9		1.0			2.9			2.7
Total selling, general and administrative expense	23.4		21.1			46.2			41.1
Operating income	46.2		37.3			4.6			11.0
Other income (expense)	—		(.1		)	1.3			(.8		)
Interest expense	6.8		4.5			12.1			8.1
Income (loss) before income taxes	39.4		32.7			(6.2		)	2.1
Income taxes	10.2		8.4			(.9		)	1.3
Net income (loss)	$	29.2	$	24.3		$	(5.3	)	$	.8
Sales (000's):
Aggregates (tons)	9,084		7,647			12,955			11,494
Asphalt (tons)	1,913		1,975			2,079			2,201
Ready-mixed concrete (cubic yards)	1,144		948			1,752			1,520

Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018 Construction materials and contracting earnings increased $4.9 million (20 percent) as a result of:

Revenues: Increase of $86.4 million, primarily the result of higher aggregate and ready-mixed concrete volumes and construction revenues due to strong economic environments in certain states, as well as additional material volumes associated with the businesses acquired since the second quarter of 2018.

44

Gross margin: Increase of $11.2 million, largely due to the higher volume of work resulting in an increase in revenues, as previously discussed. Operation and maintenance expense increased as a direct result of the revenue increase.

Selling, general and administrative expense: Increase of $2.3 million, primarily payroll-related costs, largely related to the businesses acquired since the second quarter of 2018.

Other income: Comparable to the same period in prior year.

Interest expense: Increase of $2.3 million, largely resulting from higher debt balances as a result of recent acquisitions and higher working capital needs during the construction season.

Income taxes: Increase of $1.8 million, largely the result of increased income before income taxes.

Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018 Construction materials and contracting earnings decreased $6.1 million (748 percent) as a result of:

Revenues: Increase of $100.2 million, primarily the result of higher aggregate and ready-mixed concrete volumes and construction revenues due to strong economic environments in certain states largely during the second quarter of 2019, as well as additional material volumes associated with the businesses acquired since the second quarter of 2018.

Gross margin: Decrease of $1.3 million, largely resulting from seasonal negative gross margins associated with the businesses acquired since the second quarter of 2018, partially offset by the volume of work during the second quarter of 2019 resulting in an increase in revenues, as previously discussed. Operation and maintenance expense increased as a direct result of the revenue increase.

Selling, general and administrative expense: Increase of $5.1 million, primarily payroll-related costs, largely related to the businesses acquired since the second quarter of 2018.

Other income: Increase of $2.1 million, primarily due to higher returns on investments.

Interest expense: Increase of $4.0 million, largely resulting from higher debt balances as a result of recent acquisitions and working capital needs.

Income taxes: Decrease of $2.2 million, largely the result of a loss before income taxes.

Outlook The segment's vertically integrated aggregates-based business model provides the Company with the ability to capture margin throughout the sales delivery process. The aggregate products are sold internally and externally for use in other products such as ready-mixed concrete, asphaltic concrete and public and private construction markets. The contracting services and construction materials are sold primarily to construction contractors in connection with street, highway and other public infrastructure projects, as well as private commercial and residential development projects. The public infrastructure projects have traditionally been more stable markets as public funding is more secure during periods of economic decline. The public funding is, however, dependent on state and federal funding such as appropriations to the Federal Highway Administration. Spending on private development is highly dependent on both local and national economic cycles, providing additional sales during times of strong economic cycles.

The Company remains optimistic about overall economic growth and infrastructure spending. The IBISWorld Incorporated Industry Report issued in June 2019 for sand and gravel mining in the United States projects a 1.1 percent annual growth rate through 2024. The report also states the demand for clay and refractory materials is projected to continue deteriorating in several downstream manufacturing industries. However, the report expects this decline will be offset by rising activity in the residential and nonresidential construction markets, growing public sector investment in the highway and bridge construction markets and the oil and gas sector growth. The Company believes stronger demand in the housing construction markets along with continued demand from the highway and bridge construction markets should provide a stable demand for construction materials and contracting products and services in the near future.

In the first quarter of 2019, the Company purchased additional aggregate deposits in Texas, which augments existing company operations and enhances its ability to sell aggregates to third parties in the coming years. Also in the first quarter of 2019, the Company acquired Viesko Redi-Mix, Inc., a ready-mixed concrete supplier headquartered near Salem, Oregon. The Company continues to evaluate additional acquisition opportunities. For more information on the Company's business combinations, see Note 9.

The construction materials and contracting segment's backlog at June 30, 2019, was $1.0 billion, up from $731.2 million at June 30, 2018. The increase in backlog was primarily attributable to increased agency work and bidding opportunities in nearly every region. The Company expects to complete a significant amount of backlog at June 30, 2019, during the next 12 months.

During the second quarter of 2019, the governor of Oregon signed House Bill 3427, which creates a Corporate Activity Tax. The tax is expected to be enacted in the third quarter of 2019 and effective for the Company on January 1, 2020. The Company is

45

evaluating the impact the additional taxation will have on the construction materials and contracting segment due to their operations in Oregon.

Five of the labor contracts that Knife River was negotiating, as reported in Items 1 and 2 - Business Properties - General in the 2018 Annual Report, have been ratified.

Construction Services

Strategy and challenges The construction services segment provides inside and outside specialty contracting, as discussed in Note 17. The construction services segment focuses on providing a superior return on investment by building new and strengthening existing customer relationships; ensuring quality service; safely executing projects; effectively controlling costs; collecting on receivables; retaining, developing and recruiting talented employees; growing through organic and acquisition opportunities; and focusing efforts on projects that will permit higher margins while properly managing risk.

The construction services segment faces challenges in the highly competitive markets in which it operates. Competitive pricing environments, project delays, changes in management's estimates of variable consideration and the effects from restrictive regulatory requirements have negatively impacted revenues and margins in the past and could affect revenues and margins in the future. Additionally, margins may be negatively impacted on a quarterly basis due to adverse weather conditions, as well as timing of project starts or completions, declines or delays in new projects due to the cyclical nature of the construction industry and other factors. These challenges may also impact the risk of loss on certain projects. Accordingly, operating results in any particular period may not be indicative of the results that can be expected for any other period.

The need to ensure available specialized labor resources for projects also drives strategic relationships with customers and project margins. These trends include an aging workforce and labor availability issues, increasing pressure to reduce costs and improve reliability, and increasing duration and complexity of customer capital programs. Due to these and other factors, the Company believes customer demand for labor resources will continue to increase, possibly surpassing the supply of industry resources.

Earnings overview - The following information summarizes the performance of the construction services segment.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In millions)
Operating revenues	$	464.9	$	323.6	$	885.7	$	657.6
Cost of sales:
Operation and maintenance	391.1		270.7		742.7		548.7
Depreciation, depletion and amortization	3.7		3.6		7.3		7.1
Taxes, other than income	14.6		9.5		30.5		22.3
Total cost of sales	409.4		283.8		780.5		578.1
Gross margin	55.5		39.8		105.2		79.5
Selling, general and administrative expense:
Operation and maintenance	22.1		19.1		42.4		36.4
Depreciation, depletion and amortization	.4		.3		.8		.7
Taxes, other than income	1.0		1.0		2.6		2.4
Total selling, general and administrative expense	23.5		20.4		45.8		39.5
Operating income	32.0		19.4		59.4		40.0
Other income	.6		.3		1.2		.6
Interest expense	1.4		.9		2.5		1.8
Income before income taxes	31.2		18.8		58.1		38.8
Income taxes	8.4		4.7		15.2		9.6
Net income	$	22.8	$	14.1	$	42.9	$	29.2

Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018 Construction services earnings increased $8.7 million (62 percent) as a result of:

Revenues: Increase of $141.3 million, largely the result of higher inside specialty contracting workloads from greater customer demand for hospitality and high-tech projects. Also contributing to the increase was higher outside specialty contracting workloads, primarily the result of increased demand for utility projects.

Gross margin: Increase of $15.7 million, primarily due to the higher volume of work resulting in an increase in revenues, as previously discussed. Operation and maintenance expense increased as a direct result of the revenue increase.

46

Selling, general and administrative expense: Increase of $3.1 million, primarily payroll-related costs, as well as increased professional services and office expenses, partially offset by decreased bad debt expenses.

Other income: Comparable to the same period in prior year.

Interest expense: Increase of $500,000, primarily due to higher debt balances as a result of additional working capital needs during the construction season.

Income taxes: Increase of $3.7 million, largely due to an increase in income before income taxes.

Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018 Construction services earnings increased $13.7 million (47 percent) as a result of:

Revenues: Increase of $228.1 million, largely the result of higher inside specialty contracting workloads from greater customer demand for hospitality and high-tech projects. Also contributing to the increase was higher outside specialty contracting workloads, primarily the result of increased demand for utility projects.

Gross margin: Increase of $25.7 million, primarily due to the higher volume of work resulting in an increase in revenues, as previously discussed. Operation and maintenance expense increased as a direct result of the revenue increase.

Selling, general and administrative expense: Increase of $6.3 million, primarily payroll-related costs, as well as increased office expenses and professional services, partially offset by decreased bad debt expenses.

Other income: Increase of $600,000, largely attributable to higher returns on investments.

Interest expense: Increase of $700,000, primarily due to higher debt balances as a result of additional working capital needs during the construction season.

Income taxes: Increase of $5.6 million, largely due to an increase in income before income taxes.

Outlook The Company continues to expect long-term growth in the electric transmission and distribution market, although the timing of large bids and subsequent construction is likely to be highly variable from year to year. The Company continues to believe several small and medium-sized transmission and distribution projects will be available for bid in 2019.

The Company expects bidding activity to remain strong for both inside and outside specialty construction companies in 2019. Although bidding remains highly competitive in all areas, the Company expects the segment's skilled workforce will continue to provide a benefit in securing and executing profitable projects. The construction services segment had backlog at June 30, 2019, of $1.1 billion, up from $887.9 million at June 30, 2018. The increase in backlog was largely attributable to the new project opportunities that the Company continues to see across its diverse operations, particularly in inside specialty electrical and mechanical contracting for the hospitality and gaming, high-tech, mission critical and public entities. The Company's outside power, communications and natural gas specialty operations also have a high volume of available work. The Company expects to complete a significant amount of backlog at June 30, 2019, during the next 12 months. Additionally, the Company continues to evaluate potential acquisition opportunities that would be accretive to the Company and continue to grow the Company's backlog.

During the second quarter of 2019, the governor of Oregon signed House Bill 3427, which creates a Corporate Activity Tax. The tax is expected to be enacted in the third quarter of 2019 and effective for the Company on January 1, 2020. The Company is evaluating the impact the additional taxation will have on the construction services segment due to their operations in Oregon.

47

Other

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In millions)
Operating revenues	$	2.9		$	2.8		$	10.7		$	5.5
Operating expenses:
Operation and maintenance	1.1			2.0			8.2			3.9
Depreciation, depletion and amortization	.6			.5			1.0			1.1
Taxes, other than income	—			.1			.1			.1
Total operating expenses	1.7			2.6			9.3			5.1
Operating income	1.2			.2			1.4			.4
Other income (expense)	.2			(.3		)	.3			.1
Interest expense	.5			.8			1.0			1.7
Income (loss) before income taxes	.9			(.9		)	.7			(1.2		)
Income taxes	(1.9		)	1.4			1.4			1.8
Net income (loss)	$	2.8		$	(2.3	)	$	(.7	)	$	(3.0	)

Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018 The net income for Other was positively impacted in the second quarter of 2019 as a result of favorable income tax adjustments related to the consolidated Company's annualized estimated tax rate. General and administrative costs and interest expense previously allocated to the exploration and production and refining businesses that do not meet the criteria for income (loss) from discontinued operations are also included in Other.

Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018 The net loss for Other was positively impacted as a result of reduced income tax adjustments related to the consolidated Company's annualized estimated tax rate in 2019. Also included in Other was insurance activity at the Company's captive insurer which impacted both operating revenues and operation and maintenance expense. General and administrative costs and interest expense previously allocated to the exploration and production and refining businesses that do not meet the criteria for income (loss) from discontinued operations are also included in Other.

Intersegment Transactions

Amounts presented in the preceding tables will not agree with the Consolidated Statements of Income due to the Company's elimination of intersegment transactions. The amounts related to these items were as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In millions)
Intersegment transactions:
Operating revenues	$	11.3	$	10.0	$	43.2	$	34.5
Operation and maintenance	3.9		3.5		11.9		6.3
Purchased natural gas sold	7.4		6.5		31.3		28.2

For more information on intersegment eliminations, see Note 17.

Liquidity and Capital Commitments

At June 30, 2019, the Company had cash and cash equivalents of $72.0 million and available borrowing capacity of $411.9 million under the outstanding credit facilities of the Company and its subsidiaries. The Company expects to meet its obligations for debt maturing within one year and its other operating and capital requirements from various sources, including internally generated funds; the Company's credit facilities, as described in Capital resources; the issuance of long-term debt; and the issuance of equity securities.

Cash flows

Operating activities The changes in cash flows from operating activities generally follow the results of operations as discussed in Business Segment Financial and Operating Data and also are affected by changes in working capital. Cash flows used in operating activities in the first six months of 2019 increased $199.5 million from the comparable period in 2018. The increase in cash flows used in operating activities was largely driven by an increase in accounts receivable as a result of higher revenues at the construction businesses as compared to the prior period. Also contributing to the increase in cash flows used in operating

48

activities was the increase in natural gas purchases that include the effects of colder weather, higher gas costs and the timing of collection of such balances from customers at the natural gas distribution business.

Investing activities Cash flows used in investing activities in the first six months of 2019 was $305.1 million compared to $222.3 million in the first six months of 2018. The increase in cash used in investing activities was primarily related to acquisition activity and asset purchases at the construction materials and contracting business.

Financing activities Cash flows provided by financing activities in the first six months of 2019 was $346.0 million compared to $52.7 million in the first six months of 2018. The change was largely the result of higher debt borrowings in 2019 offset in part by the repayment of debt. The increase in cash provided by financing activities was largely due to an increase in commercial paper balances as a result of higher working capital needs at the construction services business and increased long-term and short-term debt financing at the construction materials and contracting business for financing of acquisitions and working capital needs. The increase was also due to increased borrowings at the natural gas distribution business, largely resulting from short-term borrowings for higher natural gas costs, as previously discussed, and long-term borrowings for funding capital investments. During the first six months of 2019, the Company also issued common stock for net proceeds of $69.6 million under its "at-the-market" offering and 401(k) plan.

Defined benefit pension plans

There were no material changes to the Company's qualified noncontributory defined benefit pension plans from those reported in the 2018 Annual Report other than an increase of approximately $2.5 million for the year in pension expense in 2019, largely resulting from a revised assumption for the expected long-term rate of return on assets used to calculate the expense and an actual decline in asset values. For more information, see Note 18 and Part II, Item 7 in the 2018 Annual Report.

Capital expenditures

Capital expenditures for the first six months of 2019 were $298.3 million, which includes the completed aggregate deposit purchase and business combination at the construction materials and contracting business, as compared to $251.3 million in the first six months of 2018, which includes two completed acquisitions at the construction materials and contracting business. Capital expenditures allocated to the Company's business segments are estimated to be approximately $674.2 million for 2019. The Company has included in the estimated capital expenditures for 2019 the completed purchase of additional aggregate deposits, the completed business combination of a ready-mixed concrete supplier, the Demicks Lake project, the Line Section 22 Expansion project and the Demicks Lake Expansion project, as previously discussed in Business Segment Financial and Operating Data.

Estimated capital expenditures for 2019 also include system upgrades; service extensions; routine equipment maintenance and replacements; buildings, land and building improvements; pipeline projects; power generation and transmission opportunities, including certain costs for additional electric generating capacity; environmental upgrades; and other growth opportunities.

The Company continues to evaluate potential future acquisitions and other growth opportunities; however, they are dependent upon the availability of economic opportunities and, as a result, capital expenditures may vary significantly from the estimate previously discussed. It is anticipated that all of the funds required for capital expenditures for 2019 will be met from various sources, including internally generated funds; the Company's credit facilities, as described later; issuance of long-term debt; and issuance of equity securities.

Capital resources

Certain debt instruments of the Company's subsidiaries contain restrictive and financial covenants and cross-default provisions. In order to borrow under the respective debt instruments, the subsidiary companies must be in compliance with the applicable covenants and certain other conditions, all of which the subsidiaries, as applicable, were in compliance with at June 30, 2019. In the event the subsidiaries do not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued. For more information on the covenants, certain other conditions and cross-default provisions, see Part II, Item 8 in the 2018 Annual Report.

49

The following table summarizes the outstanding revolving credit facilities of the Company's subsidiaries at June 30, 2019:

Company	Facility		Facility Limit			Amount Outstanding			Letters of Credit			Expiration Date
			(In millions)
Montana-Dakota Utilities Co.	Commercial paper/Revolving credit agreement	(a)	$	175.0		$	47.9	(b)	$	—		6/8/23
Cascade Natural Gas Corporation	Revolving credit agreement		$	100.0	(c)	$	11.1		$	2.2	(d)	6/7/24
Intermountain Gas Company	Revolving credit agreement		$	85.0	(e)	$	—		$	1.4	(d)	6/7/24
Centennial Energy Holdings, Inc.	Commercial paper/Revolving credit agreement	(f)	$	500.0		$	385.5	(b)	$	—		9/23/21

(a) The commercial paper program is supported by a revolving credit agreement with various banks (provisions allow for increased borrowings, at the option of Montana-Dakota on stated conditions, up to a maximum of $225.0 million). There were no amounts outstanding under the credit agreement.

(b) Amount outstanding under commercial paper program.

(c) Certain provisions allow for increased borrowings, up to a maximum of $125.0 million.

(d) Outstanding letter(s) of credit reduce the amount available under the credit agreement.

(e) Certain provisions allow for increased borrowings, up to a maximum of $110.0 million.

(f) The commercial paper program is supported by a revolving credit agreement with various banks (provisions allow for increased borrowings, at the option of Centennial on stated conditions, up to a maximum of $600.0 million). There were no amounts outstanding under the credit agreement.

The respective commercial paper programs are supported by revolving credit agreements. While the amount of commercial paper outstanding does not reduce available capacity under the respective revolving credit agreements, the subsidiary companies do not issue commercial paper in an aggregate amount exceeding the available capacity under their credit agreements. The commercial paper borrowings may vary during the period, largely the result of fluctuations in working capital requirements due to the seasonality of the construction businesses.

Total equity as a percent of total capitalization was 52 percent, 57 percent and 55 percent at June 30, 2019 and 2018, and December 31, 2018, respectively. This ratio is calculated as the Company's total equity, divided by the Company's total capital. Total capital is the Company's total debt, including short-term borrowings and long-term debt due within one year, plus total equity. This ratio is an indicator of how a company is financing its operations, as well as its financial strength.

The Company currently has a shelf registration statement on file with the SEC, under which the Company may issue and sell any combination of common stock and debt securities. The Company may sell all or a portion of such securities if warranted by market conditions and the Company's capital requirements. Any public offer and sale of such securities will be made only by means of a prospectus meeting the requirements of the Securities Act and the rules and regulations thereunder. The Company's board of directors currently has authorized the issuance and sale of up to an aggregate of $1.0 billion worth of such securities. The Company's board of directors reviews this authorization on a periodic basis and the aggregate amount of securities authorized may be increased in the future.

On February 22, 2019, the Company entered into a Distribution Agreement with J.P. Morgan Securities LLC and MUFG Securities Americas Inc., as sales agents, with respect to the issuance and sale of up to 10.0 million shares of the Company's common stock in connection with an “at-the-market” offering. The common stock may be offered for sale, from time to time, in accordance with the terms and conditions of the agreement. Proceeds from the sale of shares of common stock under the agreement have been and are expected to be used for general corporate purposes, which may include, among other things, working capital, capital expenditures, debt repayment and the financing of acquisitions.

The Company issued 924,000 and 2.3 million shares of common stock for the three and six months ended June 30, 2019, respectively, pursuant to the “at-the-market” offering. The Company received net proceeds of $23.5 million and $59.4 million for the three and six months ended June 30, 2019, respectively. The Company paid commissions to the sales agents of approximately $237,000 and $600,000 for the three and six months ended June 30, 2019, respectively, in connection with the sales of common stock under the "at-the-market" offering. The net proceeds were used for capital expenditures and acquisitions. As of June 30, 2019, the Company had remaining capacity to issue up to 7.7 million additional shares of common stock under the "at-the-market" offering program.

Certain debt instruments that the Company borrows under use LIBOR as a benchmark for establishing the rate. LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to disappear entirely or to perform differently than in the past. The Company has been proactive to anticipate the reform of LIBOR by replacing it with Secured Overnight Financing Rate in certain of their new debt instruments, as well as those that are being renewed. The Company continues to evaluate the impact the reform will have on its debt instruments and, at this time, does not anticipate a significant impact.

50

Cascade Natural Gas Corporation On June 7, 2019, Cascade amended its revolving credit agreement to increase the borrowing limit from $75.0 million to $100.0 million and extend the maturity date from April 24, 2020 to June 7, 2024. The credit agreement contains customary covenants and provisions, including a covenant of Cascade not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

On June 13, 2019, Cascade issued $75.0 million of senior notes under a note purchase agreement with maturity dates ranging from June 13, 2029 to June 13, 2049, at a weighted average interest rate of 3.93 percent. The agreement contains customary covenants and provisions, including a covenant of Cascade not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

Cascade's credit agreements also contain cross-default provisions. These provisions state that if Cascade fails to make any payment with respect to any indebtedness or contingent obligation, in excess of a specified amount, under any agreement that causes such indebtedness to be due prior to its stated maturity or the contingent obligation to become payable, Cascade will be in default under the revolving credit agreement.

Intermountain Gas Company On June 7, 2019, Intermountain amended its revolving credit agreement to extend the termination date from April 24, 2020 to June 7, 2024. The agreement contains customary covenants and provisions, including a covenant of Intermountain not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

On June 13, 2019, Intermountain issued $50.0 million of senior notes under a note purchase agreement with maturity dates ranging from June 13, 2029 to June 13, 2049, at a weighted average interest rate of 3.92 percent. The agreement contains customary covenants and provisions, including a covenant of Intermountain not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

Intermountain's credit agreements also contain cross-default provisions. These provisions state that if Intermountain fails to make any payment with respect to any indebtedness or contingent obligation, in excess of a specified amount, under any agreement that causes such indebtedness to be due prior to its stated maturity or the contingent obligation to become payable, or certain conditions result in an early termination date under any swap contract that is in excess of a specified amount, then Intermountain will be in default under the revolving credit agreement.

Centennial Energy Holdings, Inc. On April 4, 2019, Centennial issued $150.0 million of senior notes under a note purchase agreement with maturity dates ranging from April 4, 2029 to April 4, 2034, at a weighted average interest rate of 4.60 percent. The agreement contains customary covenants and provisions, including a covenant of Centennial not to permit, at any time, the ratio of total debt to total capitalization to be greater than 60 percent.

On April 12, 2019, Centennial entered into a $50.0 million term loan agreement with a variable interest rate which matures on April 11, 2020. The agreement contains customary covenants and provisions, including a covenant of Centennial not to permit, at any time, the ratio of funded debt to capitalization to be greater than 65 percent. The covenants also include certain limitations on subsidiary indebtedness and restrictions on the sale of certain assets and on the making of certain loans and investments.

Off balance sheet arrangements

As of June 30, 2019, the Company had no material off balance sheet arrangements as defined by the rules of the SEC.

Contractual obligations and commercial commitments

There were no material changes in the Company's contractual obligations from continuing operations relating to operating leases, purchase commitments, asset retirement obligations, uncertain tax positions and minimum funding requirements for its defined benefit plans for 2019 from those reported in the 2018 Annual Report.

At June 30, 2019, the Company's commitments for long-term debt and estimated interest payments presented on a calendar-year basis were as follows:

	Remainder of 2019		1 - 3 years		3 - 5 years		More than 5 years		Total
	(In millions)
Long-term debt maturities*	$	51.8	$	549.8	$	196.2	$	1,588.5	$	2,386.3
Estimated interest payments**	48.6		253.1		137.9		526.8		966.4
	$	100.4	$	802.9	$	334.1	$	2,115.3	$	3,352.7

* Unamortized debt issuance costs and discount are excluded from the table.

** Estimated interest payments are calculated based on the applicable rates and payment dates.

For more information on contractual obligations and commercial commitments, see Part II, Item 7 in the 2018 Annual Report.

51

New Accounting Standards

For information regarding new accounting standards, see Note 6, which is incorporated by reference.

Critical Accounting Policies Involving Significant Estimates

The Company's critical accounting policies involving significant estimates include impairment testing of long-lived assets and goodwill; fair values of acquired assets and liabilities under the acquisition method of accounting; tax provisions; revenue recognized using the cost-to-cost measure of progress for contracts; and actuarially determined benefit costs. There were no material changes in the Company's critical accounting policies involving significant estimates from those reported in the 2018 Annual Report. For more information on critical accounting policies involving significant estimates, see Part II, Item 7 in the 2018 Annual Report.

Non-GAAP Financial Measures

The Business Segment Financial and Operating Data includes financial information prepared in accordance with GAAP, as well as another financial measure, adjusted gross margin, that is considered a non-GAAP financial measure as it relates to the Company's electric and natural gas distribution segments. The presentation of adjusted gross margin is intended to be a useful supplemental financial measure for investors’ understanding of the segments' operating performance. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, GAAP financial measures such as operating income (loss) or net income (loss). The Company's non-GAAP financial measure, adjusted gross margin, is not standardized; therefore, it may not be possible to compare this financial measure with other companies’ gross margin measures having the same or similar names.

In addition to operating revenues and operating expenses, management also uses the non-GAAP financial measure of adjusted gross margin when evaluating the results of operations for the electric and natural gas distribution segments. Adjusted gross margin for the electric and natural gas distribution segments is calculated by adding back adjustments to operating income (loss). These add-back adjustments include: operation and maintenance expense; depreciation, depletion and amortization expense; and certain taxes, other than income.

Adjusted gross margin includes operating revenues less cost of electric fuel and purchased power, purchased natural gas sold and certain taxes, other than income. These taxes, other than income, included as a reduction to adjusted gross margin relate to revenue taxes. These segments pass on to their customers the increases and decreases in the wholesale cost of power purchases, natural gas and other fuel supply costs in accordance with regulatory requirements. As such, the segments' revenues are directly impacted by the fluctuations in such commodities. Revenue taxes, which are passed back to customers, fluctuate with revenues as they are calculated as a percentage of revenues. For these reasons, period over period, the segments' operating income (loss) is generally not impacted. The Company's management believes the adjusted gross margin is a useful supplemental financial measure as these items are included in both operating revenues and operating expenses. The Company's management also believes that adjusted gross margin and the remaining operating expenses that calculate operating income (loss) are useful in assessing the Company's utility performance as management has the ability to influence control over the remaining operating expenses.

The following information reconciles operating income to adjusted gross margin for the electric segment.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In millions)
Operating income	$	9.8	$	13.0	$	27.8	$	31.2
Adjustments:
Operating expenses:
Operation and maintenance	33.6		31.1		63.8		61.2
Depreciation, depletion and amortization	13.9		12.5		27.6		25.1
Taxes, other than income	4.2		3.7		8.4		7.5
Total adjustments	51.7		47.3		99.8		93.8
Adjusted gross margin	$	61.5	$	60.3	$	127.6	$	125.0

52

The following information reconciles operating income (loss) to adjusted gross margin for the natural gas distribution segment.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019		2018
	(In millions)
Operating income (loss)	$	(2.6	)	$	(4.4	)	$	47.7	$	44.2
Adjustments:
Operating expenses:
Operation and maintenance	43.6			42.5			90.0		87.2
Depreciation, depletion and amortization	19.7			17.7			39.1		35.4
Taxes, other than income	5.6			5.4			11.8		11.2
Total adjustments	68.9			65.6			140.9		133.8
Adjusted gross margin	$	66.3		$	61.2		$	188.6	$	178.0

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to the impact of market fluctuations associated with interest rates. The Company has policies and procedures to assist in controlling these market risks and from time to time has utilized derivatives to manage a portion of its risk.

Interest rate risk

There were no material changes to interest rate risk faced by the Company from those reported in the 2018 Annual Report.

At June 30, 2019, the Company had no outstanding interest rate hedges.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. The Company's disclosure controls and other procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. The Company's disclosure controls and procedures include controls and procedures designed to provide reasonable assurance that information required to be disclosed is accumulated and communicated to management, including the Company's chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. The Company's management, with the participation of the Company's chief executive officer and chief financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the chief executive officer and the chief financial officer have concluded that, as of the end of the period covered by this report, such controls and procedures were effective at a reasonable assurance level.

Changes in internal controls

No change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended June 30, 2019, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

53

Part II -- Other Information

Item 1. Legal Proceedings

For information regarding legal proceedings required by this item, see Note 20, which is incorporated herein by reference.

Item 1A. Risk Factors

Please refer to the Company's risk factors that are disclosed in Part I, Item 1A - Risk Factors in the 2018 Annual Report that could be materially harmful to the Company's business, prospects, financial condition or financial results if they occur. There were no material changes to the Company's risk factors provided in Part I, Item 1A - Risk Factors in the 2018 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table includes information with respect to the Company's purchase of equity securities:

ISSUER PURCHASES OF EQUITY SECURITIES
Period	(a) Total Number of Shares (or Units) Purchased (1)	(b)  Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2)
April 1 through April 30, 2019	—	—	—	—
May 1 through May 30, 2019	—	—	—	—
June 1 through June 30, 2019	—	—	—	—
Total	—		—	—

(1) Represents shares of common stock withheld by the Company to pay taxes in connection with the vesting of shares granted pursuant to the Long-Term Performance-Based Incentive Plan.

(2) Not applicable. The Company does not currently have in place any publicly announced plans or programs to purchase equity securities.

Item 4. Mine Safety Disclosures

For information regarding mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K, see Exhibit 95 to this Form 10-Q, which is incorporated herein by reference.

Item 5. Other Information

None.

Item 6. Exhibits

See the index to exhibits immediately preceding the signature page to this report.

54

Exhibits Index
			Incorporated by Reference
Exhibit Number	Exhibit Description	Filed Herewith	Form	Period Ended	Exhibit	Filing Date	File Number
2(a)	Agreement and Plan of Merger, dated December 31, 2018, by and among MDU Resources Group, Inc., MDUR Newco, Inc. and MDU Newco Sub, Inc.		8-K		2(a)	1/2/19	1-03480
3(a)	Certificate of Merger, dated December 31, 2018		8-K		3(a)	1/2/19	1-03480
3(b)	Amended and Restated Certificate of Incorporation of MDU Resources Group, Inc.		8-K		3.2	5/8/19	1-03480
3(c)	Amended and Restated Bylaws of MDU Resources Group, Inc.		8-K		3.1	2/15/19	1-03480
*4(a)	Centennial Energy Holdings, Inc. Note Purchase Agreement, dated December 20, 2012, among Centennial Energy Holdings, Inc. and various purchasers of the notes	X
+10(a)	MDU Resources Group, Inc. Director Compensation Policy, as amended May 8, 2019	X
+10(b)	Instrument of Amendment to the MDU Resources Group, Inc. 401(k) Retirement Plan, dated April 25, 2018	X
+10(c)	Instrument of Amendment to the MDU Resources Group, Inc. 401(k) Retirement Plan, dated September 6, 2018	X
+10(d)	Instrument of Amendment to the MDU Resources Group, Inc. 401(k) Retirement Plan, dated December 20, 2018	X
+10(e)	Instrument of Amendment to the MDU Resources Group, Inc. 401(k) Retirement Plan, dated March 22, 2019	X
31(a)	Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31(b)	Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32	Certification of Chief Executive Officer and Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
95	Mine Safety Disclosures	X
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished as a supplement to the SEC upon request.

+ Management contract, compensatory plan or arrangement.

MDU Resources Group, Inc. agrees to furnish to the SEC upon request any instrument with respect to long-term debt that MDU Resources Group, Inc. has not filed as an exhibit pursuant to the exemption provided by Item 601(b)(4)(iii)(A) of Regulation S-K.

55

Signatures

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		MDU RESOURCES GROUP, INC.
DATE:	August 2, 2019	BY:	/s/ Jason L. Vollmer
			Jason L. Vollmer
			Vice President, Chief Financial Officer and Treasurer
		BY:	/s/ Stephanie A. Barth
			Stephanie A. Barth
			Vice President, Chief Accounting Officer and Controller

56

EX-4.A

CENTENNIAL ENERGY HOLDINGS, INC.

$30,000,000 3.99% Senior Notes, Series A, due December 20, 2019

$80,000,000 4.57% Senior Notes, Series B, due December 20, 2022

$40,000,000 4.97% Senior Notes, Series C, due December 20, 2027

$5,000,000 3.99% Senior Notes, Series D, due December 20, 2019

$55,000,000 4.57% Senior Notes, Series E, due December 20, 2022

$40,000,000 4.97% Senior Notes, Series F, due December 20, 2027

______________

NOTE PURCHASE AGREEMENT

______________

Dated December 20, 2012

{00163867.DOC; 9}

TABLE OF CONTENTS

SECTION    HEADING    PAGE

SECTION 1.AUTHORIZATION OF NOTES    1

SECTION 2.SALE AND PURCHASE OF NOTES    1

SECTION 3.CLOSING    2

SECTION 4.CONDITIONS TO CLOSING    2

Section 4.1.Representations and Warranties    2

Section 4.2.Performance; No Default    2

Section 4.3.Compliance Certificates    3

Section 4.4.Opinions of Counsel    3

Section 4.5.Purchase Permitted by Applicable Law, Etc    3

Section 4.6.Sale of Other Notes    3

Section 4.7.Payment of Special Counsel Fees    3

Section 4.8.Private Placement Number    4

Section 4.9.Changes in Corporate Structure    4

Section 4.10.Funding Instructions    4

Section 4.11.Proceedings and Documents    4

Section 4.12.First Closing    4

SECTION 5.REPRESENTATIONS AND WARRANTIES OF THE COMPANY    4

Section 5.1.Organization; Power and Authority    4

Section 5.2.Authorization, Etc    4

Section 5.3.Disclosure    5

Section 5.4.Organization and Ownership of Shares of Subsidiaries; Affiliates    5

Section 5.5.Financial Statements; Material Liabilities    6

Section 5.6.Compliance with Laws, Other Instruments, Etc    6

Section 5.7.Governmental Authorizations, Etc    6

Section 5.8.Litigation; Observance of Agreements, Statutes and Orders    6

Section 5.9.Taxes    7

Section 5.10.Title to Property; Leases    7

Section 5.11.Licenses, Permits, Etc    7

Section 5.12.Compliance with ERISA    7

Section 5.13.Private Offering by the Company    8

Section 5.14.Use of Proceeds; Margin Regulations    8

Section 5.15.Existing Indebtedness; Future Liens    8

Section 5.16.Foreign Assets Control Regulations, Etc    9

{00163867.DOC; 9}

Section 5.17.Status under Certain Statutes    10

Section 5.18.Environmental Matters    10

SECTION 6.REPRESENTATIONS OF THE PURCHASERS    11

Section 6.1.Purchase for Investment    11

Section 6.2.Source of Funds    11

SECTION 7.INFORMATION AS TO COMPANY    12

Section 7.1.Financial and Business Information    12

Section 7.2.Officer’s Certificate    15

Section 7.3.Visitation    16

Section 7.4.Electronic Delivery    16

SECTION 8.PAYMENT AND PREPAYMENT OF THE NOTES    17

Section 8.1.Maturity    17

Section 8.2.Optional Prepayments with Make-Whole Amount    17

Section 8.3.Change in Control    17

Section 8.4.Allocation of Partial Prepayments    18

Section 8.5.Maturity; Surrender, Etc.    18

Section 8.6.Purchase of Notes    19

Section 8.7.Make-Whole Amount    19

Section 8.8.Payment in Connection with Asset Sale    20

Section 8.9.Payments Due on Non-Business Days    21

SECTION 9.AFFIRMATIVE COVENANTS.    21

Section 9.1.Compliance with Laws    21

Section 9.2.Insurance    22

Section 9.3.Maintenance of Properties    22

Section 9.4.Payment of Taxes and Claims    22

Section 9.5.Corporate Existence, Etc    22

Section 9.6.Books and Records    22

Section 9.7.Subsidiary Guarantors    23

SECTION 10.NEGATIVE COVENANTS.    23

Section 10.1.Transactions with Affiliates    23

Section 10.2.Merger, Consolidation, Etc    24

Section 10.3.Line of Business    25

Section 10.4.Terrorism Sanctions Regulations    25

Section 10.5.Liens    25

Section 10.6.Sale of Assets    27

Section 10.7.Priority Debt    28

Section 10.8.Maximum Company Capitalization Ratio    28

Section 10.9.Minimum Interest Coverage Ratio    28

Section 10.10.Activities of International Subsidiaries    28

{00163867.DOC; 9}    - ii -

Section 10.11.    Project Finance Subsidiary    28

SECTION 11.EVENTS OF DEFAULT    29

SECTION 12.REMEDIES ON DEFAULT, ETC    31

Section 12.1.Acceleration    31

Section 12.2.Other Remedies    31

Section 12.3.Rescission    32

Section 12.4.No Waivers or Election of Remedies, Expenses, Etc    32

SECTION 13.REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES    32

Section 13.1.Registration of Notes    32

Section 13.2.Transfer and Exchange of Notes    32

Section 13.3.Replacement of Notes    33

SECTION 14.PAYMENTS ON NOTES    33

Section 14.1.Place of Payment    33

Section 14.2.Home Office Payment    34

SECTION 15.EXPENSES, ETC    34

Section 15.1.Transaction Expenses    34

Section 15.2.Survival    35

SECTION 16.SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT    35

SECTION 17.AMENDMENT AND WAIVER    35

Section 17.1.Requirements    35

Section 17.2.Solicitation of Holders of Notes    35

Section 17.3.Binding Effect, Etc    36

Section 17.4.Notes Held by Company, Etc    36

Section 17.5.Series D Notes, Series E Notes and Series F Notes Deemed Outstanding    37

SECTION 18.NOTICES    37

SECTION 19.REPRODUCTION OF DOCUMENTS    37

SECTION 20.CONFIDENTIAL INFORMATION    38

{00163867.DOC; 9}    - iii -

SECTION 21.SUBSTITUTION OF PURCHASER    39

SECTION 22.MISCELLANEOUS    39

Section 22.1.Successors and Assigns    39

Section 22.2.Accounting Terms    39

Section 22.3.Severability    39

Section 22.4.Construction, Etc    40

Section 22.5.Counterparts    40

Section 22.6.Governing Law    40

Section 22.7.Jurisdiction and Process; Waiver of Jury Trial    40

Signature    41

{00163867.DOC; 9}    - iv -

SCHEDULE A    —    DEFINED TERMS

SCHEDULE 1-A     —    Form of Series A Note

SCHEDULE 1-B     —    Form of Series B Note

SCHEDULE 1-C     —    Form of Series C Note

SCHEDULE 1-D     —    Form of Series D Note

SCHEDULE 1-E     —    Form of Series E Note

SCHEDULE 1-F     —    Form of Series F Note

SCHEDULE 4.4(a)    —    Form of Opinion of Special Counsel for the Company

SCHEDULE 4.4(b)    —    Form of Opinion of General Counsel for the Company

SCHEDULE 4.4(c)    —    Form of Opinion of Special Counsel for the Purchasers

SCHEDULE 5.4     —    Subsidiaries of the Company and Ownership of Subsidiary Stock

SCHEDULE 5.15    —    Existing Indebtedness

SCHEDULE 10.5    —    Existing Liens

SCHEDULE B    —    INFORMATION RELATING TO PURCHASERS

{00163867.DOC; 9}    - v -

CENTENNIAL ENERGY HOLDINGS, INC.

1200 West Century Avenue

Bismarck, North Dakota 58503

December 20, 2012

TO EACH OF THE PURCHASERS LISTED IN

SCHEDULE B HERETO:

Ladies and Gentlemen:

Centennial Energy Holdings, Inc., a Delaware corporation (together with any successor thereto that becomes a party hereto pursuant to Section 10.2, the “Company”), agrees with each of the Purchasers as follows:

SECTION 1. AUTHORIZATION OF NOTES.

The Company will authorize the issue and sale of (a) $30,000,000 aggregate principal amount of its 3.99% Senior Notes, Series A, due December 20, 2019, to be substantially in the form set out in Schedule 1-A (the “Series A Notes”), (b) $80,000,000 aggregate principal amount of its 4.57% Senior Notes, Series B, due December 20, 2022, to be substantially in the form set out in Schedule 1-B (the “Series B Notes”), (c) $40,000,000 aggregate principal amount of its 4.97% Senior Notes, Series C, due December 20, 2027, to be substantially in the form set out in Schedule 1-C (the “Series C Notes”), (d) $5,000,000 aggregate principal amount of its 3.99% Senior Notes, Series D, due December 20, 2019, to be substantially in the form set out in Schedule 1-D (the “Series D Notes”), (e) $55,000,000 aggregate principal amount of its 4.57% Senior Notes, Series E, due December 20, 2022, to be substantially in the form set out in Schedule 1-E (the “Series E Notes”) and (f) $40,000,000 aggregate principal amount of its 4.97% Senior Notes, Series F, due December 20, 2027, to be substantially in the form set out in Schedule 1-F (the “Series F Notes” and together with the Series A Notes, the Series B Notes, the Series C Notes, the Series D Notes and the Series E Notes, individually and collectively, the “Notes”). Certain capitalized and other terms used in this Agreement are defined in Schedule A. References to a “Schedule” are references to a Schedule attached to this Agreement. References to a “Section” are references to a Section of this Agreement unless otherwise specified.

SECTION 2. SALE AND PURCHASE OF NOTES.

Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the applicable Closing provided for in Section 3, Notes in the principal amount and in the series specified opposite such

{00163867.DOC; 9}    1

Purchaser’s name in Schedule B at the purchase price of 100% of the principal amount thereof. The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

SECTION 3. CLOSING.

The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 W. Monroe Street, Chicago, IL 60603-4080, at 11:30 a.m., New York City local time, at a closing on December 20, 2012 or on such other Business Day thereafter as may be agreed upon by the Company and the Purchasers, with respect to the Series A Notes, the Series B Notes and the Series C Notes (the “First Closing”), and at a closing on February 20, 2013 or on such other Business Day thereafter as may be agreed upon by the Company and the Purchasers, with respect to the Series D Notes, the Series E Notes and the Series F Notes (the “Second Closing,” each of the First Closing and the Second Closing, a “Closing”). At each Closing the Company will deliver to each Purchaser the respective Notes to be purchased by such Purchaser in the form of a single Series A Note, Series B Note, Series C Note, Series D Note, Series E Note or Series F Note, as the case may be (or such greater number of applicable Notes in denominations of at least $250,000 as such Purchaser may request) dated the date of such Closing and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to account number 163095535494 at US Bank, N.A., ABA #091300023 for credit of Centennial Energy Holdings, Inc. If at either Closing the Company shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of any of the conditions specified in Section 4 not having been fulfilled to such Purchaser’s satisfaction or such failure of the Company to tender such Notes.

SECTION 4. CONDITIONS TO CLOSING.

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser at the applicable Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at such Closing, of the following conditions:

Section 4.1.    Representations and Warranties. The representations and warranties of the Company in this Agreement shall be correct when made and at the time of the applicable Closing.

Section 4.2.    Performance; No Default.The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the applicable Closing. Before and after giving effect to the issue and sale of the applicable Notes

{00163867.DOC; 9}    -2-

(and the application of the proceeds thereof as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be continuing. Neither the Company nor any Subsidiary shall have entered into any transaction since the date of the Memorandum that would have been prohibited by Section 10 had such Section applied since such date.

Section 4.3.    Compliance Certificates.

(a)    Officer’s Certificate. The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the applicable Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b)    Secretary’s Certificate. The Company shall have delivered to such Purchaser a certificate of its Secretary or Assistant Secretary, dated the date of the applicable Closing, certifying as to (i) the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of such Notes and this Agreement and (ii) the Company’s organizational documents as then in effect.

Section 4.4.    Opinions of Counsel. Such Purchaser shall have received opinions in form and substance reasonably satisfactory to such Purchaser, dated the date of the applicable Closing from (a) Cohen Tauber Spievack & Wagner P.C., special counsel for the Company, and Paul K. Sandness, Esq., General Counsel of the Company, covering the matters set forth in Schedules 4.4(a) and 4.4(b), respectively, and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby instructs its counsel to deliver such opinions to the Purchasers) and (b) Chapman and Cutler LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in Schedule 4.4(c) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

Section 4.5.    Purchase Permitted by Applicable Law, Etc. On the date of each Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.

Section 4.6.    Sale of Other Notes. Contemporaneously with each Closing the Company shall sell to each Purchaser and each

{00163867.DOC; 9}    -3-

Purchaser shall purchase the Notes to be purchased by it at the applicable Closing as specified in Schedule B.

Section 4.7.    Payment of Special Counsel Fees. Without limiting Section 15.1, the Company shall have paid on or before each Closing the fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing.

Section 4.8.    Private Placement Number. Private Placement Numbers issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for the Notes.

Section 4.9.    Changes in Corporate Structure. The Company shall not have changed its jurisdiction of incorporation or organization, as applicable, or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent Centennial Financial Statements.

Section 4.10.    Funding Instructions. At least three Business Days prior to the date of each Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the information specified in Section 3 including (i) the name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the account name and number into which the purchase price for the applicable Notes is to be deposited.

Section 4.11.    Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

Section 4.12.    First Closing. For the Second Closing, the consummation of the First Closing as contemplated herein shall have occurred.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each Purchaser that:

Section 5.1.    Organization; Power and Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such

{00163867.DOC; 9}    -4-

qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof.

Section 5.2.    Authorization, Etc. This Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 5.3.    Disclosure. The Company, through its agent, J.P. Morgan Securities LLC, has delivered to each Purchaser a copy of a Private Placement Memorandum, dated November 2012 (the “Memorandum”), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries. This Agreement, the Memorandum and the most recent Centennial Financial Statements (collectively, the “Disclosure Documents”)delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby, taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Except as disclosed in the Disclosure Documents, since the end of the most recent fiscal year for which audited financial statements have been furnished, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any Subsidiary except changes that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.

Section 5.4.    Organization and Ownership of Shares of Subsidiaries; Affiliates    . (a) Schedule 5.4 contains (except as noted therein) complete and correct lists of (i) the Company’s Subsidiaries, showing, as to each Subsidiary, the name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary, (ii) the Company’s Affiliates, other than Subsidiaries, and (iii) the Company’s directors and senior officers.

(b)    All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by the Company or another Subsidiary free and clear of any Lien that is prohibited by this Agreement.

{00163867.DOC; 9}    -5-

(c)    Each Subsidiary is a corporation or other legal entity duly organized, validly existing and, where applicable, in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and, where applicable, is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.

(d)    No Subsidiary is subject to any legal, regulatory, contractual or other restriction (other than the agreements listed on Schedule 5.4 and customary limitations imposed by corporate law or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

Section 5.5.    Financial Statements; Material Liabilities. The Company has delivered to each Purchaser copies of the Centennial Financial Statements. All of such financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such financial statements and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments). The Company and its Subsidiaries do not have any Material liabilities that are not disclosed in the Disclosure Documents.

Section 5.6.    Compliance with Laws, Other Instruments, Etc. The execution, delivery and performance by the Company of this Agreement and the Notes will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.

Section 5.7.    Governmental Authorizations, Etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Notes.

{00163867.DOC; 9}    -6-

Section 5.8.    Litigation; Observance of Agreements, Statutes and Orders. (a) There are no actions, suits, investigations or proceedings pending or, to the best knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b)    Neither the Company nor any Subsidiary is (i) in default under any agreement or instrument to which it is a party or by which it is bound, (ii) in violation of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or (iii) in violation of any applicable law, ordinance, rule or regulation of any Governmental Authority (including, without limitation, Environmental Laws, the USA PATRIOT Act or any of the other laws and regulations that are referred to in Section 5.16), which default or violation could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 5.9.    Taxes. The Company and its Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which is not individually or in the aggregate is not Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of U.S. federal, state or other taxes for all fiscal periods are adequate. The U.S. federal income tax liabilities of the Company and its Subsidiaries have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all fiscal years up to and including the fiscal year ended December 31, 2006.

Section 5.10.    Title to Property; Leases. The Company and its Subsidiaries have good and sufficient title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.

Section 5.11.    Licenses, Permits, Etc. (a) The Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade

{00163867.DOC; 9}    -7-

names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others.

(b)    To the best knowledge of the Company, no product of the Company or any of its Subsidiaries infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person.

(c)    To the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries.

Section 5.12.    Compliance with ERISA. (a) Each of the Company and its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA, the Code, other applicable federal and state law and published interpretations thereunder, except for any such failure that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.

(b)    The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the Company to each Purchaser in the first sentence of this Section 5.12(b) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.

Section 5.13.    Private Offering by the Company. Neither the Company nor anyone acting on its behalf has offered the Notes or any similar Securities for sale to, or solicited any offer to buy the Notes or any similar Securities from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than 70 other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of section 5 of the Securities Act or to the registration requirements of any Securities or blue sky laws of any applicable jurisdiction.

Section 5.14.    Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the sale of the Notes hereunder as set forth in the Memorandum. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any

{00163867.DOC; 9}    -8-

Securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

Section 5.15.    Existing Indebtedness; Future Liens. (a) Except as described therein, Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Subsidiaries as of the date of this Agreement. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Subsidiary and no event or condition exists with respect to any Indebtedness of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

(b)    Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary has agreed or consented to cause or permit any of it property, whether now owned or hereafter acquired, to be subject to a Lien that secures Indebtedness or to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien that secures Indebtedness not permitted by Section 10.5.

(c)    Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or any other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Company, except as disclosed in Schedule 5.15.

Section 5.16.    Foreign Assets Control Regulations, Etc. (a) Neither the Company nor any Controlled Entity is (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, United States Department of Treasury (“OFAC“) (an “OFAC Listed Person“), (ii) an agent, department, or instrumentality of, or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is subject to any OFAC Sanctions Program, or (iii) otherwise blocked, subject to sanctions under or engaged in any activity in violation of other United States economic sanctions, including but not limited to, the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Comprehensive Iran Sanctions, Accountability and Divestment Act (“CISADA”) or any similar law or regulation with respect to Iran or any other country, the Sudan Accountability and Divestment Act, any OFAC Sanctions

{00163867.DOC; 9}    -9-

Program, or any economic sanctions regulations administered and enforced by the United States or any enabling legislation or executive order relating to any of the foregoing (collectively, “U.S. Economic Sanctions”) (each OFAC Listed Person and each other Person, entity, organization and government of a country described in clause (i), clause (ii) or clause (iii), a “Blocked Person”). Neither the Company nor any Controlled Entity has been notified that its name appears or may in the future appear on a state list of Persons that engage in investment or other commercial activities in Iran or any other country that is subject to U.S. Economic Sanctions.

(b)    No part of the proceeds from the sale of the Notes hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (i) in connection with any investment in, or any transactions or dealings with, any Blocked Person, or (ii) otherwise in violation of U.S. Economic Sanctions.

(c)    Neither the Company nor any Controlled Entity (i) has been found in violation of, charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT Act or any other United States law or regulation governing such activities (collectively, “Anti-Money Laundering Laws”) or any U.S. Economic Sanctions violations, (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any Governmental Authority for possible violation of Anti-Money Laundering Laws or any U.S. Economic Sanctions violations, (iii) has been assessed civil penalties under any Anti-Money Laundering Laws or any U.S. Economic Sanctions, or (iv) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws. The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable current and future Anti-Money Laundering Laws and U.S. Economic Sanctions.

(d)    (1)    Neither the Company nor any Controlled Entity (i) has been charged with, or convicted of bribery or any other anti-corruption related activity under any applicable law or regulation in a U.S. or any non-U.S. country or jurisdiction, including but not limited to, the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010 (collectively, “Anti-Corruption Laws”), (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any U.S. or non-U.S. Governmental Authority for possible violation of Anti-Corruption Laws, (iii) has been assessed civil or criminal penalties under any Anti-Corruption Laws or (iv) has been or is the target of sanctions imposed by the United Nations or the European Union;

(2)    To the Company’s actual knowledge after making due inquiry, neither the Company nor any Controlled Entity has, within the last five years, directly or indirectly offered, promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a Governmental Official or a commercial counterparty for the purposes of: (i) influencing any act, decision or failure to act by such Government Official in his or her official capacity or such commercial counterparty, (ii) inducing a Governmental Official to do or omit to do any act in

{00163867.DOC; 9}    -10-

violation of the Governmental Official’s lawful duty, or (iii) inducing a Governmental Official or a commercial counterparty to use his or her influence with a government or instrumentality to affect any act or decision of such government or entity; in each case in order to obtain, retain or direct business or to otherwise secure an improper advantage; and

(3)    No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any improper payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage. The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable current and future Anti-Corruption Laws.

Section 5.17.    Status under Certain Statutes. Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.

Section 5.18.    Environmental Matters. The Company conducts in the ordinary course of business a review of the effect of existing Environmental Laws and existing Environmental Claims on its business, operations and properties, and as a result thereof the Company has reasonably concluded that such Environmental Laws and Environmental Claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

SECTION 6. REPRESENTATIONS OF THE PURCHASERS.

Section 6.1.    Purchase for Investment. Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control. Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes.

Section 6.2.    Source of Funds. Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:

{00163867.DOC; 9}    -11-

(a)    the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the NAIC (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

(b)    the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

(c)    the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(d)    the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause the QPAM and the Company to be related within the meaning of Part VI(h) of the QPAM Exemption, and (i) the identity of such QPAM and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (d); or

{00163867.DOC; 9}    -12-

(e)    the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, as of the last day of its most recent calendar quarter, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or

(f)    the Source is a governmental plan; or

(g)    the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or

(h)    the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan,”“governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.

SECTION 7. INFORMATION AS TO COMPANY.

Section 7.1.    Financial and Business Information. The Company shall deliver to each holder of a Note that is an Institutional Investor:

(a)    Quarterly Statements — within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), a copy of its,

(i)    unaudited consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and

(ii)    unaudited consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the

{00163867.DOC; 9}    -13-

companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments, provided that, at such times as the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, delivery within the time period specified above of copies of the Company’s Quarterly Report on Form 10‑Q prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a);

(b)    Annual Statements — within 120 days after the end of each fiscal year of the Company, a copy of its;

(i)    consolidated balance sheet of the Company and its Subsidiaries as at the end of such year, and

(ii)    consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries for such year,

setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon (without a “going concern” or similar qualification or exception and without any qualification or exception as to the scope of the audit on which such opinion is based) of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances;

provided that, at such times as the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the delivery within the time period specified above of the Company’s Annual Report on Form 10-K for such fiscal year (together with the Company’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC, shall be deemed to satisfy the requirements of this Section 7.1(b);

(c)    SEC and Other Reports — promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to its principal lending banks as a whole (excluding information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability) or to its public Securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such Purchaser or holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the SEC and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material;

{00163867.DOC; 9}    -14-

(d)    Notice of Default or Event of Default — promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in Section 11(f), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;

(e)    ERISA Matters — promptly, and in any event within five days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:

(i)    with respect to any Plan, any Reportable Event; or

(ii)    the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or

(iii)    any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect;

(f)    Notices from Governmental Authority — promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect;

(g)    Resignation or Replacement of Auditors — within ten days following the date on which the Company’s auditors resign or the Company elects to change auditors, as the case may be, notification thereof, together with such supporting information as the Required Holders may request; and

(h)    Requested Information — with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the

{00163867.DOC; 9}    -15-

Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of a Note.

Section 7.2.    Officer’s Certificate. Each set of financial statements delivered to a holder of a Note pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a Senior Financial Officer setting forth:

(a)    Covenant Compliance — setting forth the information from such financial statements that is required in order to establish whether the Company was in compliance with the requirements of Section 10 during the quarterly or annual period covered by the statements then being furnished (including with respect to each such provision that involves mathematical calculations, the information from such financial statements that is required to perform such calculations) and detailed calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Section, and the calculation of the amount, ratio or percentage then in existence). In the event that the Company or any Subsidiary has made an election to measure any financial liability using fair value (which election is being disregarded for purposes of determining compliance with this Agreement pursuant to Section 22.2) as to the period covered by any such financial statement, such Senior Financial Officer’s certificate as to such period shall include a reconciliation from GAAP with respect to such election; and

(b)    Event of Default — certifying that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.

Section 7.3.    Visitation. The Company shall permit the representatives of each holder of Notes that is an Institutional Investor:

(a)    No Default — if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company’s officers, and (with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing; and

{00163867.DOC; 9}    -16-

(b)    Default — if a Default or Event of Default then exists, at the expense of the Company to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested.

Section 7.4.    Electronic Delivery. Financial statements, opinions of independent certified public accountants, other information and Officers’ Certificates that are required to be delivered by the Company pursuant to Sections 7.1(a), (b) or (c) and Section 7.2 shall be deemed to have been delivered if the Company satisfies any of the following requirements:

(i)    such financial statements satisfying the requirements of Section 7.1(a) or (b) and related Officer’s Certificate satisfying the requirements of Section 7.2 are delivered to each holder of a Note by e-mail;

(ii)    the Company shall have timely filed such Form 10–Q or Form 10–K, satisfying the requirements of Section 7.1(a) or Section 7.1(b), as the case may be, with the SEC and shall have made such form and the related Officer’s Certificate satisfying the requirements of Section 7.2 available on its home page on the internet;

(iii)    such financial statements satisfying the requirements of Section 7.1(a) or Section 7.1(b) and related Officer’s Certificate(s) satisfying the requirements of Section 7.2 are timely posted by or on behalf of the Company on IntraLinks or on any other similar website to which each holder of Notes has free access; or

(iv)    the Company shall have filed any of the items referred to in Section 7.1(c) with the SEC and shall have made such items available on its home page on the internet or on IntraLinks or on any other similar website to which each holder of Notes has free access;

provided however, that in the case of any of clauses (ii), (iii) or (iv), the Company shall have given each holder of a Note prior written notice, which may be by e-mail or in accordance with Section 18, of such posting or filing in connection with each delivery, provided further, that upon request of any holder to receive paper copies of such forms, financial statements and Officer’s Certificates or to receive them by e-mail, the Company will promptly e-mail them or deliver such paper copies, as the case may be, to such holder.

{00163867.DOC; 9}    -17-

SECTION 8. PAYMENT AND PREPAYMENT OF THE NOTES.

Section 8.1.    Maturity. As provided therein, the entire unpaid principal balance of each Note shall be due and payable on the Maturity Date thereof.

Section 8.2.    Optional Prepayments with Make-Whole Amount. The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in an amount not less than 10% of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than ten days and not more than 60 days prior to the date fixed for such prepayment unless the Company and the Required Holders agree to another time period pursuant to Section 17. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.4), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.

Section 8.3.    Change in Control.

(a)    Notice of Change of Control — The Company will, within five Business Days after any Responsible Officer has knowledge of the occurrence of any Change in Control, give written notice of such Change in Control to each holder of Notes. Such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (b) of this Section 8.3 and shall be accompanied by the certificate described in subparagraph (e) of this Section 8.3.

(b)    Offer to Prepay Notes — The offer to prepay the Notes contemplated by subparagraph (a) of this Section 8.3 shall be an offer to prepay, in accordance with and subject to this Section 8.3, all, but not less than all, of the Notes held by each holder (in this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment Date”). Such date shall be not less than 30 days and not more than 60 days after the date of such offer.

(c)    Acceptance — A holder of Notes may accept the offer to prepay made pursuant to this Section 8.3 by causing a notice of such acceptance to be delivered to the

{00163867.DOC; 9}    -18-

Company not later than 15 days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to the offer to prepay made pursuant to this Section 8.3 shall be deemed to constitute a rejection of such offer by such holder.

(d)    Prepayment — Prepayment of the Notes to be prepaid pursuant to this Section 8.3 shall be at 100% of the principal amount of such Notes, together with interest on such Notes accrued to the date of prepayment and without any Make-Whole Amount. The Prepayment shall be made on the Proposed Prepayment Date.

(e)    Officer’s Certificate — Each offer to prepay the Notes pursuant to this Section 8.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this Section 8.3; (iii) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (iv) that the conditions of this Section 8.3 have been fulfilled; and (v) in reasonable detail, the nature of the Change in Control.

(f)    Assumptions — All calculations contemplated in this Section 8.3 involving the capital stock or other equity interest of any Person shall be made with the assumption that all convertible securities of such Person then outstanding and all convertible securities issuable upon the exercise of any warrants, options and other rights outstanding at such time were converted at such time and that all options, warrants and similar rights to acquire shares of capital stock or other equity interests of such Person were exercised at such time.

Section 8.4.    Allocation of Partial Prepayments. In the case of each partial prepayment of the Notes pursuant to Section 8.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.

Section 8.5.    Maturity; Surrender, Etc.     In the case of each optional prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

Section 8.6.    Purchase of Notes. The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with this Agreement and the Notes or (b) pursuant to an

{00163867.DOC; 9}    -19-

offer to purchase made by the Company or any Affiliate pro rata to the holders of all Notes at the time outstanding upon the same terms and conditions Any such offer shall provide each holder with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 30 Business Days. If the holders of more than 30% of the principal amount of the Notes then outstanding accept such offer, the Company shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least 10 Business Days from its receipt of such notice to accept such offer. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

Section 8.7.    Make-Whole Amount.

“Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

“Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by (i) the yield(s) reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there are no such U.S. Treasury securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the yields Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

{00163867.DOC; 9}    -20-

If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

“Remaining Average Life” means, with respect to any Called Principal, the number of years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years computed on the basis of a 360-day year composed of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.5 or Section 12.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

Section 8.8.    Payment in Connection with Asset Sale.

If the Company makes an offer to prepay the Notes in connection with an Asset Sale pursuant to Section 10.6, the Company will give written notice thereof to the holders of all outstanding Notes, which notice shall (i) refer specifically to this Section 8.8 and describe in reasonable detail the Asset Sale giving rise to such offer to prepay the Notes, (ii) specify the pro rata portion of each Note being offered to be prepaid (as determined in accordance with Section 10.6), (iii) specify a date which is a Business Day not less than 30 days and not more than 60 days after the date of such notice (the “Asset Sale Prepayment Date”) and specify the Asset

{00163867.DOC; 9}    -21-

Sale Response Date (as defined below) and (iv) offer to prepay on the Asset Sale Prepayment Date such pro rata portion of each Note together with interest accrued thereon to the Asset Sale Prepayment Date. Each holder of a Note shall notify the Company of such holder’s acceptance or rejection of such offer by giving written notice of such acceptance or rejection to the Company (provided, however, that any holder who fails to so notify the Company shall be deemed to have rejected such offer) on a date at least 10 days prior to the Asset Sale Prepayment Date (such date 10 days prior to the Asset Sale Prepayment Date being the “Asset Sale Response Date”), and the Company shall prepay on the Asset Sale Prepayment Date such pro rata portion of each Note held by the holders who have accepted such offer in accordance with this Section 8.8. No prepayment under this Section 8.8 shall include any Make-Whole Amount or other premium. If any holder shall reject such offer on or before the Asset Sale Response Date, such holder shall be deemed to have waived its rights under this Section 8.8 to require prepayment of all Notes held by such holder in respect of such Asset Sale.

Section 8.9.    Payments Due on Non-Business Days. Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting the requirement in Section 8.2 that the notice of any optional prepayment specify a Business Day as the date fixed for such prepayment), (x) subject to clause (y), any payment of interest on any Note that is due on a date that is not a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; and (y) any payment of principal of or Make-Whole Amount on any Note (including principal due on the Maturity Date of such Note) that is due on a date that is not a Business Day shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.

SECTION 9.    Affirmative Covenants.    

The Company covenants that so long as any of the Notes are outstanding:

Section 9.1.    Compliance with Laws. Without limiting Section 10.4, the Company will, and will cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, Environmental Laws, the USA PATRIOT Act and the other laws and regulations that are referred to in Section 5.16, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 9.2.    Insurance. The Company will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including

{00163867.DOC; 9}    -22-

deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.

Section 9.3.    Maintenance of Properties. The Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 9.4.    Payment of Taxes and Claims    . The Company will, and will cause each of its Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent the same have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company or any Subsidiary, provided that neither the Company nor any Subsidiary need pay any such tax, assessment, charge, levy or claim if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes, assessments, charges, levies and claims in the aggregate could not reasonably be expected to have a Material Adverse Effect.

Section 9.5.    Corporate Existence, Etc. Subject to Sections 10.2 and 10.6, the Company will at all times preserve and keep in full force and effect. Subject to Sections 10.2 and 10.6, the Company will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries (unless merged into the Company or a Wholly-Owned Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect.

Section 9.6.    Books and Records. The Company will, and will cause each of its Subsidiaries to, maintain proper books of record and account in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company or such Subsidiary, as the case may be. The Company will, and will cause each of its Subsidiaries to, keep books, records and accounts which, in reasonable detail, accurately reflect all transactions and dispositions of assets. The Company and its Subsidiaries have devised a system of internal accounting controls sufficient to provide reasonable assurances that their respective books, records, and accounts

{00163867.DOC; 9}    -23-

accurately reflect all transactions and dispositions of assets and the Company will, and will cause each of its Subsidiaries to, continue to maintain such system.

Section 9.7.    Subsidiary Guarantors. The Company will cause each of its Subsidiaries that guarantees or otherwise becomes liable at any time, whether as a borrower or an additional or co-borrower or otherwise, for or in respect of any Indebtedness under any Material Credit Facility to concurrently therewith:

(a)    enter into an agreement in form and substance satisfactory to the Required Holders providing for the guaranty by such Subsidiary, on a joint and several basis with all other such Subsidiaries, of (i) the prompt payment in full when due of all amounts payable by the Company pursuant to the Notes (whether for principal, interest, Make-Whole Amount or otherwise) and this Agreement, including, without limitation, all indemnities, fees and expenses payable by the Company thereunder and (ii) the prompt, full and faithful performance, observance and discharge by the Company of each and every covenant, agreement, undertaking and provision required pursuant to the Notes or this Agreement to be performed, observed or discharged by it (a “Subsidiary Guaranty”); and

(b)    deliver the following to each of holder of a Note:

(i)    an executed counterpart of such Subsidiary Guaranty;

(ii)    a certificate signed by an authorized responsible officer of such Subsidiary containing representations and warranties on behalf of such Subsidiary to the same effect, mutatis mutandis, as those contained in Sections 5.1, 5.2, 5.6 and 5.7 of this Agreement (but with respect to such Subsidiary and such Subsidiary Guaranty rather than the Company);

(iii)    all documents as may be reasonably requested by the Required Holders to evidence the due organization, continuing existence and good standing of such Subsidiary and the due authorization by all requisite action on the part of such Subsidiary of the execution and delivery of such Subsidiary Guaranty and the performance by such Subsidiary of its obligations thereunder; and

(iv)    an opinion of counsel reasonably satisfactory to the Required Holders covering such matters relating to such Subsidiary and such Subsidiary Guaranty as the Required Holders may reasonably request.

SECTION 10. NEGATIVE COVENANTS.    

The Company covenants that so long as any of the Notes are outstanding:

Section 10.1.    Transactions with Affiliates. The Company will not enter into any material transaction or arrangement or series of related transactions or arrangements that in the aggregate would be material with any

{00163867.DOC; 9}    -24-

Affiliate of the Company, and the Company shall not suffer or permit any Subsidiary (other than a Project Finance Subsidiary) to enter into any material transaction or arrangement or series of related transaction or arrangements that in the aggregate would be material with any Affiliate of the Company other than another Subsidiary of the Company that is a Wholly-Owned Subsidiary (but which is not a Project Finance Subsidiary), except (i) upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtained, taking into account all facts and circumstances, in a comparable arm’s-length transaction with a Person not an Affiliate of the Company or such Subsidiary, (ii) as permitted by Section 10.11, or (iii) (A) in the ordinary course and pursuant to the reasonable requirements of the business of WBI Energy Transmission as may be required by the Federal Energy Regulatory Commission or other appropriate Governmental Authorities having jurisdiction over WBI Energy Transmission, or (B) pursuant to the Asset Purchase Agreement, dated August 6, 1982, by and between Montana-Dakota and Williston Basin Interstate Pipeline Company (predecessor to WBI Energy Transmission), as amended by Amendment to the Asset Purchase Agreement, dated January 21, 1985, entered into in furtherance of the Revised Stipulation and Agreement of Settlement in FERC Docket No. CP82-487-000 et al. (the “Settlement Agreement”), to the extent that Article Twelve thereof requires WBI Energy Transmission, if and when it implements a pricing mechanism for WBI Energy Transmission-owned production which results in prices higher than cost-of-service pricing for such production, to make a payment to Montana-Dakota which is equal in amount to the adjustment made by Montana-Dakota pursuant to Section 10.1 of such Settlement Agreement; provided that all such transactions and agreements permitted by this clause (iii) do not, individually or in the aggregate, result in a Material Adverse Effect.

Section 10.2.    Merger, Consolidation, Etc. The Company will not consolidate with or merge with any other Person or convey, transfer or lease all or substantially all of its assets in a single transaction or series of transactions to any Person unless:

(a)    the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease all or substantially all of the assets of the Company as an entirety, as the case may be, shall be a solvent corporation or limited liability company organized and existing under the laws of the United States or any state thereof (including the District of Columbia), and, if the Company is not such corporation or limited liability company, (i) such corporation or limited liability company shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes and (ii) such corporation or limited liability company shall have caused to be delivered to each holder of any Notes an opinion of nationally recognized independent counsel, or other independent counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof;

(b)    each such Subsidiary Guarantor under any Subsidiary Guaranty that is outstanding at the time such transaction or each transaction in such a series of transactions occurs reaffirms its obligations under such Subsidiary Guaranty in writing at

{00163867.DOC; 9}    -25-

such time and pursuant to documentation that is reasonably acceptable to the Required Holders; and

(c)    immediately before and immediately after giving effect to such transaction or each transaction in any such series of transactions, no Default or Event of Default shall have occurred and be continuing.

No such conveyance, transfer or lease of substantially all of the assets of the Company shall have the effect of releasing the Company or any successor corporation or limited liability company that shall theretofore have become such in the manner prescribed in this Section 10.2 from its liability under this Agreement or the Notes.

Section 10.3.    Line of Business. The Company will not and will not permit any Subsidiary to engage in any business if, as a result, the general nature of the business in which the Company and its Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Company and its Subsidiaries, taken as a whole, are engaged on the date of this Agreement as described in the Memorandum.

Section 10.4.    Terrorism Sanctions Regulations. The Company will not and will not permit any Controlled Entity (a) to become (including by virtue of being owned or controlled by a Blocked Person), own or control a Blocked Person or any Person that is the target of sanctions imposed by the United Nations or by the European Union, or (b) directly or indirectly to have any investment in or engage in any dealing or transaction (including, without limitation, any investment, dealing or transaction involving the proceeds of the Notes) with any Person if such investment, dealing or transaction (i) would cause any holder to be in violation of any law or regulation applicable to such holder, or (ii) is prohibited by or subject to sanctions under any U.S. Economic Sanctions, or (c) to engage, nor shall any Affiliate of either engage, in any activity that could subject such Person or any holder to sanctions under CISADA or any similar law or regulation with respect to Iran or any other country that is subject to U.S. Economic Sanctions.

Section 10.5.    Liens. The Company shall not, and shall not suffer or permit any Subsidiary (other than any Project Finance Subsidiary or any International Subsidiary) to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following (“Permitted Liens”):

(a)any Lien existing on property of the Company or any Subsidiary on the date of this Agreement and identified in Schedule 10.5 securing Indebtedness outstanding on such date;

(b)Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 9.4;

{00163867.DOC; 9}    -26-

(c)carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s, operators’ (including Liens arising under operating, pooling or unitizing agreements of a scope and nature customary in the oil and gas industry) or other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto, and for which adequate reserves are maintained on the books of such Person;

(d)Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business under workers’ compensation laws, unemployment insurance and other social security or retirement benefits, or similar legislation;

(e)Liens on the property of the Company or its Subsidiaries securing (i) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, (ii) contingent obligations on surety, reclamation and appeal bonds, and (iii) other non-delinquent obligations of a like nature, in each case, incurred in the ordinary course of business, provided all such Liens in the aggregate would not (even if enforced) cause a Material Adverse Effect;

(f)Liens consisting of judgment or judicial attachment liens, provided that the enforcement of such Liens is effectively stayed and the aggregate amount of the obligations secured by all such liens for the Company and its Subsidiaries (other than any Project Finance Subsidiary) does not exceed $50,000,000 at any time;

(g)easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Company and its Subsidiaries;

(h)Liens on assets of Persons which become Subsidiaries after the date of this Agreement or liens existing on any property acquired by the Company or any Subsidiary at the time such property is acquired, provided that (A) such Liens existed at the time the respective Persons became Subsidiaries or at the time such property was acquired, as applicable, and were not created in anticipation thereof and (B) such Liens shall extend solely to the property so acquired and to identifiable proceeds thereof, and shall not attach to any other property of the Company or its Subsidiaries;

(i)purchase money security interests on any real or personal property acquired or held by the company or its Subsidiaries in the ordinary course of business, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property; provided that (i) any such Lien attaches to such property concurrently with or within 20 days after the acquisition thereof, (ii) such Lien

{00163867.DOC; 9}    -27-

attaches solely to the property so acquired in such transaction, and (iii) the principal amount of the debt secured thereby does not exceed 100% of the cost of such property;

(j)Liens securing obligations in respect of capital leases on assets subject to such leases, provided that such capital leases are otherwise permitted hereunder;

(k)Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the FRB, and (ii) such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depository institution;

(l)Liens arising in connection with Securitization Transactions; provided that the amount of all Securitization Obligations shall not at any time exceed $75,000,000;

(m)Liens on the stock or other equity interests of any Project Finance Subsidiary to secure obligations of such Project Finance Subsidiary (provided that the agreement under which any such Lien is created shall expressly state that it is non-recourse to the pledgor);

(n)Liens securing Indebtedness of a Subsidiary owed to the Company;

(o)Any Lien renewing, extending or refunding any Lien permitted by clause (a), (h) or (i) of this Section 10.5; provided that (i) the principal amount of the Indebtedness secured by the subject Liens is not increased over the amount of the Indebtedness secured thereby immediately prior to such extension, renewal or refunding, (ii) such Lien is not extended to any other property and (iii) immediately after such extension, renewal or refunding, no Default or Event of Default would exist; and

(p)Other Liens securing Indebtedness or judgments otherwise permitted herein outstanding in compliance with Section 10.7 provided, that notwithstanding the foregoing, the Company shall not, and shall not permit any of its Subsidiaries to, secure any Indebtedness outstanding under or pursuant to any Material Credit Facility pursuant to this Section 10.5(p) unless and until the Notes (and any guaranty delivered in connection therewith) shall concurrently be secured equally and ratably with such Indebtedness pursuant to documentation reasonably acceptable to the Required Holders in substance and in form, including, without limitation, an intercreditor agreement and opinions of counsel to the Company and/or any such Subsidiary, as the case may be, from counsel that is reasonably acceptable to the Required Holders.

Section 10.6.    Sale of Assets. The Company shall not, and shall not permit any Subsidiary to, make any Asset Sale; provided, that so long as no Default or Event of Default exists both immediately prior to and after giving effect to any Asset Sale, the Company or any Subsidiary may make any Asset Sale if the Gross Proceeds Amount from such Asset Sale plus the Gross

{00163867.DOC; 9}    -28-

Proceeds Amounts from all other Asset Sales during the prior twelve months do not exceed 20% of Consolidated Total Assets as at the end of the prior fiscal quarter; provided, further, that Asset Sales in excess of the foregoing limits may be made if the Excess Proceeds Amount (i) (x) is applied to a Property Reinvestment Application within six months (or 12 months if the Excess Proceeds Amount is invested, not later than the end of the sixth month, in United States Governmental Securities maturing within 365 days after the closing date of any such Asset Sale) after any such Asset Sale and (y) is held, free from any Liens, prior to such Property Reinvestment Application in a segregated bank account with a bank that is not a creditor of the Company or any Subsidiary or, in the case of United States Governmental Securities, in a segregated account with an Acceptable Broker Dealer which is not a creditor or Affiliate of the Company or any Subsidiary; or (ii) is applied to the prepayment of the Notes in accordance with Section 8.8 at 100% of the principal amount thereof, without premium or Make-Whole Amount of any kind, together with interest accrued thereon pro rata with all other such Indebtedness then being prepaid, such pro rata portion of the Notes to be calculated by multiplying (A) the aggregate principal amount of unsubordinated Indebtedness to be so repaid by (B) a fraction, the numerator of which is the aggregate principal amount of Notes then outstanding and the denominator of which is the aggregate principal amount of unsubordinated Indebtedness then outstanding (including the Notes) that may receive any portion of such prepayment.

Section 10.7.    Priority Debt. The Company will not at any time permit the aggregate outstanding principal amount of Priority Debt to exceed 20% of Consolidated Net Worth.

Section 10.8.    Maximum Company Capitalization Ratio. The Company shall not permit the Company’s Capitalization Ratio to exceed 60% as of the end of any fiscal quarter. Inter-company receivables of the Company shall be excluded from the calculation of the Company’s Capitalization Ratio.

Section 10.9.    Minimum Interest Coverage Ratio.     The Company shall not permit the ratio of EBITDA to Interest Expense, in each case calculated for the period of four consecutive fiscal quarters ending on the date of calculation, to be less than 1.75 to 1.00 as of the last day of any fiscal quarter.

Section 10.10.    Activities of International Subsidiaries. The Company agrees that it will not permit any International Subsidiary, directly or indirectly, to be primarily engaged in the ownership or financing of assets located in, or to conduct the primary portion of its operations in, the United States.

Section 10.11.    Project Finance Subsidiary. The Company will not make any investments in, any Guaranty in respect or, or advances, loans, extensions of credit or capital contributions to any Project Finance Subsidiary which shall, in the aggregate, exceed $75,000,000 in value at any

{00163867.DOC; 9}    -29-

time (value of an investment for this purpose being defined as the original cost to the Company or any Subsidiary).

SECTION 11. EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

(a)    the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or

(b)    the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or

(c)    the Company defaults in the performance of or compliance with any term contained in Section 7.1(d), Section 10.7, Section 10.8 or Section 10.9; or

(d)    the Company or any Subsidiary Guarantor defaults in the performance of or compliance with any term contained herein (other than those referred to in Sections 11(a), (b) and (c)) or in any Subsidiary Guaranty and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 11(d)); or

(e)    (i) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made, or (ii) any representation or warranty made in writing by or on behalf of any Subsidiary Guarantor or by any officer of such Subsidiary Guarantor in any Subsidiary Guaranty or any writing furnished in connection with such Subsidiary Guaranty proves to have been false or incorrect in any material respect on the date as of which made; or

(f)    (i) the Company or any Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $25,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $25,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or

{00163867.DOC; 9}    -30-

continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) the Company or any Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $25,000,000, or (y) one or more Persons have the right to require the Company or any Subsidiary so to purchase or repay such Indebtedness; or

(g)    the Company or any Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or

(h)    a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any of its Subsidiaries, or any such petition shall be filed against the Company or any of its Subsidiaries and such petition shall not be dismissed within 60 days; or

(i)    one or more final judgments or orders for the payment of money aggregating in excess of $25,000,000, including, without limitation, any such final order enforcing a binding arbitration decision, are rendered against one or more of the Company and its Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or

(j)    (i) an ERISA Event with respect to a Pension Plan or Multiemployer Plan, or an ERISA Termination Event with respect to a Pension Plan, shall occur which has resulted or would reasonably be expected to result in liability of the Company under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of 10% of Consolidated Net Worth; (ii) the commencement or increase of contributions to, or the adoption of or the amendment of, a Pension Plan by the Company or an ERISA Affiliate which has resulted or could reasonably be expected to result in an increase in Unfunded Pension Liability among all Pension Plans in an aggregate amount in excess of 10% of Consolidated Net Worth; or (iii) the Company or an ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace

{00163867.DOC; 9}    -31-

period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect; or

(k)    any Subsidiary Guaranty shall cease to be in full force and effect, any Subsidiary Guarantor or any Person acting on behalf of any Subsidiary Guarantor shall contest in any manner the validity, binding nature or enforceability of any Subsidiary Guaranty, or the obligations of any Subsidiary Guarantor under any Subsidiary Guaranty are not or cease to be legal, valid, binding and enforceable in accordance with the terms of such Subsidiary Guaranty.

SECTION 12. REMEDIES ON DEFAULT, ETC.

Section 12.1.    Acceleration. (a) If an Event of Default with respect to the Company described in Section 11(g) or (h) (other than an Event of Default described in clause (i) of Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the fact that such clause encompasses clause (i) of Section 11(g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.

(b)    If any other Event of Default has occurred and is continuing, the Required Holders of the Notes may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.

(c)    If any Event of Default described in Section 11(a) or (b) has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.

Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including, but not limited to, interest accrued thereon at the Default Rate) and (y) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.

Section 12.2.    Other Remedies. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the

{00163867.DOC; 9}    -32-

holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note or Subsidiary Guaranty, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.

Section 12.3.    Rescission. At any time after any Notes have been declared due and payable pursuant to Section 12.1(b) or (c), the Required Holders of the Notes, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor any other Person shall have paid any amounts which have become due solely by reason of such declaration, (c) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17, and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.

Section 12.4.    No Waivers or Election of Remedies, Expenses, Etc. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement, any Subsidiary Guaranty or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.

SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

Section 13.1.    Registration of Notes. The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. If any holder of one or more Notes is a nominee, then (a) the name and address of the beneficial owner of such Note or Notes shall also be registered in such register as an owner and holder thereof and (b) at any such beneficial owner’s option, either such beneficial owner or its nominee may execute any amendment, waiver or consent pursuant to this Agreement. Prior to due presentment for registration of transfer, the Person(s) in whose name any Note(s) shall be registered shall be deemed and treated as the owner and holder thereof for

{00163867.DOC; 9}    -33-

all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.

Section 13.2.    Transfer and Exchange of Notes. Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Section 18(iii)), for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within ten Business Days thereafter, the Company shall execute and deliver, at the Company’s expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of (i) Schedule 1-A, in the case of a Series A Note, (ii) Schedule 1-B, in the case of a Series B Note, (iii) Schedule 1-C, in the case of a Series C Note, (iv) Schedule 1-D, in the case of a Series D Note, (v) Schedule 1-E, in the case of a Series E Note, and (vi) Schedule 1-F, in the case of a Series F Note. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $250,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $250,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 6.2.

Section 13.3.    Replacement of Notes. Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and

(a)    in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $50,000,000 or a Qualified Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or

(b)    in the case of mutilation, upon surrender and cancellation thereof,

within ten Business Days thereafter, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have

{00163867.DOC; 9}    -34-

been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.

SECTION 14. PAYMENTS ON NOTES    .

Section 14.1.    Place of Payment. Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of JPMorgan Chase Bank, N.A. in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction.

Section 14.2.    Home Office Payment. So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, interest and all other amounts becoming due hereunder by the method and at the address specified for such purpose below such Purchaser’s name in Schedule B, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 14.1. Prior to any sale or other disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2. The Company will afford the benefits of this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Section 14.2.

SECTION 15. EXPENSES, ETC.

Section 15.1.    Transaction Expenses. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required by the Required Holders, local or other counsel) incurred by the Purchasers and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement, any Subsidiary Guaranty or the Notes (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, any Subsidiary Guaranty or the Notes or in responding to any subpoena or other legal process or

{00163867.DOC; 9}    -35-

informal investigative demand issued in connection with this Agreement, any Subsidiary Guaranty or the Notes, or by reason of being a holder of any Note, (b) the costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes and any Subsidiary Guaranty and (c) the costs and expenses incurred in connection with the initial filing of this Agreement and all related documents and financial information with the SVO provided, that such costs and expenses under this clause (c) shall not exceed $3,000 per series. The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes).

Section 15.2.    Survival. The obligations of the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, any Subsidiary Guaranty or the Notes, and the termination of this Agreement.

SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.

SECTION 17. AMENDMENT AND WAIVER.

Section 17.1.    Requirements. This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), only with the written consent of the Company and the Required Holders, except that

(a)    no amendment or waiver of any of Sections 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing;

(b)    no amendment or waiver may, without the written consent of each Purchaser and the holder of each Note at the time outstanding, (i) subject to Section 12

{00163867.DOC; 9}    -36-

relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of (x) interest on the Notes or (y) the Make-Whole Amount, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any amendment or waiver, or (iii) amend any of Sections 8 (except as set forth in the second sentence of Section 8.2 and Section 17.1(c)), 11(a), 11(b), 12, 17 or 20; and

(c)    Section 8.6 may be amended or waived to permit offers to purchase made by the Company or an Affiliate pro rata to the holders of all Notes at the time outstanding upon the same terms and conditions only with the written consent of the Company and the Super-Majority Holders.

Section 17.2.    Solicitation of Holders of Notes.

(a)    Solicitation. The Company will provide each holder of a Note with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes or any Subsidiary Guaranty. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to this Section 17 or any Subsidiary Guaranty to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.

(b)    Payment. The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of a Note as consideration for or as an inducement to the entering into by such holder of any waiver or amendment of any of the terms and provisions hereof or of any Subsidiary Guaranty unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of a Note even if such holder did not consent to such waiver or amendment.

(c)    Consent in Contemplation of Transfer. Any consent given pursuant to this Section 17 or any Subsidiary Guaranty by a holder of a Note that has transferred or has agreed to transfer its Note to the Company, any Subsidiary or any Affiliate of the Company (either pursuant to a waiver under Section 17.1(c) in connection with such consent or subsequent to Section 8.6 having been amended pursuant to Section 17.1(c)) shall be void and of no force or effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such holder.

Section 17.3.    Binding Effect, Etc. Any amendment or waiver consented to as provided in this Section 17 or any Subsidiary Guaranty applies equally to all holders of Notes and is binding upon them and upon each future

{00163867.DOC; 9}    -37-

holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and any holder of a Note and no delay in exercising any rights hereunder or under any Note or Subsidiary Guaranty shall operate as a waiver of any rights of any holder of such Note.

Section 17.4.    Notes Held by Company, Etc. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement, any Subsidiary Guaranty or the Notes, or have directed the taking of any action provided herein or in any Subsidiary Guaranty or the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.

Section 17.5.        Series D Notes, Series E Notes and Series F Notes Deemed Outstanding. Solely for purposes of the provisions of this Section 17, the Series D Notes, the Series E Notes and the Series F Notes shall be deemed outstanding on the First Closing.

SECTION 18. NOTICES.

Except to the extent otherwise provided in Section 7.4, notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by an internationally recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by an internationally recognized overnight delivery service (with charges prepaid), or (d) by electronic communication (including e-mail) to those Purchasers who include an e-mail address in Schedule B specifically for such purpose. Any such notice must be sent:

(i)    if to any Purchaser or its nominee, to such Purchaser or nominee at the address or e-mail address specified for such communications in Schedule B, or at such other address or e-mail address as such Purchaser or nominee shall have specified to the Company in writing,

(ii)    if to any other holder of any Note, to such holder at such address or e-mail address as such other holder shall have specified to the Company in writing, or

(iii)    if to the Company, to the Company at its address set forth at the beginning hereof to the attention of Chief Financial Officer or to TreasuryServices@MDUResources.com, or at such other address as the Company shall have specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

{00163867.DOC; 9}    -38-

SECTION 19. REPRODUCTION OF DOCUMENTS.

This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at any Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital, or other similar process and such Purchaser may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 19 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.

SECTION 20. CONFIDENTIAL INFORMATION.

For the purposes of this Section 20, “Confidential Information” means information delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser or any holder of Notes as being confidential information of the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser or any holder of Notes prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any holder of Notes or any person acting on its behalf, (c) otherwise becomes known to such Purchaser or any holder of Notes other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser or any holder of Notes under Section 7.1 that are otherwise publicly available. Each Purchaser and holder of Notes will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser, or such holder of Notes, respectively, in good faith to protect confidential information of third parties delivered to such Purchaser, or such holder of Notes, provided that such Purchaser may deliver or disclose Confidential Information to (i) its directors, officers, employees, agents, attorneys, trustees and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), (ii) its auditors, financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (v) any Person from which it offers to purchase any Security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by this

{00163867.DOC; 9}    -39-

Section 20), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to it, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which it is a party or (z) if an Event of Default has occurred and is continuing, to the extent it may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under its Notes, this Agreement or any Subsidiary Guaranty. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying this Section 20.

In the event that as a condition to receiving access to information relating to the Company or its Subsidiaries in connection with the transactions contemplated by or otherwise pursuant to this Agreement, any Purchaser or holder of a Note is required to agree to a confidentiality undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or otherwise) which is different from this Section 20, this Section 20 shall not be amended thereby and, as between such Purchaser or such holder and the Company, this Section 20 shall supersede any such other confidentiality undertaking.

SECTION 21. SUBSTITUTION OF PURCHASER.

Each Purchaser shall have the right to substitute any one of its Affiliates or another Purchaser or any one of such other Purchaser’s Affiliates (a “Substitute Purchaser”) as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Substitute Purchaser, shall contain such Substitute Purchaser’s agreement to be bound by this Agreement and shall contain a confirmation by such Substitute Purchaser of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 21), shall be deemed to refer to such Substitute Purchaser in lieu of such original Purchaser. In the event that such Substitute Purchaser is so substituted as a Purchaser hereunder and such Substitute Purchaser thereafter transfers to such original Purchaser all of the Notes then held by such Substitute Purchaser, upon receipt by the Company of notice of such transfer, any reference to such Substitute Purchaser as a “Purchaser” in this Agreement (other than in this Section 21), shall no longer be deemed to refer to such Substitute Purchaser, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement.

{00163867.DOC; 9}    -40-

SECTION 22. MISCELLANEOUS.

Section 22.1.    Successors and Assigns. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not.

Section 22.2.    Accounting Terms. All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP. Except as otherwise specifically provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance with GAAP, and (ii) all financial statements shall be prepared in accordance with GAAP. For purposes of determining compliance with this Agreement (including, without limitation, Section 9, Section 10 and the definition of “Indebtedness”), any election by the Company to measure any financial liability using fair value (as permitted by Financial Accounting Standards Board Accounting Standards Codification Topic No. 825-1-025 – Fair Value Option, International Accounting Standard 39 – Financial Instruments: Recognition and Measurement or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.

Section 22.3.    Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

Section 22.4.    Construction, Etc. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

Section 22.5.    Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

Section 22.6.    Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice‑of‑law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

{00163867.DOC; 9}    -41-

Section 22.7.    Jurisdiction and Process; Waiver of Jury Trial. (a) The Company irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement or the Notes. To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(b)    The Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 22.7(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 18 or at such other address of which such holder shall then have been notified pursuant to said Section. The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

(c)    Nothing in this Section 22.7 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d)    THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.

* * * * *

If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company.

Very truly yours,

CENTENNIAL ENERGY HOLDINGS, INC.

By/s/ Doran N. Schwartz

Doran N. Schwartz

Vice President and Chief Financial Officer    

{00163867.DOC; 9}    -42-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

MASSACHUSETTS MUTUAL LIFE INSURANCE   COMPANY

By: Babson Capital Management LLC
as Investment Adviser

By: /s/ Elisabeth A. Perenick    

Name: Elisabeth A. Perenick

Title: Managing Director

C.M. LIFE INSURANCE COMPANY

By: Babson Capital Management LLC
as Investment Adviser

By: /s/ Elisabeth A. Perenick    

Name: Elisabeth A. Perenick

Title: Managing Director

MASSMUTAL ASIA LIMITED

By: Babson Capital Management LLC
as Investment Adviser

By: /s/ Elisabeth A. Perenick    

Name: Elisabeth A. Perenick

Title: Managing Director

{00163867.DOC; 9}    -43-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

USAA LIFE INSURANCE COMPANY

By: /s/ John C. Spear    

Name: John C. Spear

Title: Vice President Fixed-Income

USAA LIFE INSURANCE COMPANY OF NEW YORK

By: /s/ John C. Spear    

Name: John C. Spear

Title: Vice President Fixed-Income

UNITED SERVICES AUTOMOBILE ASSOCIATION

By: /s/ Donna J. Baggerly    

Name: Donna J. Baggerly

Title: Vice President Insurance Portfolios

{00163867.DOC; 9}    -44-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

By /s/ Jerome R. Baier    

Its: Authorized Representative

NORTHWESTERN LONG TERM CARE INSURANCE COMPANY

By /s/ Jerome R. Baier    

Its: Authorized Representative

{00163867.DOC; 9}    -45-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

UNITED OF OMAHA LIFE INSURANCE COMPANY

By: /s/ Justin P. Kavan    

Name: Justin P. Kavan

Title: An Authorized Signer

MUTUAL OF OMAHA INSURANCE COMPANY

By: /s/ Justin P. Kavan    

Name: Justin P. Kavan

Title: An Authorized Signer

COMPANION LIFE INSURANCE COMPANY

By: /s/ Justin P. Kavan    

Name: Justin P. Kavan

Title: An Authorized Signer

UNITED WORLD LIFE INSURANCE COMPANY

By: /s/ Justin P. Kavan    

Name: Justin P. Kavan

Title: An Authorized Signer

{00163867.DOC; 9}    -46-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

By: /s/ Edward Brennan    

Name: Edward Brennan

Title: Senior Director

{00163867.DOC; 9}    -47-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

MODERN WOODMEN OF AMERICA

By: /s/ Michael E. Dau    

Name: Michael E. Dau

Title: Treasurer & Investment Manager

{00163867.DOC; 9}    -48-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

FIDELITY & GUARANTY LIFE INSURANCE COMPANY

By: /s/ Thomas Cunningham    

Name: Thomas Cunningham

Title: Vice President

{00163867.DOC; 9}    -49-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

PHOENIX LIFE INSURANCE COMPANY

By: /s/ Paul M. Chute    

Name: Paul M. Chute

Title: Senior Managing Director, Private Placements

PHL VARIABLE INSURANCE COMPANY

By: /s/ Paul M. Chute    

Name: Paul M. Chute

Title: Its Duly Authorized Officer

{00163867.DOC; 9}    -50-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

COUNTRY LIFE INSURANCE COMPANY

COUNTRY MUTUAL INSURANCE COMPANY

COTTON STATES LIFE INSURANCE COMPANY

By: /s/ John Jacobs    

Name: John Jacobs

Title: Director - Fixed Income

{00163867.DOC; 9}    -51-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

NATIONAL MUTUAL BENEFIT

KANSAS MEDICAL MUTUAL COMPANY

GUARANTY INCOME LIFE INSURANCE COMPANY

OREGON MUTUAL INSURANCE COMPANY

THE PHARMACISTS LIFE INSURANCE COMPANY

PHARMACISTS MUTUAL INSURANCE COMPANY

By: Prime Advisors, Inc., its Attorney‑in‑Fact

By: /s/ Scott Sell    

Name: Scott Sell

Title: Vice President

{00163867.DOC; 9}    -52-

Centennial Energy Holdings, Inc.                    Note Purchase Agreement

This Agreement is hereby accepted and agreed to as of the date thereof.

SENIOR HEALTH INSURANCE COMPANY OF PENNSYLVANIA

By: Conning, Inc., as Investment Manager

By: /s/ Samuel Otchere    

Name: Samuel Otchere

Title: Director

PRIMERICA LIFE INSURANCE COMPANY

By: Conning, Inc., as Investment Manager

By: /s/ Samuel Otchere    

Name: Samuel Otchere

Title: Director

5 STAR LIFE INSURANCE COMPANY

By: Conning, Inc., as Investment Manager

By: /s/ Samuel Otchere    

Name: Samuel Otchere

Title: Director

{00163867.DOC; 9}    -53-

SCHEDULE A

DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

“Acceptable Broker Dealer” means any Person other than a natural person (i) which is registered as a broker or dealer pursuant to the Exchange Act and (ii) whose long-term unsecured debt obligations shall be rated “A” or better by S&P or “A2” or better by Moody’s.

“Affiliate”means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and, with respect to the Company, shall include any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company.

“Agreement” means this Agreement, including all Schedules attached to this Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Anti-Corruption Laws” is defined in Section 5.16(d)(1).

“Anti-Money Laundering Laws” is defined in Section 5.16(c).

“Anti-Terrorism Order” means Executive Order No. 13,224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.

“Asset Sale” means any conveyance, transfer, lease or other disposition (collectively, for purposes of this definition, a “transfer”), directly or indirectly, in one or a series of related transactions, of (a) any Capital Stock of any Subsidiary (including, without limitation, the issuance thereof by such Subsidiary to any Person other than the Company or a Wholly-Owned Subsidiary); (b) all or substantially all of the properties of any division or line of business of the Company or any Subsidiary; (c) any other properties of the Company or any Subsidiary (other than, in the case of this clause (c), (i) transfers of cash or cash equivalents, (ii) sales of inventory or oil and gas production in the ordinary course of business, (iii) any transfer of properties of any Subsidiary to the Company or a Wholly-Owned Subsidiary, and (iv) sales of damaged, worn-out or obsolete equipment that, in the Company’s reasonable judgment, are either no longer used or no longer useful in the business of the Company or its Subsidiaries).

SCHEDULE A-1

{00163867.DOC; 9}              (to Note Purchase Agreement)

“Asset Sale Prepayment Date” is defined in Section 8.8.

“Asset Sale Response Date” is defined in Section 8.8.

“Blocked Person” is defined in Section 5.16(a).

“Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed.

“Called Principal” is defined in Section 8.7

“Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.

“Capital Stock” of any Person means any and all shares, interests, participations or other equivalents in the equity interest (however designated) in such Person and any rights (other than debt securities convertible into an equity interest), warrants or options to acquire an equity interest in such Person.

“Capitalization Ratio” means the ratio of Total Debt to Total Capitalization.

“Centennial Financial Statements” means (i) a consolidated balance sheet of the Company and its Subsidiaries as at December 31 in each of the two fiscal years of the Company most recently completed and consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries for each such year, and related schedules and notes, all reported on by the Company’s independent auditors (which shall be Deloitte & Touché LLP or another nationally recognized independent accounting firm), provided that the Company shall have 120 days from the end of each fiscal year to prepare and release such audited financial statements; and (ii) unaudited consolidated balance sheet of the Company and its Subsidiaries as at the end of the quarterly period (if any) most recently completed and the comparable quarterly period in the preceding fiscal year and unaudited consolidated statements of income, changes in shareholders’ equity and cash flows for such period, provided that the Company shall have 60 days from the end of each fiscal quarter to prepare and release such financial statements.

“Centennial International” means Centennial Energy Resources International Inc., a Delaware corporation.

“Change in Control” means the occurrence of any event whereby MDU ceases to own direct or indirect sole beneficial ownership (as defined under Regulation 13d-3 of the Exchange Act as in effect on the date of this Agreement) of at least 51% of (x) the combined voting power of the Company’s securities which are entitled to vote generally in the election of directors of the Company and (y) each other class of equity securities of the Company.

“CISADA” means the Comprehensive Iran Sanctions, Accountability and Divestment Act.

{00163867.DOC; 9}    A-2

“Closing” is defined in Section 3.

“Code”means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.

“Commodity Contract” means any agreement, device or arrangement providing for payments which are related to fluctuations in commodity prices, including commodity swap or forward sale or purchase agreements.

“Company” means Centennial Energy Holdings, Inc., a Delaware corporation or any successor that becomes such in the manner prescribed in Section 10.2.

“Confidential Information” is defined in Section 20.

“Consolidated Net Income” means, for any period, consolidated net income (or net loss) of the Company and its Subsidiaries for such period as determined in accordance with GAAP computed for the purposes of this definition without giving effect to extraordinary losses or extraordinary gains for such period.

“Consolidated Net Worth” means, at any time, the excess of total assets of the Company and its Subsidiaries over total liabilities of the Company and its Subsidiaries as of the last day of the fiscal quarter most recently then ended, determined on a consolidated basis in accordance with GAAP.

“Consolidated Total Assets” means, as of any time, the total amount of assets which would appear on a consolidated balance sheet of the Company at such time prepared in accordance with GAAP.

“Controlled Entity” means (i) any of the Subsidiaries of the Company and any of their or the Company’s respective Controlled Affiliates and (ii) if the Company has a parent company, such parent company and its Controlled Affiliates. As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Covered Contracts” means all obligations (contingent or otherwise) of the Company or any Subsidiary existing or arising under Swap Contracts, provided that such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating interest rate, exchange rate or price risks associated with liabilities, commitments or assets held or reasonably anticipated by such Person and not for the purposes of financing, speculation or taking a “market view.”

“Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.

{00163867.DOC; 9}    A-3

“Default Rate” means that rate of interest that is the greater of (i) 2% per annum above the rate of interest on the Notes or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. in New York, New York as its “base” or “prime” rate.

“Disclosure Documents” is defined in Section 5.3.

“Discounted Value” is defined in Section 8.7.

“EBITDA” means, for any period, the sum of (a) Consolidated Net Income for such period plus (b) all amounts treated as expenses for depreciation (including any non-cash charge relating to asset impairment determined in accordance with GAAP) and interest and the amortization of intangibles of any kind for such period to the extent included in the determination of Consolidated Net Income plus (c) all taxes accrued for such period on or measured by income to the extent included in the determination of Consolidated Net Income; provided, that Consolidated Net Income shall be computed for purposes of this definition without giving effect to extraordinary losses or extraordinary gains for such period.

“Environmental Claims” means all material claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment.

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under Section 414 of the Code.

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization (within the meaning of Section 4241 of ERISA), insolvent (within the meaning of Section 4245 of ERISA) or in “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA); (d) the commencement of proceedings by the PBGC to terminate a Pension Plan; (e) a failure by the Company or any ERISA Affiliate to make required contributions to a Pension Plan or Multiemployer Plan, or the imposition of a lien in favor of a Pension Plan under Section 430(k) of the Code or Section 303(k) of ERISA; (f) an event or

{00163867.DOC; 9}    A-4

condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan for the imposition of any liability under Section 4069 of 4212(c) of ERISA; (g) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate; (h) an application for a funding waiver pursuant to Section 412 of the Code or Section 302(c) of ERISA with respect to any Plan; or (i) a determination that a Plan is, or is reasonably expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA).

“ERISA Termination Event” means the filing of a notice of intent to terminate a Pension Plan, or the treatment of a plan amendment as the termination of a Pension Plan, under Sections 4041, 4041A or 4042 of ERISA.

“Event of Default” is defined in Section 11.

“Excess Proceeds Amount” means, at any time, the excess, if any, of (A) the Gross Proceeds Amounts of all Asset Sales during the prior twelve months over (B) 20% of Consolidated Total Assets as of the end of the prior fiscal quarter.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, at any time with respect to any property of any kind or character, the sale value of such property that would be realized in an arm’s-length sale at such time between an informed and willing buyer and an informed and willing seller, under no compulsion to buy or sell, respectively.

“Financial Contract” means any agreement, device or arrangement providing for payments related to fluctuations of interest rates, including interest rate swap or exchange agreements, interest rate cap or collar protection agreements and interest rate options.

“First Closing” is defined in Section 3.

“FRB” means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.

“Governmental Authority” means

(a)    the government of

(i)    the United States of America or any State or other political subdivision thereof, or

{00163867.DOC; 9}    A-5

(ii)    any other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or

(b)    any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

“Governmental Official” means any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity.

“Gross Proceeds Amount” means, with respect to any Asset Sale, the aggregate amount of the proceeds received from such Asset Sale. For purposes of any calculation pursuant to clause (1) or (2) of Section 10.6 or the definition of “Excess Proceeds Amount,” such proceeds shall be deemed to equal the Fair Market Value of the property and assets subject to the Asset Sales with respect to which such calculation is being made, determined in good faith at the time of such Asset Sales by a Responsible Officer.

“Guaranty” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person:

(a)    to purchase such indebtedness or obligation or any property constituting security therefor;

(b)    to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation;

(c)    to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or

(d)    otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof.

In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or other substances that might pose a hazard to health and safety, the removal of which may be required

{00163867.DOC; 9}    A-6

or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of which is or shall be restricted, prohibited or penalized by any applicable law including, but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.

“holder” means, with respect to any Note the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 13.1.

“Indebtedness” of any Person means, at any time, without duplication,

(a)    all indebtedness for borrowed money;

(b)    all redemption obligations in respect of redeemable Preferred Stock;

(c)    all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business on ordinary terms);

(d)    all reimbursement or payment obligations (contingent or otherwise) with respect to Surety Instruments;

(e)    all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses;

(f)    all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property);

(g)    all liabilities properly appearing on the Person’s balance sheet with respect to Capital Leases;

(h)    net liabilities under Swap Contracts;

(i)     indebtedness referred to in clauses (a) through (h) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness;

(j)    all Securitization Obligations of such Person; and

{00163867.DOC; 9}    A-7

(k)    all Guaranty obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (j) above.

Indebtedness of any Person shall include all recourse Indebtedness of any partnership or joint venture or limited liability company in which such Person is a general partner or a joint venturer or member.

“INHAM Exemption” is defined in Section 6.2(e).

“Institutional Investor” means any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, including, without limiting the foregoing, any Qualified Institutional Buyer.

“International Subsidiary” means Centennial International or any Subsidiary thereof (other than any Project Finance Subsidiary)

“Iranian Sector” means (i) activities to develop petroleum or natural gas resources or nuclear power in Iran, including, but not limited to, providing oil or liquefied natural gas tankers or products used to construct or maintain pipelines used to transport oil or liquefied natural gas for the energy sector in Iran, (ii) activities to supply, maintain or enhance any aspect of the Iranian military, including, but not limited to, the research and development of nuclear weapons and (iii) the banking and financial services sector of Iran.

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements).

“Loan Document” means the Second Amended and Restated Credit Agreement, dated as of June 8, 2012, among the Company, the lenders party thereto and U.S. Bank National Association, as Administrative Agent, and the related notes, letters of credit, letter of credit applications, fee letters and other documents and agreements contemplated thereby.

“Make-Whole Amount” is defined in Section 8.7.

“Material” means material in relation to the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement and the Notes, (c) the ability of any Subsidiary Guarantor to perform its obligations under its Subsidiary Guaranty, or (d) the validity or enforceability of this Agreement, the Notes or any Subsidiary Guaranty.

{00163867.DOC; 9}    A-8

“Material Credit Facility” means, as to the Company and its Subsidiaries,

(a)    the Second Amended and Restated Credit Agreement, dated as of June 8, 2012, among the Company, the several financial institutions from time to time party thereto, and U.S. Bank National Association, as Administrative Agent, including any renewals, extensions, amendments, supplements, restatements, replacements or refinancing thereof; and

(b)    any other agreement(s) creating or evidencing indebtedness for borrowed money entered into on or after the date of Closing by the Company or any Subsidiary, or in respect of which the Company or any Subsidiary is an obligor or otherwise provides a guarantee or other credit support (“Credit Facility”), in a principal amount outstanding or available for borrowing equal to or greater than $200,000,000 (or the equivalent of such amount in the relevant currency of payment, determined as of the date of the closing of such facility based on the exchange rate of such other currency); and if no Credit Facility or Credit Facilities equal or exceed such amounts, then the largest Credit Facility shall be deemed to be a Material Credit Facility.

“Maturity Date” is defined in the first paragraph of each Note.

“MDU” means MDU Resources Group, Inc., a Delaware corporation.

“Memorandum” is defined in Section 5.3.

“Montana-Dakota” means Montana-Dakota Utilities Co., a division of MDU.

“Moody’s” means Moody’s Investors Services, Inc.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).

“NAIC” means the National Association of Insurance Commissioners or any successor thereto.

“Notes” is defined in Section 1.

“OFAC” is defined in Section 5.16(a).

“OFAC Listed Person” is defined in Section 5.16(a).

“OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate.

{00163867.DOC; 9}    A-9

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which the Company or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years but excluding any Multiemployer Plan.

“Permitted Liens” is defined in Section 10.5.

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to Title I of ERISA that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.

“Preferred Stock” means any class of capital stock of a Person that is preferred over any other class of capital stock (or similar equity interests) of such Person as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such Person.

“Priority Debt” means (without duplication) the aggregate of all Indebtedness of Subsidiaries of the Company (other than redemption obligations in respect of mandatory redeemable Preferred Stock held by the Company or Wholly-Owned Subsidiaries) plus Preferred Stock of Subsidiaries held by Persons other than the Company or Wholly-Owned Subsidiaries plus all Indebtedness and judgments secured by Liens other than Liens permitted by clauses (a) – (o), inclusive, of Section 10.5; provided, however, that Priority Debt shall not include (w) Indebtedness of a Subsidiary owed to the Company or any Wholly-Owned Subsidiary (other than a Project Finance Subsidiary), (x) Indebtedness under Covered Contracts, (y) Indebtedness of WBI Energy Transmission to the extent such Indebtedness does not exceed $175,000,000, and (z) Indebtedness of a Project Finance Subsidiary for which neither the Company nor any other Subsidiary (other than another Project Finance Subsidiary) has any liability (other than pursuant to Liens permitted by Section 10.5(n)).

“Project Finance Subsidiary” means any Subsidiary that meets each of the following requirements: (a) it is primarily engage, directly or indirectly, in the ownership, operation and/or financing of independent power production and related facilities and assets; (b) neither the Company nor any other Subsidiary (other than another Project Finance Subsidiary) has any liability, contingent or otherwise, for the Indebtedness or other obligations of such Subsidiary (other than non-recourse liability resulting solely from the pledge of stock of such Subsidiary); and (c) it has Indebtedness owing to, or commitments therefor from, Persons other than the Company and its Subsidiaries.

{00163867.DOC; 9}    A-10

“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.

“Property Reinvestment Application” means the application of an amount equal to the Excess Proceeds Amount to the acquisition by the Company or any Subsidiary, as the case may be, of assets (i) similar to those disposed by such Person, or (ii) of a type used in the business of the Company or such Subsidiary as of the date of this Agreement or another business that is substantially similar thereto. For clarification, an exchange of property on which recognition of gain or loss would be exempted from recognition pursuant to Section 1031 of the Code shall constitute an Asset Sale and a Property Reinvestment Application.

“Proposed Prepayment Date” is defined in Section 8.3(b).

“PTE” is defined in Section 6.2(a).

“Purchaser” or “Purchasers” means each of the purchasers that has executed and delivered this Agreement to the Company and such Purchaser’s successors and assigns (so long as any such assignment complies with Section 13.2), provided, however, that any Purchaser of a Note that ceases to be the registered holder or a beneficial owner (through a nominee) of such Note as the result of a transfer thereof pursuant to Section 13.2 shall cease to be included within the meaning of “Purchaser” of such Note for the purposes of this Agreement upon such transfer.

“QPAM Exemption” is defined in Section 6.2(d).

“Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.

“Reinvestment Yield” is defined in Section 8.7.

“Remaining Average Life” is defined in Section 8.7.

“Remaining Scheduled Payments” is defined in Section 8.7.

“Reportable Event” means any of the events set forth in Section 4043(b) or 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC.

“Required Holders” means, at any time, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).

“Responsible Officer” means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.

“S&P” means Standard & Poor’s Ratings Group, a division of McGraw Hill Inc.

{00163867.DOC; 9}    A-11

“SEC” means the Securities and Exchange Commission of the United States, or any successor thereto.

“Second Closing” is defined in Section 3.

“Securities” or “Security” shall have the meaning specified in section 2(1) of the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“Securitization Obligations” means, with respect to any Securitization Transaction, the aggregate investment or claim held at any time by all purchasers, assignees or transferees of (or of interests in) or holders of obligations that are supported or secured by accounts receivable, lease receivables and other rights to payment in connection with such Securitization Transaction.

“Securitization Transaction” means any sale, assignment or other transfer by the Company or any Subsidiary (other than a Project Finance Subsidiary) of accounts receivable, lease receivables or other payment obligations owing to the Company or such Subsidiary or any interest in any of the foregoing, together in each case with any collections and other proceeds thereof, any collection or deposit accounts related thereto, and any collateral, guaranties or other property or claims in favor of the Company or such Subsidiary supporting or securing payment by the obligor thereon of, or otherwise related to, any such receivables.

“Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.

“Series A Notes” is defined in Section 1.

“Series B Notes” is defined in Section 1.

“Series C Notes” is defined in Section 1.

“Series D Notes” is defined in Section 1.

“Series E Notes” is defined in Section 1.

“Series F Notes” is defined in Section 1.

“Settlement Date” is defined in Section 8.7.

“Source” is defined in Section 6.2.

“Subsidiary” means, as to any Person, any other Person in which such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of

{00163867.DOC; 9}    A-12

contingencies, to elect a majority of the directors (or Persons performing similar functions) of such second Person, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries (unless such partnership or joint venture can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Company.

“Subsidiary Guarantor” means each Subsidiary that has executed and delivered a Subsidiary Guaranty.

“Subsidiary Guaranty” is defined in Section 9.7(a).

“Substitute Purchaser” is defined in Section 21.

“Super‑Majority Holders” means at any time on or after the Closing, the holders of at least 66‑2/3% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).

“Surety Instruments” means all letters of credit (including standby and commercial), banker’s acceptances, bank guaranties, shipside bonds, surety bonds and similar instruments.

“SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.

“Swap Contract” means swap agreements (as such term is defined in Section 101(53B) of the United States Bankruptcy Code) and any other agreements or arrangements designed to provide protection against fluctuations in interest or currency exchange rates or commodity prices, including Commodity Contracts and Financial Contracts.

“Total Capitalization” means, with respect to any Person, the sum of (a) the total consolidated stockholders’ or owners’ equity of such Person determined in accordance with GAAP (excluding any non-cash gain or loss with respect to Covered Contracts resulting from the requirements of Accounting Standards Codification 815-20-25-104, formerly known as FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities”) plus (b) the Total Debt of such Person.

“Total Debt” means, with respect to any Person, the total consolidated Indebtedness of such Person, excluding (a) Indebtedness under Covered Contracts and (b) 80% of the amount of all contingent reimbursement or payment obligations with respect to unsecured surety bonds incurred in the ordinary course of business includable in the computation of “Indebtedness” pursuant to item (d) of the definition thereof but for this exclusion.

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 302(d)(7) of ERISA, over the current value of that Plan’s assets, determined in

{00163867.DOC; 9}    A-13

accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

“United States Government Security” means any direct obligation of, or obligation guaranteed by, the United States of America, or any agency controlled or supervised by or acting as an instrumentality of the United States of America pursuant to authority granted by the Congress of the United States of America, so long as such obligation or guarantee shall have the benefit of the full faith and credit of the United States of America which shall have been pledged pursuant to authority granted by the Congress of the United States of America.

“USA PATRIOT Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2011, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“U.S. Economic Sanctions” is defined in Section 5.16(a).

“WBI Energy Transmission” means WBI Energy Transmission, Inc., a Delaware corporation.

“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent of all of the equity interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company’s other Wholly-Owned Subsidiaries at such time.

{00163867.DOC; 9}    A-14

SCHEDULE 1-A

[FORM OF SERIES A NOTE]

CENTENNIAL ENERGY HOLDINGS, INC.

3.99% SENIOR NOTE, SERIES A, DUE DECEMBER 20, 2019

No. [_____]    [Date]

$[_______]    PPN 15135# BL5

FOR VALUE RECEIVED, the undersigned, CENTENNIAL ENERGY HOLDINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [____________], or registered assigns, the principal sum of [_____________________] DOLLARS (or so much thereof as shall not have been prepaid) on December 20, 2019, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of 3.99% per annum from the date hereof, payable semiannually, on the 20^th day of June and December in each year, commencing with the June 20 or December 20 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 5.99% or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from time to time in New York, New York as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at JPMorgan Chase Bank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of December 20, 2012 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of,

SCHEDULE 1-A

{00163867.DOC; 9}              (to Note Purchase Agreement)

the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

CENTENNIAL ENERGY HOLDINGS, INC.

By     

[Title]

-2-

{00163867.DOC; 9}    SCHEDULE 1-A

SCHEDULE 1-B

[FORM OF SERIES B NOTE]

CENTENNIAL ENERGY HOLDINGS, INC.

4.57% SENIOR NOTE, SERIES B, DUE DECEMBER 20, 2022

No. [_____]    [Date]

$[_______]    PPN 15135# BM3

FOR VALUE RECEIVED, the undersigned, CENTENNIAL ENERGY HOLDINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [____________], or registered assigns, the principal sum of [_____________________] DOLLARS (or so much thereof as shall not have been prepaid) on December 20, 2022, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of 4.57% per annum from the date hereof, payable semiannually, on the 20^th day of June and December in each year, commencing with the June 20 or December 20 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.57% or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from time to time in New York, New York as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at JPMorgan Chase Bank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of December 20, 2012 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of,

SCHEDULE 1-B

{00163867.DOC; 9}              (to Note Purchase Agreement)

the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

CENTENNIAL ENERGY HOLDINGS, INC.

By     

[Title]

-2-

{00163867.DOC; 9}    SCHEDULE 1-B

SCHEDULE 1-C

[FORM OF SERIES C NOTE]

CENTENNIAL ENERGY HOLDINGS, INC.

4.97% SENIOR NOTE, SERIES C, DUE DECEMBER 20, 2027

No. [_____]    [Date]

$[_______]    PPN 15135# BN1

FOR VALUE RECEIVED, the undersigned, CENTENNIAL ENERGY HOLDINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [____________], or registered assigns, the principal sum of [_____________________] DOLLARS (or so much thereof as shall not have been prepaid) on December 20, 2027, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of 4.97% per annum from the date hereof, payable semiannually, on the 20^th day of June and December in each year, commencing with the June 20 or December 20 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.97% or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from time to time in New York, New York as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at JPMorgan Chase Bank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of December 20, 2012 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of,

SCHEDULE 1-C

{00163867.DOC; 9}              (to Note Purchase Agreement)

the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

CENTENNIAL ENERGY HOLDINGS, INC.

By     

[Title]

-2-

{00163867.DOC; 9}    SCHEDULE 1-C

SCHEDULE 1-D

[FORM OF SERIES D NOTE]

CENTENNIAL ENERGY HOLDINGS, INC.

3.99% SENIOR NOTE, SERIES D, DUE DECEMBER 20, 2019

No. [_____]    [Date]

$[_______]    PPN 15135# BP6

FOR VALUE RECEIVED, the undersigned, CENTENNIAL ENERGY HOLDINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [____________], or registered assigns, the principal sum of [_____________________] DOLLARS (or so much thereof as shall not have been prepaid) on December 20, 2019, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of 3.99% per annum from the date hereof, payable semiannually, on the 20^th day of June and December in each year, commencing with the June 20 or December 20 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 5.99% or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from time to time in New York, New York as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at JPMorgan Chase Bank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of December 20, 2012 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in

SCHEDULE 1-D

{00163867.DOC; 9}              (to Note Purchase Agreement)

writing, new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

CENTENNIAL ENERGY HOLDINGS, INC.

By     

[Title]

-2-

{00163867.DOC; 9}    SCHEDULE 1-D

SCHEDULE 1-E

[FORM OF SERIES E NOTE]

CENTENNIAL ENERGY HOLDINGS, INC.

4.57% SENIOR NOTE, SERIES E, DUE DECEMBER 20, 2022

No. [_____]    [Date]

$[_______]    PPN 15135# BQ4

FOR VALUE RECEIVED, the undersigned, CENTENNIAL ENERGY HOLDINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [____________], or registered assigns, the principal sum of [_____________________] DOLLARS (or so much thereof as shall not have been prepaid) on December 20, 2022, with interest (computed on the basis of a 360-day year of twelve 30‑day months) (a) on the unpaid balance hereof at the rate of 4.57% per annum from the date hereof, payable semiannually, on the 20^th day of June and December in each year, commencing with the June 20 or December 20 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.57% or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from time to time in New York, New York as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at JPMorgan Chase Bank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of December 20, 2012 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of,

SCHEDULE 1-E

{00163867.DOC; 9}              (to Note Purchase Agreement)

the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

CENTENNIAL ENERGY HOLDINGS, INC.

By     

[Title]

-2-

{00163867.DOC; 9}    SCHEDULE 1-E

SCHEDULE 1-F

[FORM OF SERIES F NOTE]

CENTENNIAL ENERGY HOLDINGS, INC.

4.97% SENIOR NOTE, SERIES F, DUE DECEMBER 20, 2027

No. [_____]    [Date]

$[_______]    PPN 15135# BR2

FOR VALUE RECEIVED, the undersigned, CENTENNIAL ENERGY HOLDINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [____________], or registered assigns, the principal sum of [_____________________] DOLLARS (or so much thereof as shall not have been prepaid) on December 20, 2027, with interest (computed on the basis of a 360-day year of twelve 30‑day months) (a) on the unpaid balance hereof at the rate of 4.97% per annum from the date hereof, payable semiannually, on the 20^th day of June and December in each year, commencing with the June 20 or December 20 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.97% or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from time to time in New York, New York as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at JPMorgan Chase Bank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of December 20, 2012 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of,

SCHEDULE 1-F

{00163867.DOC; 9}              (to Note Purchase Agreement)

the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

CENTENNIAL ENERGY HOLDINGS, INC.

By     

[Title]

-2-

{00163867.DOC; 9}    SCHEDULE 1-F

SCHEDULE 4.4(a)

FORM OF OPINION OF COHEN TAUBER SPIEVACK & WAGNER P.C.
[Letterhead of Cohen Tauber Spievack & Wagner P.C.]

[Closing]
Ladies and Gentlemen:

We have acted as special counsel for Centennial Energy Holdings, Inc., a Delaware corporation (the “Company”), in connection with the negotiation, execution and delivery of that certain Note Purchase Agreement, dated as of December 20, 2012 (the “Agreement”), between the Company and the Purchasers of the notes issued thereunder, pursuant to which the Company has issued to the Purchasers today its [3.99% Senior Notes, Series A, due December 20, 2019, its 4.57% Senior Notes, Series B, due December 20, 2022 and its 4.97% Senior Notes, Series C, due December 20, 2027] or [3.99% Senior Notes, Series D, due December 20, 2019, its 4.57% Senior Notes, Series E, due December 20, 2022 and its 4.97% Senior Notes, Series F, due December 20, 2027] (the “Notes”) of the Company in the aggregate principal amount of [$150,000,000] [$100,000,000], and certain of the documents referred to therein. Capitalized terms used herein that are defined in the Agreement have the respective meanings specified in the Agreement unless otherwise defined or stated herein. This letter is being delivered to you in satisfaction of the condition set forth in Section 4.4 of the Agreement and with the understanding that the Purchasers are purchasing the Notes in reliance on the opinions expressed herein.

For the purpose of rendering the opinions contained herein, we have examined and reviewed the Agreement and the Notes.

We have also examined the originals, or copies certified to our satisfaction, of such other corporate records of the Company and agreements, instruments and other documents, as we have deemed necessary as a basis for the opinions expressed below. In our examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals and the conformity with original documents of all documents submitted to us as certified or photostatic copies. We have also assumed, with your consent, the due execution and delivery, pursuant to due authorization, of the Agreement by all parties thereto other than the Company and the validity and binding effect of the Agreement upon such parties. In addition, with respect to our opinion in paragraph 1, we have relied on the opinion of Paul K. Sandness contained in paragraphs 1, 2, 3 and 4 of the letter dated the date hereof addressed to you.

As to any facts that we did not independently establish or verify, we have relied without independent investigation upon statements, representations and certificates of officers of the Company and as to the matters addressed therein, upon certificates or communications from

{00163867.DOC; 9}SCHEDULE 4.4(a) - 1

public officials. As used herein, the phrase “to our knowledge” with respect to the existence or absence of facts is intended to signify that, while we have made no specific inquiry or other independent examination to determine the existence or absence of such facts, no factual information has come to the attention of the attorneys in this firm performing services on behalf of the Company and in connection with the transactions contemplated by the Agreement and the preparation of this opinion which causes such attorneys to believe that such facts are not accurate.

With respect to the opinion expressed in paragraph 2 below, we have also relied upon the representation made by you in Section 6.1 of the Agreement.

Based on and subject to the foregoing and upon such investigation as we have deemed necessary, it is our opinion that:

1.    Each of the Agreement and the Notes constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its respective terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and of general principles of equity (regardless of whether applied in a proceeding in equity or at law).

2.    Assuming that the offering, issuance, sale and delivery of the Notes occur under the circumstances contemplated by the Agreement, the registration of such offering, issuance and sale of the Notes is not required under the Securities Act and the qualification of an indenture in respect of the Notes is not required under the Trust Indenture Act of 1939, as amended.

3.    The extension, arranging and obtaining of the credit represented by the Notes do not result in any violation of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

4.    The execution and delivery of the Agreement and the Notes, the offering, issuance and sale of the Notes under the circumstances contemplated by the Agreement and fulfillment of and compliance with the respective provisions of the Agreement and the Notes will not (i) violate any applicable law (including any securities or state blue sky law), statute, rule or regulation to which the Company is subject or by which the Company is bound; or (ii) require any authorization, consent, approval, exemption or other action by or filing with any administrative or governmental body (other than routine filings after the date hereof with the Securities and Exchange Commission and/or state blue sky law authorities.

5.    The Company is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended.

This opinion is limited to matters of the corporation law of the State of New York, the General Corporation Law of the State of Delaware and the federal laws of the United States of America. We express no opinion as to the laws of any other jurisdiction.

{00163867.DOC; 9}SCHEDULE 4.4(a) - 2

This opinion is intended solely for the use of the Purchasers and is rendered solely in connection with the Agreement, and without our written consent may not be (a) relied upon by you for any other purpose, or (b) relied upon by any other Person or entity for any purpose, except that each subsequent institutional holder of the Notes may rely upon this opinion as of the date hereof. The opinions expressed above are limited to the law and facts in effect on the date hereof. We disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which might alter, affect or modify the opinions expressed herein.

Very truly yours,

{00163867.DOC; 9}SCHEDULE 4.4(a) - 3

SCHEDULE 4.4(b)
FORM OF OPINION OF GENERAL COUNSEL OF THE COMPANY

[Closing]

Ladies and Gentlemen:

I am General Counsel of Centennial Energy Holdings, Inc., a Delaware corporation (the “Company”), and in such capacity, I am familiar with that certain Note Purchaser Agreement, dated as of December 20, 2012, (the “Agreement”), between the Company and the Purchasers of the notes issued thereunder, pursuant to which the Company has issued to the Purchasers today its [3.99% Senior Notes, Series A, due December 20, 2019, its 4.57% Senior Notes, Series B, due December 20, 2022 and its 4.97% Senior Notes, Series C, due December 20, 2027] or [3.99% Senior Notes, Series D, due December 20, 2019, its 4.57% Senior Notes, Series E, due December 20, 2022 and its 4.97% Senior Notes, Series F, due December 20, 2027] (the “Notes”) of the Company in the aggregate principal amount of [$150,000,000] [$100,000,000], and certain of the documents referred to therein. This opinion is being delivered to you in satisfaction of a condition set forth in Section 4.4 of the Agreement and with the understanding that the Purchasers are purchasing the Notes issued pursuant to the Agreement today in reliance on the opinions expressed herein.

Unless otherwise defined herein, expressions which are defined in the Agreement shall have the respective meanings assigned to them therein.

As a basis for the opinions hereinafter expressed, I have examined the following:

(i)    the Agreement;

(ii)    the Notes;

(iii)    the Certificates of Incorporation and the By-laws (collectively, the “Organic Documents”) of the Company and the Principal Subsidiaries (as defined below) and any amendments thereto.

I have also examined such certificates of public officials, certificates of officers of (y) the Company and (z) WBI Holdings, Inc., a Delaware corporation, Knife River Corporation, a Delaware corporation and MDU Construction Services Group, Inc., a Delaware corporation (each a “Principal Subsidiary” and collectively, the “Principal Subsidiaries”) and copies certified to my satisfaction of corporate documents and records of the Company and the Principal Subsidiaries, certificates of public officials as to questions of fact material to my opinion that I did not independently establish, and agreements, instruments and other documents, as I have deemed necessary as a basis for the opinions expressed below. I have assumed, with your consent, the due execution and delivery, pursuant to due authorization, of the Agreement by all parties thereto other than the Company.

{00163867.DOC; 9}SCHEDULE 4.4(b) - 1

Based upon the foregoing, I am of the opinion that:

1.    The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware. Each Principal Subsidiary is a corporation duly organized and validly existing in good standing under the laws of the state of Delaware. The Company and each Principal Subsidiary have the corporate power to carry on their respective businesses as now being conducted.

2.    The execution, delivery and performance by the Company of the Agreement and the Notes are within the Company’s corporate powers, have been duly authorized by all necessary corporate action on the part of the Company and do not

(a)    contravene the Company’s Organic Documents;

(b)    contravene (i) any contractual restriction, or (ii) any law, or governmental regulation or, to the best of my knowledge after due inquiry, any order, writ, injunction or decree of any court or governmental authority or any agency or any arbitral award applicable to the Company; or

(c)    result in, or require the creation or imposition of, any Lien on any of the properties of the Company.

3.    The due execution, delivery and performance by (a) the Company of the Agreement and the Notes under the circumstances contemplated by the Agreement will not require (i) any authorization, consent, approval, exemption, or other action by or filing with any administrative or governmental body or (ii) any authorization, consent, approval, or other action by or notice to any Person.

4.    Each of the Agreement and the Notes has been validly authorized, executed and delivered by the Company.

5.    There is no pending action or proceeding nor, to the best of my knowledge, any action or proceeding threatened in writing against the Company before any court, governmental agency or arbitrator (a) which purports to affect the legality, validity, binding effect or enforceability of the Agreement or the Notes or (b) which may materially adversely affect the financial condition, operations, assets, business or properties of the Company and its Subsidiaries taken as a whole.

The opinions expressed herein are limited to the laws of the states of North Dakota and Delaware. I am a member of the North Dakota Bar and do not hold myself out as an expert on the laws of the state of Delaware, but I have made a study through counsel located therein or otherwise of the laws of such state insofar as such laws are involved in the conclusions stated in this opinion.

This opinion is intended solely for your use and the use of your counsel, and is rendered solely in connection with the Agreement. A copy of this opinion may be delivered to any

{00163867.DOC; 9}SCHEDULE 4.4(b) - 2

transferee of all or part of a Note (“Transferee”) or to any Person to which you or such Transferee sells or offers to sell any Note or to any Person which participates in any Note, and such Transferee or Person may rely upon this opinion as if it were addressed and had been delivered to such Transferee or Person on the date hereof. This opinion may not be (a) relied upon by you or your counsel for any other purpose, or (b) relied upon by any other person or entity for any purpose, other than Cohen Tauber Spievack & Wagner P.C., special counsel to the Company, to the extent set forth in its opinion of even date addressed to you, without my prior consent. This opinion may be delivered to, but may not be relied upon by, regulatory authorities including the National Association of Insurance Commissioners. I disclaim any obligation to advise you or your counsel of facts, circumstances, events or developments which hereafter may be brought to my attention and which might alter, affect or modify the opinions expressed herein. The opinions expressed above are limited to the law and facts in effect on the date hereof.

Very truly yours,
Paul K. SandnessGeneral Counsel

{00163867.DOC; 9}SCHEDULE 4.4(b) - 3

SCHEDULE 4.4(c)

FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS

To Be Provided on a Case by Case Basis

SCHEDULE 4.4(c)

{00163867.DOC; 9} (to Note Purchase Agreement)

SCHEDULE5.4

SUBSIDIARIES AND MINORITY INTERESTS

I.    Company's Subsidiaries

1. Alaska Basic Industries, Inc., an Alaska corporation, 100%

2. Ames Sand & Gravel, Inc., a North Dakota corporation, 100%

3. Anchorage Sand and Gravel Company, Inc., an Alaska corporation , 100%

4. Baldwin Contracting Company, Inc., a California corporation, 100%

5. BEH Electric Holdings, LLC, a Nevada limited liability company, 100%

6. Bell Electrical Contractors, Inc., a Missouri corporation, 100%

7. BMH Mechanical Holdings, LLC, a Nevada limited liability company, 100%

8. Bombard Electric, LLC, a Nevada limited liability company, 100%

9. Bombard Mechanical, LLC, a Nevada limited liability company, 100%

10. Capital Electric Construction Company, Inc., a Kansas corporation, 100%

11. Capital Electric Line Builders, Inc., a Kansas corporation, 100%

12. Centennial Energy Resources International, Inc., a Delaware corporation, 100%

13. Centennial Energy Resources LLC, a Delaware limited liability company, 100%

14. Centennial Holdings Capital LLC, a Delaware limited liability company, 100%

15. Central Oregon Redi-Mix, L.L.C., an Oregon limited liability company, 78%

16. Concrete, Inc., a California corporation, 100%

17. Connolly-Pacific Co., a California corporation, 100%

18. Continental Line Builders, Inc., a Delaware corporation, 100%

19. Coordinating and Planning Services, Inc., a Delaware corporation, 100%

20. Desert Fire Holdings, Inc., a Nevada corporation, 100%

21. Desert Fire Protection, a Nevada Limited Partnership, 100%

22. Desert Fire Protection, Inc., a Nevada corporation, 100%

23. Desert Fire Protection, LLC, a Nevada limited liability company, 100%

24. D S S Company, a California corporation, 100%

25. E.S.I., Inc., an Ohio corporation, 100%

26. Fairbanks Materials, Inc., an Alaska corporation, 100%

27. Fidelity Exploration & Production Company, a Delaware corporation, 100%

28. Fidelity Oil Co., a Delaware corporation, 100%

29. Frebco, Inc., an Ohio corporation, 100%

30. FutureSource Capital Corp., a Delaware corporation, 100%

31. Granite City Ready Mix, Inc., a Minnesota corporation, 100%

32. Hamlin Electric Company, a Colorado corporation, 100%

33. Harp Engineering, Inc., a Montana corporation, 100%

34. Hawaiian Cement, a Hawaii partnership, 100%

35. ILB Hawaii, Inc., a Hawaii corporation, 100%

36. Independent Fire Fabricators, LLC, a Nevada limited liability company, 100%

37. International Line Builders, Inc., a Delaware corporation, 100%

38. InterSource Insurance Company, a Vermont corporation, 100%

39. Jebro Incorporated, an Iowa corporation, 100%

40. JTL Group, Inc., a Montana corporation, 100%

SCHEDULE 5.4 - 1

{00163867.DOC; 9}    (to Note Purchase Agreement)

41. JTL Group, Inc., a Wyoming corporation, 100%

42. Kent’s Oil Service, a California corporation, 100%

43. Knife River Corporation, a Delaware corporation, 100%

44. Knife River Corporation – North Central, a Minnesota corporation, 100%

45. Knife River Corporation – Northwest, an Oregon corporation, 100%

46. Knife River Corporation – South, a Texas corporation, 100%

47. Knife River Dakota, Inc., a Delaware corporation, 100%

48. Knife River Equipment, Inc., a Delaware corporation, 100%

49. Knife River Hawaii, Inc., a Delaware corporation, 100%

50. Knife River Marine, Inc., a Delaware corporation, 100%

51. Knife River Midwest, LLC, a Delaware limited liability company, 100%

52. KRC Holdings, Inc., a Delaware corporation, 100%

53. LME&U Holdings, LLC, a Nevada limited liability company, 100%

54. Lone Mountain Excavation & Utilities, LLC, a Nevada limited liability company, 100%

55. Loy Clark Pipeline Co., an Oregon corporation, 100%

56. LTM, Incorporated, an Oregon corporation, 100%

57. MDU Brasil Ltda., a Brazil limited liability company, 100%

58. MDU Construction Services Group, Inc., a Delaware corporation, 100%

59. MDU Industrial Services, Inc., a Delaware corporation, 100%

60. MDU Resources International LLC, a Delaware limited liability company, 100%

61. MDU Resources Luxembourg I LLC S.a.r.l., a Luxembourg limited liability company, 100%

62. MDU Resources Luxembourg II LLC S.a.r.l., a Luxembourg limited liability company, 100%

63. Midland Technical Crafts, Inc., a Delaware corporation, 100%

64. Netricity LLC, an Alaska limited liability company, 75%

65. Nevada Solar Solutions, LLC, a Delaware limited liability company, 100%

66. Northstar Materials, Inc., a Minnesota corporation, 100%

67. Oregon Electric Construction, Inc., an Oregon corporation, 100%

68. Pouk & Steinle, Inc., a California corporation, 100%

69. Prairielands Energy Marketing, Inc., a Delaware corporation, 100%

70. Prairielands Magnetics Limited, a Scotland private limited company, 100%

71. Rocky Mountain Contractors, Inc., a Montana corporation, 100%

72. USI Industrial Services, Inc., a Delaware corporation, 100%

73. The Wagner Group, Inc., a Delaware corporation, 100%

74. Wagner Industrial Electric, Inc., a Delaware corporation, 100%

75. The Wagner-Smith Company, an Ohio corporation, 100%

76. Wagner-Smith Equipment Co., a Delaware corporation, 100%

77. Wagner-Smith Pumps & Systems, Inc., an Ohio corporation, 100%

78. Warner Enterprises, Inc., a Nevada corporation, 100%

79. WBI Canadian Pipeline, Ltd., a Canadian corporation, 100%

80. WBI Energy, Inc., a Delaware corporation, 100%

81. WBI Energy Midstream, LLC, a Colorado limited liability company, 100%

82. WBI Energy Services, Inc., a Delaware corporation, 100%

83. WBI Energy Transmission, Inc., a Delaware corporation, 100%

84. WBI Holdings, Inc., a Delaware corporation, 100%

85. WHC, Ltd., a Hawaii corporation, 100%

SCHEDULE 5.4 - 2

{00163867.DOC; 9}    (to Note Purchase Agreement)

SCHEDULE5.15

EXISTING INDEBTEDNESS

(As of September 30, 2012)

Amount

Centennial Energy Holdings, Inc.Outstanding

Prudential                                $ 466,000,000

Note Purchase Agreements                        $ 148,666,666

Commercial Paper                            $ 350,443,215

Interest Rate Swap Agreements                    $ 7,779,152

Knife River Corporation

Various Other Debt                            $ 439,415

MDU Construction Services Group, Inc.

Various Other Debt                            $ 286,381

WBI Holdings, Inc.

Prudential Insurance Company                    $ 100,000,000

Various Capital Leases                        $ 2,531,486

SCHEDULE 5.15

{00163867.DOC; 9} (to Note Purchase Agreement)

SCHEDULE10.5

EXISTING LIENS

Liens on certain assets of WBI Energy Midstream, LLC, f/k/a Bitter Creek Pipelines, LLC, under the Agreement for the Construction, Ownership and Operation of the Belfield Gas Plant and Related Facilities in Stark and Billings Counties, North Dakota.

SCHEDULE 10.5

{00163867.DOC; 9} (to Note Purchase Agreement)

EX-10.A

MDU RESOURCES GROUP, INC.

DIRECTOR COMPENSATION POLICY

Each director of MDU Resources Group, Inc. (the “Company”) who is not a full-time employee of the Company (a “Director”) shall receive compensation made up of annual cash retainers and shares of the Company’s common stock (“Common Stock”), as set forth in this policy.

Director Compensation

Annual Cash Retainers
	Base Retainer	$85,000*
	Additional Retainers:
	Non-Executive Chair of the Board	$95,000*
	Chair of Audit Committee	20,000*
	Chair of Compensation Committee	15,000*
	Chair of Environmental and Sustainability Committee	15,000*
	Chair of Nominating and Governance Committee	15,000*
	*Effective June 1, 2019.

Such cash retainers shall be paid in monthly installments.

The MDU Resources Group, Inc. Deferred Compensation Plan for Directors (as amended and restated effective May 15, 2008) (the “Plan”) permits a Director to defer all or any portion of the annual cash retainers. The amount deferred is recorded in each participant's deferred compensation account and credited with income in the manner prescribed in the Plan. For further details, reference is made to the Plan, a copy of which is attached.

Common Stock

Each person, other than the Non-Executive Chair of the Board, who is a Director of the Company at any time during the calendar year shall receive a $125,000 stock payment, and any person who is the Non-Executive Chair of the Board shall receive a $150,000 stock payment, on or about the Wednesday following the Board of Directors’ regularly-scheduled November meeting, pursuant to the Non-Employee Director Long-Term Incentive Compensation Plan. The stock payment shall be made under the Non-Employee Director Long-Term Incentive Compensation Plan. The stock payment shall be made by providing the Director or Non-Executive Chair with the number of whole shares of Common Stock determined (i) if the shares are original issue or treasury stock, by dividing the amount of the applicable stock payment by the closing price of the Common Stock on the New York Stock Exchange on the grant date and (ii) if the shares are purchased on the open market, by dividing the amount of the applicable stock payment by the weighted average price paid to purchase shares for the Director or Non-Executive Chair for that stock payment, excluding any related brokerage commissions or other service fees. Any fractional shares shall be paid in cash. The stock payment shall be prorated for any Director or Non-Executive Chair who does not serve the entire calendar year by multiplying the applicable stock payment by a fraction, the numerator of which is the number of actual or expected months (with a partial month counted as a full month) of service on the Board during the calendar year and the denominator of which is twelve.

1

By written election a Director may reduce his or her annual cash retainers and have that amount applied to the purchase of additional shares of Common Stock under the Non-Employee Director Long-Term Incentive Compensation Plan. The annual election shall specify the percentage of the annual cash retainers to be applied toward the purchase of additional shares and must be received by the Company by the last business day of the year prior to the year in which the election is to be effective. No election may be changed or revoked for the current year, but may be changed for a subsequent year. The additional stock payments will be made on the last business day of March, June, September, and December. The stock payment shall be made by providing the Director with the number of whole shares of Common Stock determined (i) if the shares are original issue or treasury stock, by dividing the amount of the applicable stock payment by the closing price of the Common Stock on the New York Stock Exchange on the grant date or (ii) if the shares are purchased on the open market, by dividing the amount of the applicable stock payment by the weighted average price paid to purchase shares for the Director for that stock payment, excluding any related brokerage commissions or other service fees. No fractional shares shall be purchased and cash in lieu of any fractional shares shall be paid to the Director.

Travel Expense Reimbursement

All Directors will be reimbursed for reasonable travel expenses incurred while serving as a Director, including spouse’s expenses, in connection with attendance at meetings of the Company’s Board of Directors and its committees. If the travel expense is related to the reimbursement of airfare, such reimbursement will not exceed full-coach rate. Spousal travel expenses paid by the Company are treated as taxable income to the Director. See the paragraph below entitled "Code Section 409A" for further rules relating to travel expense reimbursements.

Directors' Liability

Article Seventeenth of the Company's Restated Certificate of Incorporation provides that no Director of the Company shall be liable to the Company or its stockholders for breach of fiduciary duty as a Director, with certain exceptions stated below. Section 7.07 of the Company's Bylaws requires the Company to indemnify fully a Director against expenses, attorneys fees, judgments, fines and amounts paid in settlement of any suit, action or proceeding, whether civil or criminal, arising from an action of a Director by reason of the fact that the Director was a Director of MDU Resources Group, Inc.

There are exceptions to the protections under Article Seventeenth of the Company’s Restated Certificate of Incorporation: breaches of the Directors' duty of loyalty to the Company or its stockholders, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, violation of Section 174 of the Delaware General Corporation Law (relating to unlawful declaration of dividends and unlawful purchase of the Company's stock), and transactions from which the Director derived an improper personal benefit (including short-swing profits under Section 16(b) of the Securities Exchange Act of 1934).

Additional protection is provided through individual indemnification agreements with each Director.

The Company has and does maintain Directors' and Officers' liability insurance coverage with a 130 million limit.

2

Insurance Coverages

The Company maintains the following insurance for protection of its Directors as they carry out the business of MDU Resources Group, Inc., which shall be provided while serving as a Director:

1.    General liability and automobile liability insurance:

If driving a personal vehicle, the Directors are afforded automobile liability coverage excess of their own personal automobile insurance under a combination of policies with program limits to $125 million after a self-insured retention of $500,000. If driving a vehicle owned by the Company, personal automobile insurance does not apply.

For general liability, coverage is provided to Directors under a combination of policies with program limits to $125 million after a self-insured retention of $500,000.

2. Fiduciary and crime insurance:

The Directors are afforded coverage under the fiduciary and crime liability insurance policies. The fiduciary policy has a limit of $35 million and the crime policy has a limit of $10 million.

3.    Aircraft liability insurance:

The Company's existing aircraft liability insurance extends coverage while a hired, non-owned* aircraft is used by a Director in traveling to and from Director or Board committee meetings. This insurance coverage is excess of any underlying policy that may exist and provides limits of $200 million.

*Non-owned aircraft is defined as: 1) any aircraft registered under a “standard” airworthiness certificate issued by the FAA; 2) aircraft with a seating capacity not exceeding 40 seats; 3) aircraft that are not owned by MDU Resources Group, Inc. or any of its subsidiaries; 4) aircraft that are not partly or wholly owned by or registered in the Director’s name or the name of any Director’s household member.

4.    Business travel accident insurance:

All Directors are protected by a group insurance policy with coverage of $250,000 that provides 24-hour accident protection while traveling on Company business.

Coverage in all instances begins at the actual start of a business trip and ends when the Director returns to his/her home or regular place of employment.

The beneficiary of the insurance will be that beneficiary recorded on a beneficiary designation provided by the Company.

3

5.    Group life insurance:

All outside Directors are protected by a non-contributory group life insurance policy with coverage of $100,000.

The coverage begins the day the Director is elected to the Board of Directors and terminates when the Director ceases to be an outside Director.

A Summary Plan Description (SPD) can be provided to the Director. The beneficiary of the insurance will be the beneficiary recorded on a beneficiary designation provided by the Company.

This protection is considered taxable compensation under current tax laws. Consequently, the Company will provide each Director annually on Form 1099 the amount of taxable income related to this coverage.

Hedging Stock Ownership

Directors are not permitted to hedge their ownership of Company common stock. Hedging strategies include but are not limited to zero-cost collars, equity swaps, straddles, prepaid variable forward contracts, security futures contracts, exchange funds, forward sale contracts and other financial transactions that allow the Director to benefit from devaluation of the Company's stock. Hedging strategies may allow Directors to own stock technically but without the full benefits and risks of such ownership. Therefore, Directors are prohibited from engaging in any such transactions.

Policy Regarding Margin Accounts and Pledging of Company Stock

Effective December 21, 2012, Directors and related persons are prohibited from holding Company common stock in a margin account or pledging Company securities as collateral for a loan, with certain exceptions. Company common stock may be held in a margin brokerage account only if the stock is explicitly excluded from any margin, pledge or security provisions of the customer agreement. Company common stock may be held in a cash account, which is a brokerage account that does not allow any extension of credit on securities. “Related person” means a Director’s spouse, minor child and any person (other than a tenant or domestic employee) sharing the household of a Director, as well as any entities over which a Director exercises control.

Code Section 409A

To the extent any reimbursements or in-kind benefits provided to a Director pursuant to this policy constitute “deferred compensation” under Internal Revenue Code Section 409A, any such reimbursement or in-kind benefit shall be paid in a manner consistent with Treasury Regulation Section 1.409A-3(i)(1)(iv), including the requirements that the amount of reimbursable expenses or in-kind benefits provided during a year may not affect the expenses eligible for reimbursement or in-kind benefits provided in any other year and that any reimbursement be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.

4

EX-10.B

INSTRUMENT OF AMENDMENT TO THE

MDU RESOURCES GROUP, INC.

401(k) RETIREMENT PLAN

The MDU Resources Group, Inc. 401(k) Retirement Plan (as amended and restated January 1, 2017) (the “K‑Plan”), is hereby amended effective May 1, 2018, as follows:

1. By adding the following to the table in Section D-1-2 Eligibility to Share in the Profit Sharing Feature of Supplement D-1, Provisions Relating to the Profit Sharing Feature for Certain Participating Affiliates:

Participating Affiliate	Current Effective Date (Original Effective Date)
Knife River Corporation – Mountain West	May 1, 2018 (January 1, 2015)

Explanation: This amendment replaces Knife River Corporation – Northwest (the Idaho Division) (“IDAHO”) with Knife River Corporation – Mountain West (KRC-MW) as a Participating Affiliate in the Profit Sharing Feature, effective May 1, 2018, due to the Idaho Division of Knife River Corporation – Northwest being spun off into a separate legal entity.

2. By removing the following entry from the table in Section D-1-2 Eligibility to Share in the Profit Sharing Feature of Supplement D-1, Provisions Relating to the Profit Sharing Feature for Certain Participating Affiliates:

Participating Affiliate	Current Effective Date (Original Effective Date)
Knife River Corporation – Northwest (the Idaho Division)	January 1, 2015

Explanation: This amendment removes IDAHO as a Participating Affiliate in the Profit Sharing Feature, effective May 1, 2018, due to IDAHO being spun off into a separate legal entity.

1

3. By removing the second entry in Schedule B and replacing it with the following:

Knife River Corporation – Mountain West (formerly known as Knife River Corporation – Northwest (the Idaho Division) shall make supplemental contributions on behalf of its Davis-Bacon Employees in such amounts as may be necessary to satisfy the Prevailing Wage Law’s required fringe cost without regard to any employer Matching and Profit Sharing Contributions pursuant to Supplement G.

Effective May 1, 2018.

Explanation: This amendment revises Schedule B to reflect the Davis-Bacon provisions for KRC-MW, effective May 1, 2018, due to IDAHO being spun off into a separate legal entity.

IN WITNESS WHEREOF, MDU Resources Group, Inc., as Sponsoring Employer of the K-Plan, has caused this amendment to be duly executed by a member of the MDU Resources Group, Inc. Employee Benefits Committee on this 25 day of April, 2018.

MDU RESOURCES GROUP, INC.

EMPLOYEE BENEFITS COMMITTEE

By:/s/Jason L. Vollmer

Jason L. Vollmer, Chairman

2

EX-10.C

INSTRUMENT OF AMENDMENT TO THE

MDU RESOURCES GROUP, INC.

401(k) RETIREMENT PLAN

The MDU Resources Group, Inc. 401(k) Retirement Plan (as amended and restated January 1, 2017) (the “K‑Plan”), is hereby amended effective as of May 24, 2018, as follows:

1. By replacing the table in Section D-1-2 Eligibility to Share in the Profit Sharing Feature of Supplement D-1, Provisions Relating to the Profit Sharing Feature for Certain Participating Affiliates, in its entirety, with the following:

Participating Affiliate	Current Effective Date (Original Effective Date)2
Ames Sand & Gravel, Inc.	January 1, 2016 (July 16, 2007)
Anchorage Sand & Gravel Company, Inc. (excluding President)	January 1, 1999
Baldwin Contracting Company, Inc.	January 1, 1999
Capital Electric Line Builders, Inc.7	January 1, 2014
Cascade Natural Gas Corporation1	January 1, 2017  (July 2, 2007)
Concrete, Inc.	January 1, 2001
Connolly-Pacific Co.	January 1, 2007
DSS Company	January 1, 2004 (July 8, 1999)
E.S.I., Inc.	January 1, 2008 (January 1, 2003)
Fairbanks Materials, Inc.	May 1, 2008
Granite City Ready Mix, Inc.	June 1, 2002
Great Plains Natural Gas Co.1	January 1, 2017 (January 1, 2008)

1

Participating Affiliate	Current Effective Date (Original Effective Date)2
Hawaiian Cement (non-union employees hired after December 31, 2005)	January 1, 2009
Intermountain Gas Company1	January 1, 2017 (January 1, 2011)
JTL Group, Inc.5/6	January 1, 2015 (January 1, 2014)
Jebro Incorporated	November 1, 2005
Kent’s Oil Service4	January 1, 2007
Knife River – North Dakota Division, a Division of Knife River Corporation – North Central	January 1, 2016 (January 1, 2007)
Knife River Corporation – Mountain West	May 1, 2018 (January 1, 2015)
Knife River Corporation – North Central	January 1, 2016 (January 1, 2007)
Knife River Corporation – Northwest (the Central Oregon Division, f/k/a HTS)	May 1, 2010 (January 1, 1999)
Knife River Corporation – Northwest (the Southern Oregon Division)	January 1, 2012
Knife River Corporation – Northwest (the Western Oregon Division)	January 1, 2012
Knife River Corporation - South (f/k/a Young Contractors, Inc.)	January 1, 2008 (January 1, 2007)
Knife River Midwest, LLC	January 1, 2016 (April 1, 2004)
LTM, Incorporated	January 1, 2003
MDU Resources Group, Inc.1	January 1, 2017
Montana-Dakota Utilities Co. (non-union employees)1	January 1, 2017 (January 1, 2008)

2

Participating Affiliate	Current Effective Date (Original Effective Date)2
Montana-Dakota Utilities Co. (union employees)	January 1, 2008
Northstar Materials, Inc.	January 1, 2016 (January 1, 2003)
OEG, Inc.3	March 7, 2011
Wagner Industrial Electric, Inc.	January 1, 2008
Wagner Smith Equipment Co.	January 1, 2008 (July 1, 2000)
WBI Energy, Inc.1	January 1, 2017 (May 1, 2012)
WBI Energy Midstream, LLC1	January 1, 2017  (January 1, 2001)
WBI Energy Transmission, Inc.1	January 1, 2017  (January 1, 2009)
WHC, Ltd.	September 1, 2001

^1/Eligible employees only include those in salary grade levels 29-38.

^2/In the event a Participating Affiliate adopts a Profit Sharing Feature on a date other than January 1, effective as of the date of participation in the Plan, the amount of any such contribution allocated to a Supplement D‑1 Participant shall be based upon Compensation, received while in the employ of the Participating Affiliate after the date of acquisition by the Company or any Affiliate.

^3/Requirement to be an Active Employee on the last day of the Plan Year does not apply.

^4/The following participant of Kent’s Oil Service is granted vesting service for prior years of service with Spirit Road Oils: Jose Padilla.

^5/Eligible JTL Casper hourly employees (both union and nonunion), including those employees who participate in the Operating Engineers Local No. 800 & The Wyoming Contractors’ Association, Inc. Pension Trust Fund for Wyoming (JTL MEP employees.)

^6/Eligible salaried employees of JTL hired after December 31, 2014 or any other JTL employee who transfers to a salaried position after December 31, 2014.

^7/Eligible employees participating in a management incentive compensation plan are not eligible for a Profit Sharing Contribution.

3

2. By replacing the table in Section D-2-2 Eligibility to Share in the Retirement Contribution of Supplement D-2, Provisions Relating to the Retirement Contribution Feature for Certain Participating Affiliates, in its entirety, with the following:

Participating Affiliate	Current Effective Date (Original Effective Date)	Retirement Contribution Amount - Percentage of Compensation
Cascade Natural Gas Corporation (non-bargaining)	January 1, 2011 (July 2, 2007)	5%
Cascade Natural Gas Corporation (Field Operations Bargaining Unit employees hired on or after 1/1/2007)	May 1, 2015 (July 2, 2007)	5%
Great Plains Natural Gas Co.	January 1, 2003	5%
Intermountain Gas Company	January 1, 2011 (October 12, 2008)	5%
OEG, Inc.	May 24, 2018 March 7, 2011	6%
Rocky Mountain Contractors, Inc. (non-bargaining)	January 1, 2005	5%
WBI Energy Midstream, LLC1	July 1, 2012 (January 1, 2001)	5%

¹The following participants of WBI Energy Midstream, LLC are excluded:, Grady Breipohl, Jon Forbes, Richard Guderjahn, Steven Haag, Raymond Harms, Wade Hasler, Douglas Henry, Pamela Lynn, Todd Mandeville, Marlin Mogan, and Dale Sudbrack due to participation in the appropriate pension plan replacement contribution.

3. By replacing the following paragraph for On Electric Group, Inc. on Schedule A to the K-Plan, in its entirety, with the following:

OEG, Inc. (“OEG”) shall make a matching contribution equal to one hundred percent (100%) of each OEG employee’s participating savings contribution, up to the maximum savings contribution of two percent (2%) of compensation for each pay period. Prior to March 7, 2011, OEG did not make matching contributions for OEG employees.

Effective March 7, 2011 and as amended May 24, 2018.

4

IN WITNESS WHEREOF, MDU Resources Group, Inc., as Sponsoring Employer of the K-Plan, has caused this amendment to be duly executed by a member of the MDU Resources Group, Inc. Employee Benefits Committee on this 6th day of September, 2018.

MDU RESOURCES GROUP, INC.

EMPLOYEE BENEFITS COMMITTEE

By:/s/ Jason L. Vollmer

Jason L. Vollmer, Chairman

5

EX-10.D

INSTRUMENT OF AMENDMENT TO THE

MDU RESOURCES GROUP, INC.

401(k) RETIREMENT PLAN

The MDU Resources Group, Inc. 401(k) Retirement Plan (as amended and restated January 1, 2017) (the “K-Plan”), is hereby further amended, effective as of October 4, 2018, by adding Supplement D-10, Provisions Relating to the Sweetman Const. Co. and Rail to Road, Inc. Retirement Contribution Feature, as follows:

Supplement D-10

Provisions Relating to the

Sweetman Const. Co. and Rail to Road, Inc.

Retirement Contribution Feature

D-10-1 Introduction    . Effective as of October 4, 2018, Sweetman Const. Co. (“SCC”) and Rail to Road, Inc. (RTR”), Participating Affiliates in the Plan, establish a Retirement Contribution Feature as described in this Supplement D-10. This Retirement Contribution Feature shall be in effect from October 4, 2018 through December 31, 2018 and is in addition to all other contributions provided by SCC and RTR pursuant to the Plan.

D-10-2 Eligibility to Share in the Retirement Contribution    . In order to share in the allocation of any Retirement Contribution made by SCC or RTR pursuant to Paragraph 3 below for the dates reflected above, a Participant must be an Eligible Employee of either SCC, including its subsidiaries, or RTR. Participants who meet the preceding requirements are referred to herein as “Supplement D-10 Participants.”

D-10-3 Amount of Retirement Contribution, Allocation    . The Board of Directors of SCC and RTR shall credit eligible Participants with a contribution equal to three percent (3%) of Eligible Compensation. Eligible Compensation does not include compensation prior to the effective date of this amendment.

D-10-4 Vesting    . Participants shall be fully vested in the Supplement D-10 Retirement Contribution.

D-10-5 Use of Terms    . Terms used in this Supplement D-10 shall, unless defined in this Supplement D-10 or elsewhere noted, have the meanings given to those terms in the Plan.

D-10-6 Inconsistencies with the Plan    . The terms of this Supplement D‑10 are a part of the Plan and supersede the provisions of the Plan to the

extent necessary to eliminate inconsistencies between the Plan and the Supplement D-10.

IN WITNESS WHEREOF, MDU Resources Group, Inc., as Sponsoring Employer of the Plan, has caused this amendment to be duly executed by a member of the MDU Resources Group, Inc. Employee Benefits Committee on this 20^th day of December, 2018.

MDU RESOURCES GROUP, INC.

EMPLOYEE BENEFITS COMMITTEE

By:/s/ Jason L. Vollmer

Jason L. Vollmer, Chairman

EX-10.E

INSTRUMENT OF AMENDMENT TO THE

MDU RESOURCES GROUP, INC.

401(k) RETIREMENT PLAN

The MDU Resources Group, Inc. 401(k) Retirement Plan (as amended and restated January 1, 2017) (the “K‑Plan”), is hereby amended effective January 1, 2019, as follows:

1. By replacing the table in Section D-1-2 Eligibility to Share in the Profit Sharing Feature of Supplement D-1, Provisions Relating to the Profit Sharing Feature for Certain Participating Affiliates, in its entirety, with the following:

Participating Affiliate	Current Effective Date (Original Effective Date)2
Ames Sand & Gravel, Inc.	January 1, 2016 (July 16, 2007)
Anchorage Sand & Gravel Company, Inc. (excluding President)	January 1, 1999
Baldwin Contracting Company, Inc.	January 1, 1999
Capital Electric Line Builders, Inc.7	January 1, 2014
Cascade Natural Gas Corporation1	January 1, 2017  (July 2, 2007)
Concrete, Inc.	January 1, 2001
Connolly-Pacific Co.	January 1, 2007
DSS Company	January 1, 2004 (July 8, 1999)
E.S.I., Inc.	January 1, 2008 (January 1, 2003)
Fairbanks Materials, Inc.	May 1, 2008
Granite City Ready Mix, Inc.	June 1, 2002
Great Plains Natural Gas Co.1	January 1, 2017 (January 1, 2008)

1

Participating Affiliate	Current Effective Date (Original Effective Date)2
Hawaiian Cement (non-union employees hired after December 31, 2005)	January 1, 2009
Intermountain Gas Company1	January 1, 2017 (January 1, 2011)
JTL Group, Inc.5/6	January 1, 2015 (January 1, 2014)
Jebro Incorporated	November 1, 2005
Kent’s Oil Service4	January 1, 2007
Knife River – North Dakota Division, a Division of Knife River Corporation – North Central	January 1, 2016 (January 1, 2007)
Knife River Corporation – Mountain West	May 1, 2018 (January 1, 2015)
Knife River Corporation – North Central	January 1, 2016 (January 1, 2007)
Knife River Corporation – Northwest	January 1, 2019 (January 1, 2012)
Knife River Corporation - South	January 1, 2008 (January 1, 2007)
Knife River Midwest, LLC	January 1, 2016 (April 1, 2004)
LTM, Incorporated	January 1, 2003
MDU Resources Group, Inc.1	January 1, 2017
Montana-Dakota Utilities Co. (non-union employees)1	January 1, 2017 (January 1, 2008)
Montana-Dakota Utilities Co. (union employees)	January 1, 2008
Northstar Materials, Inc.	January 1, 2016 (January 1, 2003)

2

Participating Affiliate	Current Effective Date (Original Effective Date)2
OEG, Inc.3	March 7, 2011
Rail to Road, Inc.	January 1, 2019
Sweetman Const. Co. (including subsidiaries)	January 1, 2019
Wagner Smith Equipment Co.	January 1, 2008 (July 1, 2000)
WBI Energy, Inc.1	January 1, 2017 (May 1, 2012)
WBI Energy Midstream, LLC1	January 1, 2017  (January 1, 2001)
WBI Energy Transmission, Inc.1	January 1, 2017  (January 1, 2009)
WHC, Ltd.	September 1, 2001

^1/Eligible employees only include those in salary grade levels 29-38.

^2/In the event a Participating Affiliate adopts a Profit Sharing Feature on a date other than January 1, effective as of the date of participation in the Plan, the amount of any such contribution allocated to a Supplement D‑1 Participant shall be based upon Compensation, received while in the employ of the Participating Affiliate after the date of acquisition by the Company or any Affiliate.

^3/Requirement to be an Active Employee on the last day of the Plan Year does not apply.

^4/The following participant of Kent’s Oil Service is granted vesting service for prior years of service with Spirit Road Oils: Jose Padilla.

^5/Eligible JTL Casper hourly employees (both union and nonunion), including those employees who participate in the Operating Engineers Local No. 800 & The Wyoming Contractors’ Association, Inc. Pension Trust Fund for Wyoming (JTL MEP employees.)

^6/Eligible salaried employees of JTL hired after December 31, 2014 or any other JTL employee who transfers to a salaried position after December 31, 2014.

^7/Eligible employees participating in a management incentive compensation plan are not eligible for a Profit Sharing Contribution.

3

IN WITNESS WHEREOF, MDU Resources Group, Inc., as Sponsoring Employer of the K-Plan, has caused this amendment to be duly executed by a member of the MDU Resources Group, Inc. Employee Benefits Committee on this 22 day of March, 2019.

MDU RESOURCES GROUP, INC.

EMPLOYEE BENEFITS COMMITTEE

By:/s/ Anne M. Jones

Anne M. Jones, Vice Chairman – Secretary

4

EX-31.A

CERTIFICATION

I, David L. Goodin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MDU Resources Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 2, 2019

/s/ David L. Goodin

David L. Goodin

President and Chief Executive Officer

EX-31.B

CERTIFICATION

I, Jason L. Vollmer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MDU Resources Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 2, 2019

/s/ Jason L. Vollmer

Jason L. Vollmer

Vice President, Chief Financial Officer and Treasurer

EX-32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned, David L. Goodin, the President and Chief Executive Officer, and Jason L. Vollmer, the Vice President, Chief Financial Officer and Treasurer of MDU Resources Group, Inc. (the "Company"), DOES HEREBY CERTIFY that:

1.  The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 (the "Report"), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2.  Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHERE OF, each of the undersigned has executed this statement this 2nd day of August, 2019.

/s/ David L. Goodin

David L. Goodin

President and Chief Executive Officer

/s/ Jason L. Vollmer

Jason L. Vollmer

Vice President, Chief Financial Officer and Treasurer

A signed original of this written statement required by Section 906 has been provided to MDU Resources Group, Inc. and will be retained by MDU Resources Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-95

MDU RESOURCES GROUP, INC.

MINE SAFETY INFORMATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires issuers to include in periodic reports filed with the SEC certain information relating to citations or orders for violations of standards under the Federal Mine Safety and Health Act of 1977 (Mine Act), as amended by the Mine Improvement and New Emergency Response Act of 2006 (Mine Safety Act). The Dodd-Frank Act requires reporting of the following types of citations or orders:

1. Citations issued under Section 104 of the Mine Safety Act for violations that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard.

2. Orders issued under Section 104(b) of the Mine Safety Act. Orders are issued under this section when citations issued under Section 104 have not been totally abated within the time period allowed by the citation or subsequent extensions.

3. Citations or orders issued under Section 104(d) of the Mine Safety Act. Citations or orders are issued under this section when it has been determined that the violation is caused by an unwarrantable failure of the mine operator to comply with the standards. An unwarrantable failure occurs when the mine operator is deemed to have engaged in aggravated conduct constituting more than ordinary negligence.

4. Citations issued under Section 110(b)(2) of the Mine Safety Act for flagrant violations. Violations are considered flagrant for repeat or reckless failures to make reasonable efforts to eliminate a known violation of a mandatory health and safety standard that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury.

5. Imminent danger orders issued under Section 107(a) of the Mine Safety Act. An imminent danger is defined as the existence of any condition or practice in a coal or other mine which could reasonably be expected to cause death or serious physical harm before such condition or practice can be abated.

6. Notice received under Section 104(e) of the Mine Safety Act of a pattern of violations or the potential to have such a pattern of violations that could significantly and substantially contribute to the cause and effect of mine health and safety standards.

During the three months ended June 30, 2019, none of the Company's operating subsidiaries received citations or orders under the following sections of the Mine Safety Act: 104(b), 104(d), 110(b)(2), 107(a) or 104(e). The Company did not have any mining-related fatalities during this period.

1

MSHA Identification Number/Contractor ID	Section 104 S&S Citations (#)	Total Dollar Value of MSHA Assessments Proposed ($)		Legal Actions Pending as of Last Day of Period (#)	Legal Actions Initiated During Period (#)	Legal Actions Resolved During Period (#)
10-02089	1	$	37,644	2	2	—
21-03096	1	—		—	—	—
21-03358	1	—		—	—	—
21-03419	1	—		—	—	—
24-00459	1	—		—	—	—
24-02022	—	242		—	—	—
24-02414	—	121		—	—	—
32-00950	1	—		—	—	—
35-00495	—	121		—	—	—
35-02968	—	968		1	—	—
35-03022	—	132		—	—	—
35-03131	2	1,936		1	1	—
35-03449	—	121		—	—	—
35-03527	—	—		—	—	1
35-03558	—	121		—	—	—
35-03581	—	768		1	—	—
35-03642	—	121		—	—	—
35-03667	—	726		—	—	—
35-03678	—	121		—	—	—
35-00503	—	121		—	—	—
39-01478	—	3,003		—	—	—
41-02639	—	121		—	—	—
41-03931	—	132		—	—	—
48-01383	1	—		—	—	—
50-00883	—	—		—	—	1
51-00036	3	5,741		1	1	—
51-00192	—	121		1	1	—
51-00195	—	—		—	1	1
	12	$	52,381	7	6	3

Legal actions pending before the Federal Mine Safety and Health Review Commission (the Commission) may involve, among other questions, challenges by operators to citations, orders and penalties they have received from the Federal Mine Safety and Health Administration (MSHA) or complaints of discrimination by miners under section 105 of the Mine Act. The following is a brief description of the types of legal actions that may be brought before the Commission.

• Contests of Citations and Orders - A contest proceeding may be filed with the Commission by operators, miners or miners' representatives to challenge the issuance of a citation or order issued by MSHA.

• Contests of Proposed Penalties (Petitions for Assessment of Penalties) - A contest of a proposed penalty is an administrative proceeding before the Commission challenging a civil penalty that MSHA has proposed for the alleged violation contained in a citation or order.

• Complaints for Compensation - A complaint for compensation may be filed with the Commission by miners entitled to compensation when a mine is closed by certain withdrawal orders issued by MSHA. The purpose of the proceeding is to determine the amount of compensation, if any, due miners idled by the orders.

• Complaints of Discharge, Discrimination or Interference - A discrimination proceeding is a case that involves a miner's allegation that he or she has suffered a wrong by the operator because he or she engaged in some type of activity protected under the Mine Act, such as making a safety complaint.

2

• Applications for Temporary Relief - Applications for temporary relief from any modification or termination of any order or from any order issued under section 104 of the Mine Act.

• Appeals of Judges' Decisions or Orders to the Commission - A filing with the Commission for discretionary review of a judge's decision or order by a person who has been adversely affected or aggrieved by such decision or order.

The following table reflects the types of legal actions pending before the Commission as of June 30, 2019:

MSHA Identification Number	Contests of Citations and Orders	Contests of Proposed Penalties	Complaints for Compensation	Complaints of Discharge, Discrimination or Interference	Applications for Temporary Relief	Appeals of Judges' Decisions or Orders to the Commission
10-02089	—	2	—	—	—	—
35-02968	1	—	—	—	—	—
35-03131	1	—	—	—	—	—
35-03581	—	1	—	—	—	—
51-00036	1	—	—	—	—	—
51-00192	1	—	—	—	—	—
	4	3	—	—	—	—

3

XML

Cover page - shares	6 Months Ended
	Jun. 30, 2019	Jul. 26, 2019
Entity Information [Line Items]
Document type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2019
Document Transition Report	false
Entity File Number	1-03480
Entity registrant name	MDU RESOURCES GROUP INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	30-1133956
Entity Address, Address Line One	1200 West Century Avenue
Entity Address, Address Line Two	P.O. Box 5650
Entity Address, City or Town	Bismarck
Entity Address, State or Province	ND
Entity Address, Postal Zip Code	58506-5650
City Area Code	701
Local Phone Number	530-1000
Title of 12(b) Security	Common Stock, par value $1.00 per share
Trading Symbol	MDU
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity common stock, shares outstanding		199,058,947
Entity Central Index Key	0000067716
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Operating revenues:
Operating revenues:	$ 1,303,573	$ 1,064,597	$ 2,394,764	$ 2,040,890
Operating expenses:
Operation and maintenance:	1,021,031	822,084	1,723,945	1,422,940
Purchased natural gas sold	54,866	56,228	238,695	238,196
Depreciation, depletion and amortization	63,019	53,553	122,916	106,282
Taxes, other than income	47,953	40,757	101,982	89,610
Electric fuel and purchased power	19,393	17,983	45,696	40,494
Total operating expenses	1,206,262	990,605	2,233,234	1,897,522
Operating income	97,311	73,992	161,530	143,368
Other income	1,615	1,599	9,208	2,181
Interest expense	25,429	20,800	48,836	41,246
Income before income taxes	73,497	54,791	121,902	104,303
Income taxes	10,352	10,716	17,668	18,267
Income from continuing operations	63,145	44,075	104,234	86,036
Income (loss) from discontinued operations, net of tax (Note 10)	(1,320)	(273)	(1,483)	203
Net income	$ 61,825	$ 43,802	$ 102,751	$ 86,239
Earnings per share - basic:
Income from continuing operations	$ 0.32	$ 0.22	$ 0.53	$ 0.44
Discontinued operations, net of tax	(0.01)	0	(0.01)	0
Earnings per share - basic	0.31	0.22	0.52	0.44
Earnings per share - diluted:
Income from continuing operations	0.32	0.22	0.53	0.44
Discontinued operations, net of tax	(0.01)	0	(0.01)	0
Earnings per share - diluted	$ 0.31	$ 0.22	$ 0.52	$ 0.44
Weighted average common shares outstanding - basic	198,270	195,524	197,341	195,415
Weighted average common shares outstanding - diluted	198,287	196,169	197,356	196,077
Regulated operation
Operating revenues:
Operating revenues:	$ 236,247	$ 226,684	$ 675,864	$ 651,143
Operating expenses:
Operation and maintenance:	88,415	83,928	176,186	170,042
Income from continuing operations	7,597	7,521	66,606	58,686
Nonregulated operation
Operating revenues:
Operating revenues:	1,067,326	837,913	1,718,900	1,389,747
Operating expenses:
Operation and maintenance:	932,616	738,156	1,547,759	1,252,898
Income from continuing operations	$ 55,548	$ 36,554	$ 37,628	$ 27,350

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net income	$ 61,825	$ 43,802	$ 102,751	$ 86,239
Other comprehensive income:
Reclassification adjustment for loss on derivative instruments included in net income, net of tax of $36 and $53 for the three months ended and $(213) and $109 for the six months ended in 2019 and 2018, respectively	111	95	508	187
Postretirement liability adjustment:
Amortization of postretirement liability losses included in net periodic benefit cost, net of tax of $89 and $145 for the three months ended and $189 and $300 for the six months ended in 2019 and 2018, respectively	276	449	586	867
Foreign currency translation adjustment:
Foreign currency translation adjustment recognized during the period, net of tax of $0 and $(13) for the three months ended and $0 and $(14) for the six months ended in 2019 and 2018, respectively	0	(59)	0	(61)
Reclassification adjustment for foreign currency translation adjustment included in net income, net of tax of $0 and $75 for the three months ended and $0 and $75 for the six months ended in 2019 and 2018, respectively	0	249	0	249
Foreign currency translation adjustment	0	190	0	188
Net unrealized gain (loss) on available-for-sale investments:
Net unrealized gain (loss) on available-for-sale investments arising during the period, net of tax of $21 and $(12) for the three months ended and $31 and $(39) for the six months ended in 2019 and 2018, respectively	79	(43)	118	(148)
Reclassification adjustment for loss on available-for-sale investments included in net income, net of tax of $3 and $10 for the three months ended and $10 and $17 for the six months ended in 2019 and 2018, respectively	12	34	40	64
Net unrealized gain (loss) on available-for-sale investments	91	(9)	158	(84)
Other comprehensive income	478	725	1,252	1,158
Comprehensive income attributable to common stockholders	$ 62,303	$ 44,527	$ 104,003	$ 87,397

XML

Consolidated Statements of Comprehensive Income - Parenthetical - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Reclassification adjustment for loss on derivative instruments included in net income, tax	$ 36	$ 53	$ (213)	$ 109
Amortization of postretirement liability losses included in net periodic benefit cost, tax	89	145	189	300
Foreign currency translation adjustments recognized during the period, tax	0	(13)	0	(14)
Reclassification of foreign currency translation adjustment	0	75	0	75
Net unrealized gain (loss) on available-for-sale investments arising during the period, tax	21	(12)	31	(39)
Reclassification adjustment for loss on available-for-sale investments included in net income, tax	$ 3	$ 10	$ 10	$ 17

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Current assets:
Cash and cash equivalents	$ 71,966	$ 53,948	$ 41,659
Receivables, net	890,579	722,945	743,687
Inventories	325,944	287,309	278,239
Prepayments and other current assets	155,893	119,500	52,035
Current assets held for sale	428	430	572
Total current assets	1,444,810	1,184,132	1,116,192
Investments	145,746	138,620	140,053
Property, plant and equipment	7,625,654	7,397,321	6,975,919
Less accumulated depreciation, depletion and amortization	2,903,274	2,818,644	2,758,163
Net property, plant and equipment	4,722,380	4,578,677	4,217,756
Deferred charges and other assets:
Goodwill	679,395	664,922	642,374
Other intangible assets, net	11,323	10,815	4,190
Operating lease right-of-use assets (Note 11)	118,795	0	0
Other	466,957	408,857	409,407
Noncurrent assets held for sale	2,087	2,087	3,998
Total deferred charges and other assets	1,278,557	1,086,681	1,059,969
Total assets	7,591,493	6,988,110	6,533,970
Current liabilities:
Short-term borrowings	89,983	0	0
Long-term debt due within one year	51,822	251,854	109,199
Accounts payable	356,059	358,505	330,926
Taxes payable	46,731	41,929	47,803
Dividends payable	40,225	39,695	38,714
Accrued compensation	71,508	69,007	53,933
Current operating lease liabilities (Note 11)	31,615	0	0
Other accrued liabilities	218,442	221,059	208,696
Current liabilities held for sale	6,217	4,001	11,713
Total current liabilities	912,602	986,050	800,984
Long-term debt	2,327,984	1,856,841	1,743,711
Deferred credits and other liabilities:
Deferred income taxes	457,588	430,085	362,896
Noncurrent operating lease liabilities (Note 11)	87,172	0	0
Other	1,145,846	1,148,359	1,175,301
Total deferred credits and other liabilities	1,690,606	1,578,444	1,538,197
Commitments and contingencies
Stockholders' equity:
Authorized - 500,000,000 shares, $1.00 par value Shares issued - 199,539,110 at June 30, 2019, 196,557,245 at June 30, 2018 and 196,564,907 at December 31, 2018	199,539	196,565	196,557
Other paid-in capital	1,315,511	1,248,576	1,245,858
Retained earnings	1,185,967	1,163,602	1,056,424
Accumulated other comprehensive loss	(37,090)	(38,342)	(44,135)
Treasury stock at cost - 538,921 shares	(3,626)	(3,626)	(3,626)
Total stockholders' equity	2,660,301	2,566,775	2,451,078
Total liabilities and stockholders' equity	$ 7,591,493	$ 6,988,110	$ 6,533,970

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Stockholders' equity:
Common stock, shares issued	199,539,110	196,564,907	196,557,245
Treasury shares	538,921	538,921	538,921
Common stock, shares authorized	500,000,000	500,000,000	500,000,000
Common stock, par value	$ 1.00	$ 1.00	$ 1.00

XML

Consolidated Statements of Equity - USD ($) $ in Thousands	Total	Common stock	Other paid-in capital	Retained earnings	Accumulated other comprehensive loss	Treasury stock
Cumulative effect of adoption of ASU 2014-09 | Accounting Standards Update 2014-09	$ (970)			$ (970)
Balance (in shares) at Dec. 31, 2017		195,843,297
Treasury stock (in shares) at Dec. 31, 2017						(538,921)
Balance at Dec. 31, 2017	2,429,043	$ 195,843	$ 1,233,412	1,040,748	$ (37,334)	$ (3,626)
Balance (Accounting Standards Update 2014-09) at Dec. 31, 2017	2,428,073			1,039,778
Net income	42,437			42,437
Other comprehensive income	433				433
Reclassification of certain prior period tax effects from accumulated other comprehensive loss | Adjustments for new accounting pronouncement	0			7,959	(7,959)
Dividends declared on common stock	(38,705)			(38,705)
Stock-based compensation	1,223		1,223
Repurchase of common stock						(182,424)
Repurchase of common stock	(5,020)					$ (5,020)
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings			(7,350)
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings (in shares)						182,424
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings						$ 5,020
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	(2,330)
Balance (in shares) at Mar. 31, 2018		195,843,297
Treasury stock (in shares) at Mar. 31, 2018						(538,921)
Balance at Mar. 31, 2018	2,426,111	$ 195,843	1,227,285	1,051,469	(44,860)	$ (3,626)
Balance (in shares) at Dec. 31, 2017		195,843,297
Treasury stock (in shares) at Dec. 31, 2017						(538,921)
Balance at Dec. 31, 2017	2,429,043	$ 195,843	1,233,412	1,040,748	(37,334)	$ (3,626)
Balance (Accounting Standards Update 2014-09) at Dec. 31, 2017	2,428,073			1,039,778
Net income	86,239
Other comprehensive income	1,158
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	$ (2,330)
Balance (in shares) at Jun. 30, 2018	196,557,245	196,557,245
Treasury stock (in shares) at Jun. 30, 2018						(538,921)
Balance at Jun. 30, 2018	$ 2,451,078	$ 196,557	1,245,858	1,056,424	(44,135)	$ (3,626)
Balance (in shares) at Mar. 31, 2018		195,843,297
Treasury stock (in shares) at Mar. 31, 2018						(538,921)
Balance at Mar. 31, 2018	2,426,111	$ 195,843	1,227,285	1,051,469	(44,860)	$ (3,626)
Net income	43,802			43,802
Other comprehensive income	725				725
Dividends declared on common stock	(38,847)			(38,847)
Stock-based compensation	1,294		1,294
Issuance of common stock (shares)		713,948
Issuance of common stock	$ 17,993	$ 714	17,279
Balance (in shares) at Jun. 30, 2018	196,557,245	196,557,245
Treasury stock (in shares) at Jun. 30, 2018						(538,921)
Balance at Jun. 30, 2018	$ 2,451,078	$ 196,557	1,245,858	1,056,424	(44,135)	$ (3,626)
Balance (in shares) at Dec. 31, 2018	196,564,907	196,564,907
Treasury stock (in shares) at Dec. 31, 2018						(538,921)
Balance at Dec. 31, 2018	$ 2,566,775	$ 196,565	1,248,576	1,163,602	(38,342)	$ (3,626)
Net income	40,926			40,926
Other comprehensive income	774				774
Dividends declared on common stock	(40,019)			(40,019)
Stock-based compensation	1,617		1,617
Share Based Compensation, Shares, Shares Issued Net Of Tax Withholdings		246,214
Share Based Compensation Value Issued Shares Net Of Tax Withholdings		$ 246
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings			(3,261)
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	(3,015)
Issuance of common stock (shares)		1,505,687
Issuance of common stock	38,634	$ 1,506	37,128
Balance (in shares) at Mar. 31, 2019		198,316,808
Treasury stock (in shares) at Mar. 31, 2019						(538,921)
Balance at Mar. 31, 2019	$ 2,605,692	$ 198,317	1,284,060	1,164,509	(37,568)	$ (3,626)
Balance (in shares) at Dec. 31, 2018	196,564,907	196,564,907
Treasury stock (in shares) at Dec. 31, 2018						(538,921)
Balance at Dec. 31, 2018	$ 2,566,775	$ 196,565	1,248,576	1,163,602	(38,342)	$ (3,626)
Net income	102,751
Other comprehensive income	1,252
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	$ (3,015)
Balance (in shares) at Jun. 30, 2019	199,539,110	199,539,110
Treasury stock (in shares) at Jun. 30, 2019						(538,921)
Balance at Jun. 30, 2019	$ 2,660,301	$ 199,539	1,315,511	1,185,967	(37,090)	$ (3,626)
Balance (in shares) at Mar. 31, 2019		198,316,808
Treasury stock (in shares) at Mar. 31, 2019						(538,921)
Balance at Mar. 31, 2019	2,605,692	$ 198,317	1,284,060	1,164,509	(37,568)	$ (3,626)
Net income	61,825			61,825
Other comprehensive income	478				478
Dividends declared on common stock	(40,367)			(40,367)
Stock-based compensation	1,742		1,742
Issuance of common stock (shares)		1,222,302
Issuance of common stock	$ 30,931	$ 1,222	29,709
Balance (in shares) at Jun. 30, 2019	199,539,110	199,539,110
Treasury stock (in shares) at Jun. 30, 2019						(538,921)
Balance at Jun. 30, 2019	$ 2,660,301	$ 199,539	$ 1,315,511	$ 1,185,967	$ (37,090)	$ (3,626)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Net income	$ 102,751	$ 86,239
Operating activities:
Income (loss) from discontinued operations, net of tax	(1,483)	203
Income from continuing operations	104,234	86,036
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization	122,916	106,282
Deferred income taxes	22,753	4,186
Changes in current assets and liabilities, net of acquisitions:
Receivables	(171,304)	(13,853)
Inventories	(36,302)	(47,396)
Other current assets	(32,088)	29,072
Accounts payable	1,398	15,748
Other current liabilities	15,585	7,849
Other noncurrent changes	(50,822)	(11,566)
Net cash provided by (used in) continuing operations	(23,630)	176,358
Net cash provided by discontinued operations	735	224
Net cash provided by (used in) operating activities	(22,895)	176,582
Investing activities:
Capital expenditures	(281,674)	(210,612)
Acquisitions, net of cash acquired	(30,868)	(20,009)
Net proceeds from sale or disposition of property and other	8,197	9,286
Investments	(713)	(916)
Net cash used in investing activities	(305,058)	(222,251)
Financing activities:
Issuance of short-term borrowings	119,977	0
Repayment of short-term borrowings	(30,000)	0
Issuance of long-term debt	368,975	240,746
Repayment of long-term debt	(99,961)	(103,521)
Proceeds from issuance of common stock	69,565	0
Dividends paid	(79,570)	(77,145)
Repurchase of common stock	0	(5,020)
Tax withholding on stock-based compensation	(3,015)	(2,330)
Net cash provided by financing activities	345,971	52,730
Effect of Exchange Rate on Cash and Cash Equivalents	0	(1)
Increase in cash and cash equivalents	18,018	7,060
Cash and cash equivalents -- beginning of year	53,948	34,599
Cash and cash equivalents -- end of period	$ 71,966	$ 41,659

XML

Basis of presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of presentation

Basis of presentation

The accompanying consolidated interim financial statements were prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Interim financial statements do not include all disclosures provided in annual financial statements and, accordingly, these financial statements should be read in conjunction with those appearing in the 2018 Annual Report. The information is unaudited but includes all adjustments that are, in the opinion of management, necessary for a fair presentation of the accompanying consolidated interim financial statements and are of a normal recurring nature. Depreciation, depletion and amortization expense is reported separately on the Consolidated Statements of Income and therefore is excluded from the other line items within operating expenses.

On January 2, 2019, the Company announced the completion of the Holding Company Reorganization, which resulted in Montana-Dakota becoming a subsidiary of the Company. The purpose of the reorganization was to make the public utility division into a subsidiary of the holding company, just as the other operating companies are wholly owned subsidiaries.

Effective January 1, 2019, the Company adopted the requirements of the ASU on leases, as further discussed in Notes 6 and 11. As such, results for reporting periods beginning January 1, 2019, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting for leases.

The assets and liabilities for the Company's discontinued operations have been classified as held for sale and the results of operations are shown in income (loss) from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. At the time the assets were classified as held for sale, depreciation, depletion and amortization expense was no longer recorded. Unless otherwise indicated, the amounts presented in the accompanying notes to the consolidated financial statements relate to the Company's continuing operations. For more information on the Company's discontinued operations, see Note 10.

Management has also evaluated the impact of events occurring after June 30, 2019, up to the date of issuance of these consolidated interim financial statements.

XML

Seasonality of operations

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Seasonality of operations

Seasonality of operations

Some of the Company's operations are highly seasonal and revenues from, and certain expenses for, such operations may fluctuate significantly among quarterly periods. Accordingly, the interim results for particular businesses, and for the Company as a whole, may not be indicative of results for the full fiscal year.

XML

Accounts receivable and allowance for doubtful accounts

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Accounts receivable and allowance for doubtful accounts

Accounts receivable and allowance for doubtful accounts

Accounts receivable consists primarily of trade receivables from the sale of goods and services which are recorded at the invoiced amount net of allowance for doubtful accounts, and costs and estimated earnings in excess of billings on uncompleted contracts. The total balance of receivables past due 90 days or more was $47.2 million, $36.6 million and $30.0 million at June 30, 2019 and 2018, and December 31, 2018, respectively.

The allowance for doubtful accounts is determined through a review of past due balances and other specific account data. Account balances are written off when management determines the amounts to be uncollectible. The Company's allowance for doubtful accounts at June 30, 2019 and 2018, and December 31, 2018, was $8.2 million, $7.8 million and $8.9 million, respectively.

XML

Inventories and natural gas in storage

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Inventories and natural gas in storage

Inventories and natural gas in storage

Natural gas in storage for the Company's regulated operations is generally carried at lower of cost or net realizable value, or cost using the last-in, first-out method. All other inventories are stated at the lower of cost or net realizable value. The portion of the cost of natural gas in storage expected to be used within one year was included in inventories. Inventories on the Consolidated Balance Sheets were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Aggregates held for resale	$	147,030	$	131,784	$	139,681
Asphalt oil	80,418		64,560		54,741
Materials and supplies	28,746		24,688		23,611
Merchandise for resale	27,167		17,502		22,552
Natural gas in storage (current)	15,841		13,774		22,117
Other	26,742		25,931		24,607
Total	$	325,944	$	278,239	$	287,309

The remainder of natural gas in storage, which largely represents the cost of gas required to maintain pressure levels for normal operating purposes, was included in deferred charges and other assets - other and was $48.2 million, $47.8 million and $48.5 million at June 30, 2019 and 2018, and December 31, 2018, respectively.

XML

Earnings per common share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings per common share

Earnings per share

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share is computed by dividing net income by the total of the weighted average number of shares of common stock outstanding during the applicable period, plus the effect of nonvested performance share awards and restricted stock units. Common stock outstanding includes issued shares less shares held in treasury. Net income was the same for both the basic and diluted earnings per share calculations. A reconciliation of the weighted average common shares outstanding used in the basic and diluted earnings per share calculations follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands, except per share amounts)
Weighted average common shares outstanding - basic	198,270		195,524		197,341		195,415
Effect of dilutive performance share awards and restricted stock units	17		645		15		662
Weighted average common shares outstanding - diluted	198,287		196,169		197,356		196,077
Shares excluded from the calculation of diluted earnings per share	—		—		93		—
Dividends declared per common share	$	.2025	$	.1975	$	.4050	$	.3950

XML

New accounting standards

6 Months Ended

Jun. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New accounting standards

New accounting standards

Recently adopted accounting standards

ASU 2016-02 - Leases In February 2016, the FASB issued guidance regarding leases. The guidance required lessees to recognize a lease liability and a right-of-use asset on the balance sheet for operating and financing leases. The guidance remained largely the same for lessors, although some changes were made to better align lessor accounting with the new lessee accounting and to align with the revenue recognition standard. The guidance also required additional disclosures, both quantitative and qualitative, related to operating and financing leases for the lessee and sales-type, direct financing and operating leases for the lessor. The Company adopted the standard on January 1, 2019.

In July 2018, the FASB issued ASU 2018-11 - Leases: Targeted Improvements, an accounting standard update to ASU 2016-02. This ASU provided an entity the option to adopt the guidance using one of two modified retrospective approaches. An entity could adopt the guidance using the modified retrospective transition approach beginning in the earliest year presented in the financial statements. This method of adoption would have required the restatement of prior periods reported and the presentation of lease disclosures under the new guidance for all periods reported. The additional transition method of adoption, introduced by ASU 2018-11, allowed entities the option to apply the guidance on the date of adoption by recognizing a cumulative effect adjustment to retained earnings during the period of adoption and did not require prior comparative periods to be restated.

The Company adopted the standard on January 1, 2019, utilizing the additional transition method of adoption applied on the date of adoption and the practical expedient that allowed the Company to not reassess whether an expired or existing contract contained a lease, the classification of leases or initial direct costs. The Company did not identify any cumulative effect

adjustments. The Company also adopted a short-term leasing policy as the lessee where leases with a term of 12 months or less are not included on the Consolidated Balance Sheet.

As a practical expedient, a lessee may choose not to separate nonlease components from lease components and instead account for lease and nonlease components as a single lease component. The election shall be made by asset class. The Company has elected to adopt the lease/nonlease component practical expedient for all asset classes as the lessee. The Company did not elect the practical expedient to use hindsight when assessing the lease term or impairment of right-of-use assets for the existing leases on the date of adoption.

In January 2018, the FASB issued a practical expedient for land easements under the new lease guidance. The practical expedient permits an entity to elect the option to not evaluate land easements under the new guidance if they existed or expired before the adoption of the new lease guidance and were not previously accounted for as leases under the previous lease guidance. Once an entity adopts the new guidance, the entity should apply the new guidance on a prospective basis to all new or modified land easements. The Company has adopted this practical expedient.

The Company formed a lease implementation team to review and assess existing contracts to identify and evaluate those containing leases. Additionally, the team implemented new and revised existing software to meet the reporting and disclosure requirements of the standard. The Company also assessed the impact the standard had on its processes and internal controls and identified new and updated existing internal controls and processes to ensure compliance with the new lease standard; such modifications were not deemed to be significant. During the assessment phase, the Company used various surveys, reconciliations and analytic methodologies to ensure the completeness of the lease inventory. The Company determined that most of the current operating leases were subject to the guidance and were recognized as operating lease liabilities and right-of-use assets on the Consolidated Balance Sheet upon adoption. On January 1, 2019, the Company recorded approximately $112 million to right-of-use assets and lease liabilities as a result of the initial adoption of the guidance. In addition, the Company evaluated the impact the new guidance had on lease contracts where the Company is the lessor and determined it did not have a significant impact to the Company's financial statements.

ASU 2018-15 - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract In August 2018, the FASB issued guidance on the accounting for implementation costs of a hosting arrangement that is a service contract. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract similar to the costs incurred to develop or obtain internal-use software and such capitalized costs to be expensed over the term of the hosting arrangement. Costs incurred during the preliminary and postimplementation stages should continue to be expensed as activities are performed. The capitalized costs are required to be presented on the balance sheet in the same line the prepayment for the fees associated with the hosting arrangement would be presented. In addition, the expense related to the capitalized implementation costs should be presented in the same line on the income statement as the fees associated with the hosting element of the arrangements. The Company adopted the guidance effective January 1, 2019, on a prospective basis. The adoption of the guidance did not have a material impact on its results of operations, financial position, cash flows, and disclosures.

Recently issued accounting standards not yet adopted

ASU 2016-13 - Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance on the measurement of credit losses on certain financial instruments. The guidance introduces a new impairment model known as the current expected credit loss model that will replace the incurred loss impairment methodology currently included under GAAP. This guidance requires entities to present certain investments in debt securities, trade accounts receivable and other financial assets at their net carrying value of the amount expected to be collected on the financial statements. The guidance will be effective for the Company on January 1, 2020, and must be applied on a modified retrospective basis with early adoption permitted. The Company does not expect the guidance to have a material impact on its results of operations, financial position, cash flows and disclosures.

ASU 2017-04 - Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued guidance on simplifying the test for goodwill impairment by eliminating Step 2, which required an entity to measure the amount of impairment loss by comparing the implied fair value of reporting unit goodwill with the carrying amount of such goodwill. This guidance requires entities to perform a quantitative impairment test, previously Step 1, to identify both the existence of impairment and the amount of impairment loss by comparing the fair value of a reporting unit to its carrying amount. Entities will continue to have the option of performing a qualitative assessment to determine if the quantitative impairment test is necessary. The guidance also requires additional disclosures if an entity has one or more reporting units with zero or negative carrying amounts of net assets. The guidance will be effective for the Company on January 1, 2020, and must be applied on a prospective basis with early adoption permitted. The Company is evaluating the guidance and does not expect it to have a material impact on its results of operations, financial position, cash flows and disclosures.

ASU 2018-13 - Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the FASB issued guidance on modifying the disclosure requirements on fair value measurements as part of the disclosure framework project. The guidance modifies, among other things, the disclosures required for Level 3 fair value measurements, including the range and weighted average of significant unobservable inputs. The guidance removes, among other things, the disclosure requirement to disclose transfers between Levels 1 and 2. The guidance will be effective for the Company on January 1, 2020, including interim periods,

with early adoption permitted. Level 3 fair value measurement disclosures should be applied prospectively while all other amendments should be applied retrospectively. The Company is evaluating the effects the adoption of the new guidance will have on its disclosures.

ASU 2018-14 - Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued guidance on modifying the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans as part of the disclosure framework project. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. The guidance adds, among other things, the requirement to include an explanation for significant gains and losses related to changes in benefit obligations for the period. The guidance removes, among other things, the disclosure requirement to disclose the amount of net periodic benefit costs to be amortized over the next fiscal year from accumulated other comprehensive income (loss) and the effects a one percentage point change in assumed health care cost trend rates will have on certain benefit components. The guidance will be effective for the Company on January 1, 2021, and must be applied on a retrospective basis with early adoption permitted. The Company is evaluating the effects the adoption of the new guidance will have on its disclosures.

XML

Accumulated other comprehensive income (loss)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Comprehensive income (loss)

Accumulated other comprehensive income (loss)

The after-tax changes in the components of accumulated other comprehensive income (loss) were as follows:

Six Months Ended June 30, 2019	Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Hedges			Postretirement Liability Adjustment			Net Unrealized Gain (Loss) on Available-for-sale Investments			Total Accumulated Other Comprehensive Loss
	(In thousands)
At December 31, 2018	$	(2,161	)	$	(36,069	)	$	(112	)	$	(38,342	)
Other comprehensive income before reclassifications	—			—			39			39
Amounts reclassified from accumulated other comprehensive loss	397			310			28			735
Net current-period other comprehensive income	397			310			67			774
At March 31, 2019	$	(1,764	)	$	(35,759	)	$	(45	)	$	(37,568	)
Other comprehensive income before reclassifications	—			—			79			79
Amounts reclassified from accumulated other comprehensive loss	111			276			12			399
Net current-period other comprehensive income	111			276			91			478
At June 30, 2019	$	(1,653	)	$	(35,483	)	$	46		$	(37,090	)

Six Months Ended June 30, 2018	Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Hedges			Postretirement Liability Adjustment			Foreign Currency Translation Adjustment			Net Unrealized Gain (Loss) on Available-for-sale Investments			Total Accumulated Other Comprehensive Loss
	(In thousands)
At December 31, 2017	$	(1,934	)	$	(35,163	)	$	(155	)	$	(82	)	$	(37,334	)
Other comprehensive loss before reclassifications	—			—			(2		)	(105		)	(107		)
Amounts reclassified from accumulated other comprehensive loss	92			418			—			30			540
Net current-period other comprehensive income (loss)	92			418			(2		)	(75		)	433
Reclassification adjustment of prior period tax effects related to TCJA included in accumulated other comprehensive loss	(389		)	(7,520		)	(33		)	(17		)	(7,959		)
At March 31, 2018	$	(2,231	)	$	(42,265	)	$	(190	)	$	(174	)	$	(44,860	)
Other comprehensive loss before reclassifications	—			—			(59		)	(43		)	(102		)
Amounts reclassified from accumulated other comprehensive loss	95			449			249			34			827
Net current-period other comprehensive income (loss)	95			449			190			(9		)	725
At June 30, 2018	$	(2,136	)	$	(41,816	)	$	—		$	(183	)	$	(44,135	)

The following amounts were reclassified out of accumulated other comprehensive loss into net income. The amounts presented in parenthesis indicate a decrease to net income on the Consolidated Statements of Income. The reclassifications were as follows:

	Three Months Ended						Six Months Ended						Location on Consolidated Statements of Income
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Reclassification adjustment for loss on derivative instruments included in net income	$	(147	)	$	(148	)	$	(295	)	$	(296	)	Interest expense
	36			53			(213		)	109			Income taxes
	(111		)	(95		)	(508		)	(187		)
Amortization of postretirement liability losses included in net periodic benefit cost (credit)	(365		)	(594		)	(775		)	(1,167		)	Other income
	89			145			189			300			Income taxes
	(276		)	(449		)	(586		)	(867		)
Reclassification adjustment for loss on foreign currency translation adjustment included in net income	—			(324		)	—			(324		)	Other income
	—			75			—			75			Income taxes
	—			(249		)	—			(249		)
Reclassification adjustment on available-for-sale investments included in net income	(15		)	(44		)	(50		)	(81		)	Other income
	3			10			10			17			Income taxes
	(12		)	(34		)	(40		)	(64		)
Total reclassifications	$	(399	)	$	(827	)	$	(1,134	)	$	(1,367	)

XML

Revenue from contracts with customers

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from contracts with customers

Revenue from contracts with customers

Revenue is recognized when a performance obligation is satisfied by transferring control over a product or service to a customer. Revenue is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company is considered an agent for certain taxes collected from customers. As such, the Company presents revenues net of these taxes at the time of sale to be remitted to governmental authorities, including sales and use taxes.

As part of the adoption of ASC 606 - Revenue from Contracts with Customers, the Company elected the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less.

Disaggregation

In the following table, revenue is disaggregated by the type of customer or service provided. The Company believes this level of disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The table also includes a reconciliation of the disaggregated revenue by reportable segments. For more information on the Company's business segments, see Note 17.

Three Months Ended June 30, 2019	Electric		Natural gas distribution		Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	26,437	$	71,010	$	—		$	—		$	—		$	—		$	97,447
Commercial utility sales	33,231		41,250		—			—			—			—			74,481
Industrial utility sales	9,344		5,577		—			—			—			—			14,921
Other utility sales	1,879		—		—			—			—			—			1,879
Natural gas transportation	—		10,706		24,804			—			—			—			35,510
Natural gas gathering	—		—		2,396			—			—			—			2,396
Natural gas storage	—		—		2,623			—			—			—			2,623
Contracting services	—		—		—			297,124			—			—			297,124
Construction materials	—		—		—			444,768			—			—			444,768
Intrasegment eliminations*	—		—		—			(145,925		)	—			—			(145,925		)
Inside specialty contracting	—		—		—			—			319,276			—			319,276
Outside specialty contracting	—		—		—			—			133,288			—			133,288
Other	8,417		2,923		6,293			—			9			2,903			20,545
Intersegment eliminations	—		—		(7,513		)	(168		)	(721		)	(2,879		)	(11,281		)
Revenues from contracts with customers	79,308		131,466		28,603			595,799			451,852			24			1,287,052
Revenues out of scope	1,703		2,401		77			—			12,340			—			16,521
Total external operating revenues	$	81,011	$	133,867	$	28,680		$	595,799		$	464,192		$	24		$	1,303,573

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Three Months Ended June 30, 2018	Electric		Natural gas distribution		Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	26,752	$	68,688	$	—		$	—		$	—		$	—		$	95,440
Commercial utility sales	32,676		40,820		—			—			—			—			73,496
Industrial utility sales	8,226		5,227		—			—			—			—			13,453
Other utility sales	1,874		—		—			—			—			—			1,874
Natural gas transportation	—		10,084		21,287			—			—			—			31,371
Natural gas gathering	—		—		2,310			—			—			—			2,310
Natural gas storage	—		—		2,634			—			—			—			2,634
Contracting services	—		—		—			247,558			—			—			247,558
Construction materials	—		—		—			387,632			—			—			387,632
Intrasegment eliminations*	—		—		—			(125,567		)	—			—			(125,567		)
Inside specialty contracting	—		—		—			—			216,371			—			216,371
Outside specialty contracting	—		—		—			—			95,261			—			95,261
Other	8,425		3,614		4,326			—			103			2,757			19,225
Intersegment eliminations	—		—		(6,539		)	(235		)	(540		)	(2,667		)	(9,981		)
Revenues from contracts with customers	77,953		128,433		24,018			509,388			311,195			90			1,051,077
Revenues out of scope	546		1,107		42			—			11,825			—			13,520
Total external operating revenues	$	78,499	$	129,540	$	24,060		$	509,388		$	323,020		$	90		$	1,064,597

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Six Months Ended June 30, 2019	Electric		Natural gas distribution			Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	62,993	$	271,619		$	—		$	—		$	—		$	—		$	334,612
Commercial utility sales	68,902		163,043			—			—			—			—			231,945
Industrial utility sales	18,228		14,188			—			—			—			—			32,416
Other utility sales	3,678		—			—			—			—			—			3,678
Natural gas transportation	—		22,276			49,862			—			—			—			72,138
Natural gas gathering	—		—			4,517			—			—			—			4,517
Natural gas storage	—		—			5,269			—			—			—			5,269
Contracting services	—		—			—			380,164			—			—			380,164
Construction materials	—		—			—			624,077			—			—			624,077
Intrasegment eliminations*	—		—			—			(181,066		)	—			—			(181,066		)
Inside specialty contracting	—		—			—			—			618,805			—			618,805
Outside specialty contracting	—		—			—			—			240,686			—			240,686
Other	17,538		6,836			8,989			—			26			10,747			44,136
Intersegment eliminations	—		—			(31,468		)	(264		)	(849		)	(10,704		)	(43,285		)
Revenues from contracts with customers	171,339		477,962			37,169			822,911			858,668			43			2,368,092
Revenues out of scope	2,239		(1,948		)	124			—			26,257			—			26,672
Total external operating revenues	$	173,578	$	476,014		$	37,293		$	822,911		$	884,925		$	43		$	2,394,764

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Six Months Ended June 30, 2018	Electric			Natural gas distribution		Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	61,935		$	261,574	$	—		$	—		$	—		$	—		$	323,509
Commercial utility sales	67,377			157,711		—			—			—			—			225,088
Industrial utility sales	16,996			13,036		—			—			—			—			30,032
Other utility sales	3,710			—		—			—			—			—			3,710
Natural gas transportation	—			21,263		43,105			—			—			—			64,368
Natural gas gathering	—			—		4,580			—			—			—			4,580
Natural gas storage	—			—		5,768			—			—			—			5,768
Contracting services	—			—		—			321,622			—			—			321,622
Construction materials	—			—		—			561,223			—			—			561,223
Intrasegment eliminations*	—			—		—			(159,837		)	—			—			(159,837		)
Inside specialty contracting	—			—		—			—			450,192			—			450,192
Outside specialty contracting	—			—		—			—			182,442			—			182,442
Other	16,678			7,613		7,652			—			17			5,452			37,412
Intersegment eliminations	—			—		(28,298		)	(336		)	(550		)	(5,306		)	(34,490		)
Revenues from contracts with customers	166,696			461,197		32,807			722,672			632,101			146			2,015,619
Revenues out of scope	(792		)	1,007		86			—			24,970			—			25,271
Total external operating revenues	$	165,904		$	462,204	$	32,893		$	722,672		$	657,071		$	146		$	2,040,890

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Contract balances

The timing of revenue recognition may differ from the timing of invoicing to customers. The timing of invoicing to customers does not necessarily correlate with the timing of revenues being recognized under the cost‐to‐cost method of accounting. Contracts from contracting services are billed as work progresses in accordance with agreed upon contractual terms. Generally, billing to the customer occurs contemporaneous to revenue recognition. A variance in timing of the billings may result in a contract asset or a contract liability. A contract asset occurs when revenues are recognized under the cost-to-cost measure of progress, which exceeds amounts billed on uncompleted contracts. Such amounts will be billed as standard contract terms allow, usually based on various measures of performance or achievement. A contract liability occurs when there are billings in excess of revenues recognized under the cost-to-cost measure of progress on uncompleted contracts. Contract liabilities decrease as revenue is recognized from the satisfaction of the related performance obligation. The changes in contract assets and liabilities were as follows:

	June 30, 2019			December 31, 2018			Change		Location on Consolidated Balance Sheets
	(In thousands)
Contract assets	$	153,641		$	104,239		$	49,402	Receivables, net
Contract liabilities - current	(90,031		)	(93,901		)	3,870		Accounts payable
Contract liabilities - noncurrent	(25		)	(135		)	110		Deferred credits and other liabilities - other
Net contract assets	$	63,585		$	10,203		$	53,382

The Company recognized $22.6 million and $79.0 million in revenue for the three and six months ended June 30, 2019, respectively, which was previously included in contract liabilities at December 31, 2018. The Company recognized $16.9 million and $68.9 million in revenue for the three and six months ended June 30, 2018, respectively, which was previously included in contract liabilities at December 31, 2017.

The Company recognized a net increase in revenues of $20.6 million and $32.5 million for the three and six months ended June 30, 2019, respectively, from performance obligations satisfied in prior periods. The Company recognized a net increase in revenues of $2.6 million and $5.3 million for the three and six months ended June 30, 2018, respectively, from performance obligations satisfied in prior periods.

Remaining performance obligations

The remaining performance obligations at the construction materials and contracting and construction services segments include unrecognized revenues the Company reasonably expects to be realized which includes projects that have a written award, a letter of intent, a notice to proceed, an agreed upon work order to perform work on mutually accepted terms and conditions and change orders or claims to the extent management believes additional contract revenues will be earned and are deemed probable of collection. Excluded from remaining performance obligations are potential orders under master service agreements. The remaining performance obligations at the pipeline and midstream segment include firm transportation and storage contracts with fixed pricing and fixed volumes.

At June 30, 2019, the Company's remaining performance obligations were $2.3 billion. The Company expects to recognize the following revenue amounts in future periods related to these remaining performance obligations: $1.8 billion within the next 12 months; $269.4 million within the next 13 to 24 months; and $248.6 million thereafter.

The majority of the Company's construction contracts have an original duration of less than two years. The Company's firm transportation and firm storage contracts have weighted average remaining durations of approximately five and three years, respectively.

XML

Business Combinations

6 Months Ended

Jun. 30, 2019

Business Acquisition [Line Items]

Business Combinations

Business combinations

In March 2019, the Company acquired Viesko Redi-Mix, Inc., a provider of ready-mixed concrete in Oregon. The gross aggregate consideration for this acquisition was $32.1 million, subject to certain adjustments, which includes $1.2 million of debt assumed. The acquisition is subject to customary adjustments based on, among other things, the amount of cash, debt and working capital in the business as of the closing date. The amounts included in the Consolidated Balance Sheet for these adjustments are considered provisional until final settlement has occurred.

The purchase price adjustments for all business combinations that occurred during 2018 have been settled and the purchase price allocations are considered final; except for Sweetman Construction Company, which was acquired in October 2018. No material adjustments were made to the provisional accounting for the business combinations.

Business combinations were accounted for in accordance with ASC 805 - Business Combinations. The results of the acquired businesses have been included in the Company's construction materials and contracting segment and Consolidated Financial Statements beginning on the acquisition date. Pro forma financial amounts reflecting the effects of the business combinations are not presented, as these business combinations were not material to the Company's financial position or results of operations.

For all business combinations, the Company preliminarily allocates the purchase price of the acquisitions to the assets acquired

and liabilities assumed based on their estimated fair values as of the acquisition dates and are considered provisional until final fair values are determined, or the measurement period has passed. The Company expects to record adjustments as it accumulates the information needed to estimate the fair value of assets acquired and liabilities assumed, including working capital balances, estimated fair value of identifiable intangible assets, property, plant and equipment, total consideration and goodwill. The excess of the purchase price over the aggregate fair values is recorded as goodwill. The Company calculated the fair value of the assets acquired in 2019 and 2018 using a market or cost approach (or a combination of both). Fair values for some of the assets were determined based on Level 3 inputs including estimated future cash flows, discount rates, growth rates, sales projections, retention rates and terminal values, all of which require significant management judgment and are susceptible to change. The final fair value of the net assets acquired may result in adjustments to the assets and liabilities, including goodwill, and will be made as soon as practical, but no later than one year from the respective acquisition dates. However, any subsequent measurement period adjustments are not expected to have a material impact on the Company's results of operations.

XML

Discontinued operations

6 Months Ended

Jun. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations

Discontinued operations

The assets and liabilities of the Company's discontinued operations have been classified as held for sale and the results of operations are shown in income (loss) from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. At the time the assets were classified as held for sale, depreciation, depletion and amortization expense was no longer recorded.

Dakota Prairie Refining On June 24, 2016, WBI Energy entered into a membership interest purchase agreement with Tesoro to sell all the outstanding membership interests in Dakota Prairie Refining to Tesoro. WBI Energy and Calumet each previously owned 50 percent of the Dakota Prairie Refining membership interests and were equal members in building and operating Dakota Prairie Refinery. To effectuate the sale, WBI Energy acquired Calumet’s 50 percent membership interest in Dakota Prairie Refining on June 27, 2016. The sale of the membership interests to Tesoro closed on June 27, 2016. The sale of Dakota Prairie Refining reduced the Company’s risk by decreasing exposure to commodity prices.

In connection with the sale of Dakota Prairie Refining, Centennial guaranteed certain debt obligations of Dakota Prairie Refining and Tesoro agreed to indemnify Centennial for any losses and litigation expenses arising from the guarantee. On October 17, 2018, Centennial was released of any further liabilities or obligations under this guarantee.

Fidelity In the second quarter of 2015, the Company began the marketing and sale process of Fidelity with an anticipated sale to occur within one year. Between September 2015 and March 2016, the Company entered into purchase and sale agreements to sell substantially all of Fidelity's oil and natural gas assets. The completion of these sales occurred between October 2015 and April 2016. In July 2018, the Company completed the sale of a majority of the remaining property, plant and equipment. The sale of Fidelity was part of the Company's strategic plan to grow its capital investments in the remaining business segments and to focus on creating a greater long-term value.

Dakota Prairie Refining and Fidelity The carrying amounts of the major classes of assets and liabilities classified as held for sale on the Consolidated Balance Sheets were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Assets
Current assets:
Receivables, net	$	428	$	572	$	430
Income taxes receivable (a)	—		1,689		—
Total current assets held for sale	428		2,261		430
Noncurrent assets:
Net property, plant and equipment	—		1,236		—
Deferred income taxes	1,926		2,637		1,926
Other	161		162		161
Total noncurrent assets held for sale	2,087		4,035		2,087
Total assets held for sale	$	2,515	$	6,296	$	2,517
Liabilities
Current liabilities:
Accounts payable	$	82	$	—	$	80
Taxes payable	3,114		10,656		1,451
Other accrued liabilities	3,021		2,746		2,470
Total current liabilities held for sale	6,217		13,402		4,001
Noncurrent liabilities:
Deferred income taxes (b)	—		37		—
Total noncurrent liabilities held for sale	—		37		—
Total liabilities held for sale	$	6,217	$	13,439	$	4,001

(a) On the Company's Consolidated Balance Sheets, these amounts were reclassified to taxes payable and are reflected in current liabilities held for sale.

(b) On the Company's Consolidated Balance Sheets, these amounts were reclassified to deferred charges and other assets - deferred income taxes and are reflected in noncurrent assets held for sale.

The reconciliation of the major classes of income and expense constituting pretax loss from discontinued operations to the after-tax income (loss) from discontinued operations on the Consolidated Statements of Income was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Operating revenues	$	37		$	75		$	67		$	140
Operating expenses	1,778			435			2,023			609
Operating loss	(1,741		)	(360		)	(1,956		)	(469		)
Other income	—			—			—			12
Interest expense	—			—			—			575
Loss from discontinued operations before income taxes	(1,741		)	(360		)	(1,956		)	(1,032		)
Income taxes	(421		)	(87		)	(473		)	(1,235		)
Income (loss) from discontinued operations	$	(1,320	)	$	(273	)	$	(1,483	)	$	203

XML

Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

Leases

Most of the leases the Company enters into are for equipment, buildings, easements and vehicles as part of their ongoing operations. The Company also leases certain equipment to third parties through its utility and construction services segments. The Company determines if an arrangement contains a lease at inception of a contract and accounts for all leases in accordance with ASC 842 - Leases. For more information on the adoption of ASC 842, see Note 6.

The recognition of leases requires the Company to make estimates and assumptions that affect the lease classification and the assets and liabilities recorded. The accuracy of lease assets and liabilities reported on the Consolidated Financial Statements depends on, among other things, management's estimates of interest rates used to discount the lease assets and liabilities to their present value, as well as the lease terms based on the unique facts and circumstances of each lease.

Lessee accounting

The leases the Company has entered into as part of its ongoing operations are considered operating leases and are recognized on the balance sheet as right-of-use assets, current lease liabilities and, if applicable, noncurrent lease liabilities. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The Company determines the lease term based on the non-cancelable and cancelable periods in each contract. The non-cancelable period consists of the term of the contract that is legally enforceable and cannot be canceled by either party without incurring a significant penalty. The cancelable period is determined by various factors that are based on who has the right to cancel a contract. If only the lessor has the right to cancel the contract, the Company will assume the contract will continue. If the lessee is the only party that has the right to cancel the contract, the Company looks to asset, entity and market-based factors. If both the lessor and the lessee have the right to cancel the contract, the Company assumes the contract will not continue.

Generally, the leases for vehicles and equipment have a term of five years or less and buildings and easements have a longer term of up to 35 years or more. To date, the Company does not have any residual value guarantee amounts probable of being owed to a lessor, financing leases or material agreements with related parties.

The Company has elected to recognize leases with an original lease term of 12 months or less in income on a straight-line basis over the term of the lease and not recognize a corresponding right-of-use asset or lease liability. Lease costs are included in operation and maintenance expense on the Company's Consolidated Statements of Income. The discount rate used to calculate the present value of the lease liabilities is based upon the implied rate within each contract. If the rate is unknown or cannot be determined, the Company uses an incremental borrowing rate which is determined by the length of the contract, asset class and the Company's borrowing rates as of the commencement date of the contract.

The following tables provide information on the Company's operating leases:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019		2019
	(In thousands)
Lease costs:
Operating lease cost	$	10,387	$	21,908
Variable lease cost	400		799
Short-term lease cost	40,474		57,712
Total lease costs	$	51,261	$	80,419

	June 30, 2019
	(Dollars in thousands)
Weighted average remaining lease term	3.02 years
Weighted average discount rate	4.46		%
Cash paid for amounts included in the measurement of lease liabilities	$	21,798

The reconciliation of the future undiscounted cash flows to the operating lease liabilities presented on the Company's Consolidated Balance Sheet is as follows:

	June 30, 2019
	(In thousands)
Remainder of 2019	$	19,276
2020	30,065
2021	22,850
2022	14,816
2023	8,941
Thereafter	51,335
Total	147,283
Less discount	28,496
Total operating lease liabilities	$	118,787

As previously disclosed in the 2018 Annual Report, the undiscounted annual minimum lease payments due under the Company's leases following the previous lease accounting standard as of December 31, 2018, were as follows:

	2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Operating leases	$	37,740	$	26,255	$	17,868	$	11,647	$	7,278	$	49,098

Leases of Lessor Disclosure [Text Block]

Lessor accounting

The Company leases certain equipment to third parties which are considered operating leases. The Company recognized revenue from operating leases of $12.5 million and $26.5 million for the three and six months ended June 30, 2019, respectively.

The majority of the Company's operating leases are short-term leases of less than 12 months. At June 30, 2019, the Company had $10.6 million of lease receivables with a majority due within 12 months.

XML

Goodwill and other intangible assets

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and other intangible assets

Goodwill and other intangible assets

The changes in the carrying amount of goodwill were as follows:

Six Months Ended June 30, 2019	Balance at January 1, 2019		Goodwill Acquired During  the Year		Balance at June 30, 2019
	(In thousands)
Natural gas distribution	$	345,736	$	—	$	345,736
Construction materials and contracting	209,421		14,473		223,894
Construction services	109,765		—		109,765
Total	$	664,922	$	14,473	$	679,395

Six Months Ended June 30, 2018	Balance at January 1, 2018		Goodwill Acquired During  the Year		Balance at June 30, 2018
	(In thousands)
Natural gas distribution	$	345,736	$	—	$	345,736
Construction materials and contracting	176,290		10,583		186,873
Construction services	109,765		—		109,765
Total	$	631,791	$	10,583	$	642,374

Year Ended December 31, 2018	Balance at January 1, 2018		Goodwill Acquired During  the Year		Balance at December 31, 2018
	(In thousands)
Natural gas distribution	$	345,736	$	—	$	345,736
Construction materials and contracting	176,290		33,131		209,421
Construction services	109,765		—		109,765
Total	$	631,791	$	33,131	$	664,922

During 2019 and 2018, the Company completed one and four business combinations, respectively, and the results of the acquired businesses have been included in the Company's construction materials and contracting segment. These business combinations increased the construction materials and contracting segment's goodwill balance at June 30, 2019 and 2018, and December 31, 2018, as noted in the previous tables. As a result of the business combinations, other intangible assets increased $1.6 million at June 30, 2019, compared to December 31, 2018. For more information related to business combinations, see Note 9.

Other amortizable intangible assets were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Customer relationships	$	14,601	$	15,587	$	22,720
Less accumulated amortization	5,629		13,191		13,535
	8,972		2,396		9,185
Noncompete agreements	3,179		2,546		2,605
Less accumulated amortization	1,798		1,877		1,956
	1,381		669		649
Other	6,578		6,458		6,458
Less accumulated amortization	5,608		5,333		5,477
	970		1,125		981
Total	$	11,323	$	4,190	$	10,815

Amortization expense for amortizable intangible assets for the three and six months ended June 30, 2019, was $500,000 and $1.1 million, respectively. Amortization expense for amortizable intangible assets for the three and six months ended June 30, 2018, was $300,000 and $700,000, respectively. Estimated amortization expense for identifiable intangible assets as of June 30, 2019, was:

	Remainder of 2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Amortization expense	$	938	$	1,644	$	1,254	$	1,231	$	1,249	$	5,007

XML

Regulatory assets and liabilities

6 Months Ended

Jun. 30, 2019

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities

Regulatory assets and liabilities

The following table summarizes the individual components of unamortized regulatory assets and liabilities:

	Estimated Recovery Period	*	June 30, 2019			December 31, 2018
			(In thousands)
Regulatory assets:
Pension and postretirement benefits (a)	(e)		$	165,861		$	165,898
Natural gas costs recoverable through rate adjustments (a) (b)	Up to 3 years		94,543			42,652
Asset retirement obligations (a)	Over plant lives		64,215			60,097
Cost recovery mechanisms (a) (b)	Up to 4 years		18,488			17,948
Manufactured gas plant site remediation (a)	-		15,619			17,068
Taxes recoverable from customers (a)	Over plant lives		11,755			11,946
Plants to be retired (a)	-		16,933			—
Conservation programs (b)	Up to 1 year		7,627			7,494
Long-term debt refinancing costs (a)	Up to 19 years		4,592			4,898
Costs related to identifying generation development (a)	Up to 8 years		2,280			2,508
Other (a) (b)	Up to 20 years		5,761			9,608
Total regulatory assets			$	407,674		$	340,117
Regulatory liabilities:
Taxes refundable to customers (c) (d)			$	264,025		$	277,833
Plant removal and decommissioning costs (c) (d)			175,003			173,143
Natural gas costs refundable through rate adjustments (d)			25,737			29,995
Pension and postretirement benefits (c)			12,967			15,264
Other (c) (d)			27,955			25,197
Total regulatory liabilities			$	505,687		$	521,432
Net regulatory position			$	(98,013	)	$	(181,315	)

* Estimated recovery period for regulatory assets currently being recovered in rates charged to customers.

(a) Included in deferred charges and other assets - other on the Consolidated Balance Sheets.

(b) Included in prepayments and other current assets on the Consolidated Balance Sheets.

(c) Included in deferred credits and other liabilities - other on the Consolidated Balance Sheets.

(d) Included in other accrued liabilities on the Consolidated Balance Sheets.

(e) Recovered as expense is incurred or cash contributions are made.

The regulatory assets are expected to be recovered in rates charged to customers. A portion of the Company's regulatory assets are not earning a return; however, these regulatory assets are expected to be recovered from customers in future rates. As of June 30, 2019 and December 31, 2018, approximately $290.5 million and $313.5 million, respectively, of regulatory assets were not earning a rate of return.

During the first quarter of 2019 and the fourth quarter of 2018, the Company experienced increased natural gas costs in certain jurisdictions where it supplies natural gas. The Company has recorded these natural gas costs as regulatory assets as they are expected to be recovered from customers, as discussed in Note 19.

In February 2019, the Company announced that it intends to retire three aging coal-fired electric generation units within the next three years. The Company has accelerated the depreciation related to these facilities in property, plant and equipment and has recorded the difference between the accelerated depreciation, in accordance with GAAP, and the depreciation approved for rate-making purposes as regulatory assets. The Company expects to recover the regulatory assets related to the plants to be retired in future rates.

If, for any reason, the Company's regulated businesses cease to meet the criteria for application of regulatory accounting for all or part of their operations, the regulatory assets and liabilities relating to those portions ceasing to meet such criteria would be removed from the balance sheet and included in the statement of income or accumulated other comprehensive income (loss) in the period in which the discontinuance of regulatory accounting occurs.

XML

Fair value measurements

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair value measurements

Fair value measurements

The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income. The Company anticipates using these investments, which consist of an insurance contract, to satisfy its obligations under its unfunded, nonqualified benefit plans for executive officers and certain key management employees, and invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation. These investments, which totaled $83.1 million, $78.3 million and $73.8 million, at June 30, 2019 and 2018, and December 31, 2018, respectively, are classified as investments on the Consolidated Balance Sheets. The net unrealized gains on these investments were $2.9 million and $9.3 million for the three and six months ended June 30, 2019, respectively. The net unrealized gains on these investments were $1.4 million and $900,000 for the three and six months ended June 30, 2018, respectively. The change in fair value, which is considered part of the cost of the plan, is classified in other income on the Consolidated Statements of Income.

The Company did not elect the fair value option, which records gains and losses in income, for its available-for-sale securities. The available-for-sale securities include mortgage-backed securities and U.S. Treasury securities. These available-for-sale securities are recorded at fair value and are classified as investments on the Consolidated Balance Sheets. Unrealized gains or losses are recorded in accumulated other comprehensive loss. Details of available-for-sale securities were as follows:

June 30, 2019	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed securities	$	10,771	$	94	$	35	$	10,830
U.S. Treasury securities	180		—		—		180
Total	$	10,951	$	94	$	35	$	11,010

June 30, 2018	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed securities	$	10,015	$	6	$	236	$	9,785
U.S. Treasury securities	242		—		2		240
Total	$	10,257	$	6	$	238	$	10,025

December 31, 2018	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed securities	$	10,473	$	21	$	162	$	10,332
U.S. Treasury securities	179		—		—		179
Total	$	10,652	$	21	$	162	$	10,511

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The fair value ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach. The Company's Level 2 money market funds are valued at the net asset value of shares held at the end of the quarter, based on published market quotations on active markets, or using other known sources including pricing from outside sources. The estimated fair value of the Company's Level 2 mortgage-backed securities and U.S. Treasury securities are based on comparable market transactions, other observable inputs or other sources, including pricing from outside sources. The estimated fair value of the Company's Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data.

Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the six months ended June 30, 2019 and 2018, there were no transfers between Levels 1 and 2.

The Company's assets and liabilities measured at fair value on a recurring basis were as follows:

	Fair Value Measurements at June 30, 2019, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2019
	(In thousands)
Assets:
Money market funds	$	—	$	10,816	$	—	$	10,816
Insurance contract*	—		83,134		—		83,134
Available-for-sale securities:
Mortgage-backed securities	—		10,830		—		10,830
U.S. Treasury securities	—		180		—		180
Total assets measured at fair value	$	—	$	104,960	$	—	$	104,960

* The insurance contract invests approximately 51 percent in fixed-income investments, 22 percent in common stock of large-cap companies, 12 percent in common stock of mid-cap companies, 10 percent in common stock of small-cap companies, 4 percent in target date investments and 1 percent in cash equivalents.

	Fair Value Measurements at June 30, 2018, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2018
	(In thousands)
Assets:
Money market funds	$	—	$	9,904	$	—	$	9,904
Insurance contract*	—		78,312		—		78,312
Available-for-sale securities:
Mortgage-backed securities	—		9,785		—		9,785
U.S. Treasury securities	—		240		—		240
Total assets measured at fair value	$	—	$	98,241	$	—	$	98,241

* The insurance contract invests approximately 48 percent in fixed-income investments, 23 percent in common stock of large-cap companies, 13 percent in common stock of mid-cap companies, 11 percent in common stock of small-cap companies, 3 percent in target date investments and 2 percent in cash equivalents.

	Fair Value Measurements at December 31, 2018, Using
	Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs  (Level 3)		Balance at December 31, 2018
	(In thousands)
Assets:
Money market funds	$	—	$	10,799	$	—	$	10,799
Insurance contract*	—		73,838		—		73,838
Available-for-sale securities:
Mortgage-backed securities	—		10,332		—		10,332
U.S. Treasury securities	—		179		—		179
Total assets measured at fair value	$	—	$	95,148	$	—	$	95,148

* The insurance contract invests approximately 53 percent in fixed-income investments, 21 percent in common stock of large-cap companies, 11 percent in common stock of mid-cap companies, 10 percent in common stock of small-cap companies, 3 percent in target date investments and 2 percent in cash equivalents.

The Company applies the provisions of the fair value measurement standard to its nonrecurring, non-financial measurements, including long-lived asset impairments. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. The Company reviews the carrying value of its long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying amounts may not be recoverable.

In the second quarter of 2019, the Company reviewed a non-utility investment at its electric and natural gas distribution segments for impairment. This was a cost-method investment and was written down to zero using the income approach to determine its fair value, requiring the Company to record a write-down of $2.0 million, before tax. The fair value of this investment was categorized as Level 3 in the fair value hierarchy. The reduction is reflected in investments on the Company's Consolidated Balance Sheet, as well as within other income on the Consolidated Statements of Income.

The Company's long-term debt is not measured at fair value on the Consolidated Balance Sheets and the fair value is being provided for disclosure purposes only. The fair value was based on discounted future cash flows using current market interest rates. The estimated fair value of the Company's Level 2 long-term debt was as follows:

	Carrying Amount		Fair Value
	(In thousands)
Long-term debt at June 30, 2019	$	2,379,806	$	2,521,325
Long-term debt at June 30, 2018	$	1,852,910	$	1,949,564
Long-term debt at December 31, 2018	$	2,108,695	$	2,183,819

The carrying amounts of the Company's remaining financial instruments included in current assets and current liabilities approximate their fair values.

XML

Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt

Certain debt instruments of the Company's subsidiaries contain restrictive covenants and cross-default provisions. In order to borrow under the respective debt instruments, the subsidiary companies must be in compliance with the applicable covenants and certain other conditions all of which the subsidiaries, as applicable, were in compliance with at June 30, 2019. In the event the Company's subsidiaries do not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued.

Montana-Dakota's and Centennial's respective commercial paper programs are supported by revolving credit agreements. While the amount of commercial paper outstanding does not reduce available capacity under the respective revolving credit agreements, Montana-Dakota and Centennial do not issue commercial paper in an aggregate amount exceeding the available capacity under their respective credit agreements. The commercial paper borrowings may vary during the period, largely the result of fluctuations in working capital requirements due to the seasonality of the construction businesses.

Short-term debt

The following describes certain transactions during the three and six months ended June 30, 2019, included in outstanding short-term debt:

• On March 22, 2019, Cascade entered into a $40.0 million term loan agreement with a variable interest rate and a maturity date of December 31, 2019.

• On April 12, 2019, Centennial entered into a $50.0 million term loan agreement with a variable interest rate and a maturity date of April 11, 2020.

Long-term debt

The following describes certain transactions during the three and six months ended June 30, 2019, included in outstanding long-term debt:

• On April 4, 2019, Centennial issued $150.0 million of senior notes with maturity dates ranging from April 4, 2029 to April 4, 2034, at a weighted average interest rate of 4.60 percent.

• On June 7, 2019, Cascade amended its revolving credit agreement to increase the borrowing limit from $75.0 million to $100.0 million and extend the termination date from April 24, 2020 to June 7, 2024.

• On June 7, 2019, Intermountain amended its revolving credit agreement to extend the termination date from April 24, 2020 to June 7, 2024.

• On June 13, 2019, Cascade issued $75.0 million of senior notes with maturity dates ranging from June 13, 2029 to June 13, 2049, at a weighted average interest rate of 3.93 percent.

• On June 13, 2019, Intermountain issued $50.0 million of senior notes with maturity dates ranging from June 13, 2029 to June 13, 2049, at a weighted average interest rate of 3.92 percent.

Long-term Debt Outstanding Long-term debt outstanding was as follows:

	Weighted Average Interest Rate at June 30, 2019		June 30, 2019		December 31, 2018
			(In thousands)
Senior notes due on dates ranging from July 1, 2019 to January 15, 2055	4.52	%	$	1,656,000	$	1,381,000
Commercial paper supported by revolving credit agreements	2.77	%	433,350		338,100
Term loan agreements due on dates ranging from October 17, 2019 to September 3, 2032	2.75	%	209,800		209,800
Credit agreements due on June 7, 2024	5.50	%	11,075		110,100
Medium-term notes due on dates ranging from September 1, 2020 to March 16, 2029	6.68	%	50,000		50,000
Other notes due on dates ranging from January 2, 2022 to November 30, 2038	5.01	%	26,105		25,229
Less unamortized debt issuance costs			6,164		5,207
Less discount			360		327
Total long-term debt			2,379,806		2,108,695
Less current maturities			51,822		251,854
Net long-term debt			$	2,327,984	$	1,856,841

Schedule of Debt Maturities Long-term debt maturities, which excludes unamortized debt issuance costs and discount, as of June 30, 2019, were as follows:

	Remainder of 2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Long-term debt maturities	$	51,761	$	15,926	$	386,430	$	147,434	$	125,188	$	1,659,591

XML

Cash flow information

6 Months Ended

Jun. 30, 2019

Supplemental Cash Flow Information [Abstract]

Cash flow information

Cash flow information

Cash expenditures for interest and income taxes were as follows:

	Six Months Ended
	June 30,
	2019		2018
	(In thousands)
Interest, net*	$	45,702	$	39,467
Income taxes paid, net**	$	4,124	$	4,034

* AFUDC - borrowed was $1.2 million and $1.0 million for the six months ended June 30, 2019 and 2018, respectively.

** Income taxes paid, net of discontinued operations, were $2.0 million and $3.1 million for the six months ended June 30, 2019 and 2018, respectively.

Noncash investing and financing transactions were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Right-of-use assets obtained in exchange for new operating lease liabilities	$	24,990	$	—	$	—
Property, plant and equipment additions in accounts payable	$	27,312	$	30,985	$	42,355
Debt assumed in connection with a business combination	$	1,163	$	—	$	—
Issuance of common stock in connection with a business combination	$	—	$	17,993	$	18,186

XML

Business segment data

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Business segment data

Business segment data

The Company's reportable segments are those that are based on the Company's method of internal reporting, which generally segregates the strategic business units due to differences in products, services and regulation. The internal reporting of these operating segments is defined based on the reporting and review process used by the Company's chief executive officer. The vast majority of the Company's operations are located within the United States.

The electric segment generates, transmits and distributes electricity in Montana, North Dakota, South Dakota and Wyoming. The natural gas distribution segment distributes natural gas in those states, as well as in Idaho, Minnesota, Oregon and Washington. These operations also supply related value-added services.

The pipeline and midstream segment provides natural gas transportation, underground storage and gathering services through regulated and nonregulated pipeline systems primarily in the Rocky Mountain and northern Great Plains regions of the United States. This segment also provides cathodic protection and other energy-related services.

The construction materials and contracting segment mines, processes and sells construction aggregates (crushed stone, sand and gravel); produces and sells asphalt mix; and supplies ready-mixed concrete. This segment focuses on vertical integration of its contracting services with its construction materials to support the aggregate based product lines including aggregate placement, asphalt and concrete paving, and site development and grading. Although not common to all locations, other products include the sale of cement, liquid asphalt for various commercial and roadway applications, various finished concrete products and other building materials and related contracting services. This segment operates in the central, southern and western United States and Alaska and Hawaii.

The construction services segment provides inside and outside specialty contracting services. Its inside services include design, construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, and mechanical piping and services. Its outside services include design, construction and maintenance of overhead and underground electrical distribution and transmission lines, substations, external lighting, traffic signalization, and gas pipelines, as well as utility excavation and the manufacture and distribution of transmission line construction equipment. This segment also constructs and maintains renewable energy projects. These specialty contracting services are provided to utilities and large manufacturing, commercial, industrial, institutional and governmental customers.

The Other category includes the activities of Centennial Capital, which, through its subsidiary InterSource Insurance Company, insures various types of risks as a captive insurer for certain of the Company's subsidiaries. The function of the captive insurer is to fund the self-insured layers of the insured Company's general liability, automobile liability, pollution liability and other coverages. Centennial Capital also owns certain real and personal property. In addition, the Other category includes certain assets, liabilities and tax adjustments of the holding company primarily associated with corporate functions and certain general and administrative costs (reflected in operation and maintenance expense) and interest expense which were previously allocated to the refining business and Fidelity that do not meet the criteria for income (loss) from discontinued operations. The Other category also includes Centennial Resources' former investment in Brazil.

Discontinued operations include the results and supporting activities of Dakota Prairie Refining and Fidelity other than certain general and administrative costs and interest expense as described above. For more information on discontinued operations, see Note 10.

The information below follows the same accounting policies as described in Note 1 of the Company's Notes to Consolidated Financial Statements in the 2018 Annual Report. Information on the Company's segments was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands)
External operating revenues:
Regulated operations:
Electric	$	81,011	$	78,499	$	173,578	$	165,904
Natural gas distribution	133,867		129,540		476,014		462,204
Pipeline and midstream	21,369		18,645		26,272		23,035
	236,247		226,684		675,864		651,143
Nonregulated operations:
Pipeline and midstream	7,311		5,415		11,021		9,858
Construction materials and contracting	595,799		509,388		822,911		722,672
Construction services	464,192		323,020		884,925		657,071
Other	24		90		43		146
	1,067,326		837,913		1,718,900		1,389,747
Total external operating revenues	$	1,303,573	$	1,064,597	$	2,394,764	$	2,040,890

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Intersegment operating revenues:
Regulated operations:
Electric	$	—		$	—		$	—		$	—
Natural gas distribution	—			—			—			—
Pipeline and midstream	7,426			6,446			31,349			28,182
	7,426			6,446			31,349			28,182
Nonregulated operations:
Pipeline and midstream	87			93			119			116
Construction materials and contracting	168			235			264			336
Construction services	721			540			849			550
Other	2,879			2,667			10,704			5,306
	3,855			3,535			11,936			6,308
Intersegment eliminations	(11,281		)	(9,981		)	(43,285		)	(34,490		)
Total intersegment operating revenues	$	—		$	—		$	—		$	—
Operating income (loss):
Electric	$	9,791		$	13,027		$	27,779		$	31,182
Natural gas distribution	(2,621		)	(4,371		)	47,696			44,169
Pipeline and midstream	10,698			8,482			20,602			16,650
Construction materials and contracting	46,178			37,301			4,597			10,992
Construction services	31,966			19,356			59,431			39,990
Other	1,299			197			1,425			385
Total operating income	$	97,311		$	73,992		$	161,530		$	143,368
Net income (loss):
Regulated operations:
Electric	$	7,471		$	9,133		$	22,976		$	22,216
Natural gas distribution	(6,252		)	(6,852		)	30,248			25,771
Pipeline and midstream	6,378			5,240			13,382			10,699
	7,597			7,521			66,606			58,686
Nonregulated operations:
Pipeline and midstream	742			467			579			288
Construction materials and contracting	29,166			24,336			(5,283		)	815
Construction services	22,845			14,088			42,869			29,179
Other	2,795			(2,337		)	(537		)	(2,932		)
	55,548			36,554			37,628			27,350
Income from continuing operations	63,145			44,075			104,234			86,036
Income (loss) from discontinued operations, net of tax	(1,320		)	(273		)	(1,483		)	203
Net income	$	61,825		$	43,802		$	102,751		$	86,239

XML

Employee benefit plans

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Pension and other postretirement benefit plans

Employee benefit plans

Pension and other postretirement plans

The Company has noncontributory qualified defined benefit pension plans and other postretirement benefit plans for certain eligible employees. Components of net periodic benefit cost (credit) for the Company's pension and other postretirement benefit plans were as follows:

	Pension Benefits						Other Postretirement Benefits
Three Months Ended June 30,	2019			2018			2019			2018
	(In thousands)
Components of net periodic benefit cost (credit):
Service cost	$	—		$	—		$	227		$	340
Interest cost	3,840			3,488			713			672
Expected return on assets	(3,998		)	(5,379		)	(1,182		)	(1,266		)
Amortization of prior service credit	—			—			(228		)	(348		)
Amortization of net actuarial (gain) loss	1,418			1,721			(42		)	82
Net periodic benefit cost (credit), including amount capitalized	1,260			(170		)	(512		)	(520		)
Less amount capitalized	—			—			27			43
Net periodic benefit cost (credit)	$	1,260		$	(170	)	$	(539	)	$	(563	)

	Pension Benefits						Other Postretirement Benefits
Six Months Ended June 30,	2019			2018			2019			2018
	(In thousands)
Components of net periodic benefit cost (credit):
Service cost	$	—		$	—		$	571		$	747
Interest cost	7,613			7,295			1,493			1,450
Expected return on assets	(9,118		)	(10,377		)	(2,402		)	(2,433		)
Amortization of prior service credit	—			—			(577		)	(697		)
Amortization of net actuarial loss	2,773			3,503			55			320
Net periodic benefit cost (credit), including amount capitalized	1,268			421			(860		)	(613		)
Less amount capitalized	—			—			58			83
Net periodic benefit cost (credit)	$	1,268		$	421		$	(918	)	$	(696	)

The components of net periodic benefit cost (credit), other than the service cost component, are included in other income on the Consolidated Statements of Income. The service cost component is included in operation and maintenance expense on the Consolidated Statements of Income.

Nonqualified defined benefit plans

In addition to the qualified defined benefit pension plans reflected in the table at the beginning of this note, the Company also has unfunded, nonqualified defined benefit plans for executive officers and certain key management employees. The Company's net periodic benefit cost for these plans for the three and six months ended June 30, 2019, was $1.1 million and $2.2 million, respectively. The Company's net periodic benefit cost for these plans for the three and six months ended June 30, 2018, was $1.1 million and $2.2 million, respectively. The components of net periodic benefit cost for these plans, which does not contain any service costs, are included in other income on the Consolidated Statements of Income.

XML

Regulatory matters

6 Months Ended

Jun. 30, 2019

Regulated Operations [Abstract]

Regulatory matters

Regulatory matters

The Company regularly reviews the need for electric and natural gas rate changes in each of the jurisdictions in which service is provided. The Company files for rate adjustments to seek recovery of operating costs and capital investments, as well as reasonable returns as allowed by regulators. The Company's most recent cases by jurisdiction are discussed in the following paragraphs.

MNPUC

On April 18, 2019, the MNPUC approved a decrease in rates for Great Plains of $400,000 on an annual basis to reflect TCJA impacts effective May 1, 2019, as well as a one-time TCJA refund of approximately $600,000, to be issued within 120 days of the implementation of new rates, for the period from January 1, 2018 through April 30, 2019.

MTPSC

On September 28, 2018, Montana-Dakota filed an application with the MTPSC for an electric rate increase of approximately $11.9 million annually or approximately 18.9 percent above current rates. The requested increase was primarily to recover

investments in facilities to enhance safety and reliability and the depreciation and taxes associated with the increase in investment. The requested increase was partially offset by tax savings related to the TCJA. On March 7, 2019, the MTPSC issued an interim order authorizing an interim increase of $7.9 million or approximately 12.8 percent, subject to refund, to be effective with service rendered on or after April 1, 2019. On April 24, 2019, Montana-Dakota submitted a settlement agreement reflecting a $9.0 million annual increase to be implemented in the first 12 months following the date of approval and an additional $300,000 annual increase to be implemented beginning 12 months after the date of approval. On June 18, 2019, the MTPSC voted to approve the settlement as filed.

NDPSC

On January 23, 2019, the NDPSC approved a $168,000 reduction in annual revenues for Great Plains to reflect TCJA impacts effective February 1, 2019, along with the refund plan that provided for approximately $200,000 in refunds that were credited to customers' bills on April 12, 2019.

On July 19, 2019, Montana-Dakota filed an update with the NDPSC to recover approximately $1.5 million annually for the revenue requirements on certain electric transmission projects through its transmission cost adjustment rate. This matter is pending before the NDPSC.

OPUC

On December 29, 2017, Cascade filed a request with the OPUC to use deferral accounting for the 2018 net benefits associated with the implementation of the TCJA. The deferral request was renewed on December 28, 2018. This matter is pending before the OPUC.

On May 31, 2018, Cascade filed a general rate case with the OPUC requesting an overall increase to Cascade's natural gas rates of approximately $2.3 million or 3.5 percent on an annual basis, which incorporated the impact of the TCJA. On January 22, 2019, Cascade filed a stipulation with the OPUC for an annual increase in revenues of $1.7 million with a $500,000 reduction for excess deferred income taxes, for a net increase of $1.2 million. On March 14, 2019, the OPUC approved the settlement with rates effective April 1, 2019.

On June 14, 2019, Cascade filed a request with the OPUC to implement a new pipeline safety cost recovery mechanism to recover investments to replace Cascade's highest risk infrastructure. If approved, Cascade would file a report annually with the OPUC detailing actual projects undertaken and costs incurred for the year on November 1, seeking recovery for investments from January 1 through December 31 of that same year. This matter is pending before the OPUC.

WUTC

On March 28, 2019, the WUTC approved an increase to Cascade's natural gas rates through an out-of-period purchased gas adjustment surcharge. The increase of approximately $48.0 million reflected unrecovered purchased gas costs from October 2018 through the end of January 2019 as a result of the rupture of the Enbridge pipeline in Canada on October 9, 2018, causing increased natural gas costs. The WUTC approved this amount, including interest, to be collected over three years beginning April 1, 2019.

On March 29, 2019, Cascade filed a general rate case with the WUTC requesting an increase in annual revenue of $12.7 million or approximately 5.5 percent. This matter is pending before the WUTC. The WUTC has 11 months to process the request and issue an order.

On May 31, 2019, Cascade filed its annual pipeline cost recovery mechanism requesting an increase in revenue of approximately $1.6 million or approximately 0.7 percent. This matter is pending before the WUTC.

WYPSC

On April 4, 2019, Montana-Dakota submitted compliance rates to the WYPSC reflecting a decrease in annual revenues of approximately $1.1 million or approximately 4.2 percent to reflect TCJA impacts. On April 8, 2019, the WYPSC approved the Company's requested decrease in electric rates and required a refund to customers for the period from January 1, 2018 through the date prior to the implementation of the rates within 90 days of the effective date of the new rates. The new rates were implemented for service rendered on and after May 1, 2019, and the refunds of approximately $1.6 million were credited to customers' bills on July 25, 2019.

On March 30, 2018, Montana-Dakota reported its natural gas earnings do not support a decrease in rates and requested the WYPSC allow the impacts of the TCJA be addressed in a natural gas rate case to be submitted by June 1, 2019. On July 16, 2019, the WYPSC ruled in a hearing for Montana-Dakota to provide for a one-time refund of approximately $190,000 to be credited to customers' bills by November 1, 2019, for the TCJA impacts from January 1, 2018 through June 30, 2019. This matter is pending before the WYPSC.

On May 23, 2019, Montana-Dakota filed an application with the WYPSC for a natural gas rate increase of approximately $1.1 million annually or approximately 7.0 percent above current rates. The requested increase was to recover increased operating expenses and investments in distribution facilities to improve system safety and reliability. This matter is pending before the WYPSC.

FERC

In accordance with WBI Energy Transmission’s offer of settlement and stipulation and agreement with the FERC dated June 4, 2014, the Company was to make a filing with new proposed rates to be effective no later than May 1, 2019. On October 31, 2018, the Company filed a rate case with the FERC. Following negotiations between FERC staff, customers and the Company, on May 30, 2019, the FERC granted the Company's request to place interim settlement rates into effect May 1, 2019, subject to refund or surcharge, and pending the FERC's consideration of the filing of a settlement agreement. Based on as filed volumes and settlement rates, the revenue increase is approximately $4.5 million annually. Included in the revenue increase are the impacts from higher depreciation rates agreed to in the settlement, as well as the impacts of the TCJA. On June 28, 2019, the Company filed a final settlement agreement and related documents with the FERC. This matter is pending before the FERC.

XML

Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

The Company is party to claims and lawsuits arising out of its business and that of its consolidated subsidiaries, which may include, but are not limited to, matters involving property damage, personal injury, and environmental, contractual, statutory and regulatory obligations. The Company accrues a liability for those contingencies when the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss. Accruals are based on the best information available, but in certain situations management is unable to estimate an amount or range of a reasonably possible loss including, but not limited to when: (1) the damages are unsubstantiated or indeterminate, (2) the proceedings are in the early stages, (3) numerous parties are involved, or (4) the matter involves novel or unsettled legal theories.

The Company has accrued liabilities of $32.1 million, $31.1 million and $30.4 million, which have not been discounted, including liabilities held for sale, for contingencies, including litigation, production taxes, royalty claims and environmental matters at June 30, 2019 and 2018, and December 31, 2018, respectively. This includes amounts that have been accrued for matters discussed in Environmental matters within this note. The Company will continue to monitor each matter and adjust accruals as might be warranted based on new information and further developments. Management believes that the outcomes with respect to probable and reasonably possible losses in excess of the amounts accrued, net of insurance recoveries, while uncertain, either cannot be estimated or will not have a material effect upon the Company's financial position, results of operations or cash flows. Unless otherwise required by GAAP, legal costs are expensed as they are incurred.

Environmental matters

Portland Harbor Site In December 2000, Knife River - Northwest was named by the EPA as a PRP in connection with the cleanup of the Willamette River site adjacent to a commercial property site acquired by Knife River - Northwest from Georgia-Pacific West, Inc. The riverbed site is part of the Portland, Oregon, Harbor Superfund Site where the EPA wants responsible parties to share in the costs of cleanup. To date, costs of the overall remedial investigation and feasibility study of the harbor site are being recorded, and initially paid, through an administrative consent order by the LWG. Investigative costs are indicated to be in excess of $100 million. Remediation is expected to take up to 13 years with a present value cost estimate of approximately $1 billion. Corrective action will not be taken until remedial design/remedial action plans are approved by the EPA. Knife River - Northwest was also notified that the Portland Harbor Natural Resource Trustee Council intends to perform an injury assessment to natural resources resulting from the release of hazardous substances at the Harbor Superfund Site. It is not possible to estimate the costs of natural resource damages until an assessment is completed and allocations are undertaken.

At this time, Knife River - Northwest does not believe it is a responsible party and has notified Georgia-Pacific West, Inc., that it intends to seek indemnity for liabilities incurred in relation to the above matters pursuant to the terms of their sale agreement. Knife River - Northwest has entered into an agreement tolling the statute of limitations in connection with the LWG's potential claim for contribution to the costs of the remedial investigation and feasibility study. LWG has stated its intent to file suit against Knife River - Northwest and others to recover LWG's investigation costs to the extent Knife River - Northwest cannot demonstrate its non-liability for the contamination or is unwilling to participate in an alternative dispute resolution process that has been established to address the matter. At this time, Knife River - Northwest has agreed to participate in the alternative dispute resolution process.

The Company believes it is not probable that it will incur any material environmental remediation costs or damages in relation to the above referenced matter.

Manufactured Gas Plant Sites There are three claims against Cascade for cleanup of environmental contamination at manufactured gas plant sites operated by Cascade's predecessors, and one against Montana-Dakota at a site operated by Montana-Dakota or its predecessors. Any accruals related to these claims are reflected in regulatory assets. For more information, see Note 13.

The first claim against Cascade is for contamination at a site in Eugene, Oregon, which was received in 1995. The Oregon DEQ released an ROD in January 2015 that selected a remediation alternative for the site as recommended in an earlier staff report. In the second quarter of 2019, site field work for the design was completed which resulted in reducing the total estimated cost for the selected remediation, including long-term maintenance, to approximately $2.4 million of which $400,000 has been incurred. Cascade and other PRPs are finalizing a proposed consent judgment with the Oregon DEQ by which the PRPs agree to perform the recommended remediation and long-term maintenance for the site. Cascade and other PRPs will share in the cleanup and maintenance costs with Cascade to pay 50 percent of such costs. Cascade has an accrual balance of $1.0 million for remediation and maintenance of this site. In January 2013, the OPUC approved Cascade's application to defer environmental remediation costs at the Eugene site for a period of 12 months starting November 30, 2012. Cascade received orders reauthorizing the deferred accounting.

The second claim against Cascade is for contamination at the Bremerton Gasworks Superfund Site in Bremerton, Washington, which was received in 1997. A preliminary investigation has found soil and groundwater at the site contain contaminants requiring further investigation and cleanup. The EPA conducted a Targeted Brownfields Assessment of the site and released a report summarizing the results of that assessment in August 2009. The assessment confirms that contaminants have affected soil and groundwater at the site, as well as sediments in the adjacent Port Washington Narrows. Alternative remediation options have been identified with preliminary cost estimates ranging from $340,000 to $6.4 million. Data developed through the assessment and previous investigations indicates the contamination likely derived from multiple, different sources and multiple current and former owners of properties and businesses in the vicinity of the site may be responsible for the contamination. In April 2010, the Washington DOE issued notice it considered Cascade a PRP for hazardous substances at the site. In May 2012, the EPA added the site to the National Priorities List of Superfund sites. Cascade has entered into an administrative settlement agreement and consent order with the EPA regarding the scope and schedule for a remedial investigation and feasibility study for the site. Current estimates for the cost to complete the remedial investigation and feasibility study are approximately $7.6 million of which $3.6 million has been incurred. Cascade has accrued $4.0 million for the remedial investigation and feasibility study, as well as $6.4 million for remediation of this site; however, the accrual for remediation costs will be reviewed and adjusted, if necessary, after completion of the remedial investigation and feasibility study. In April 2010, Cascade filed a petition with the WUTC for authority to defer the costs incurred in relation to the environmental remediation of this site. The WUTC approved the petition in September 2010, subject to conditions set forth in the order.

The third claim against Cascade is for contamination at a site in Bellingham, Washington. Cascade received notice from a party in May 2008 that Cascade may be a PRP, along with other parties, for contamination from a manufactured gas plant owned by Cascade and its predecessor from about 1946 to 1962. Other PRPs reached an agreed order and work plan with the Washington DOE for completion of a remedial investigation and feasibility study for the site. A feasibility study prepared for one of the PRPs in March 2018 identifies five cleanup action alternatives for the site with estimated costs ranging from $8.0 million to $20.4 million with a selected preferred alternative having an estimated total cost of $9.3 million. The other PRPs will develop a cleanup action plan and, after public review of the cleanup action plan, develop design documents. Cascade believes its proportional share of any liability will be relatively small in comparison to other PRPs. The plant manufactured gas from coal between approximately 1890 and 1946. In 1946, shortly after Cascade's predecessor acquired the plant, it converted the plant to a propane-air gas facility. There are no documented wastes or by-products resulting from the mixing or distribution of propane-air gas. Cascade has recorded an accrual for this site for an amount that is not material.

Cascade has received notices from and entered into agreement with certain of its insurance carriers that they will participate in defense of Cascade for certain of the contamination claims subject to full and complete reservations of rights and defenses to insurance coverage. To the extent these claims are not covered by insurance, Cascade intends to seek recovery through the OPUC and WUTC of remediation costs in its natural gas rates charged to customers.

Demand has been made of Montana-Dakota to participate in investigation and remediation of environmental contamination at a site in Missoula, Montana. The site operated as a former manufactured gas plant from approximately 1907 to 1938 when it was converted to a butane-air plant that operated until 1956. Montana-Dakota or its predecessors owned or controlled the site for a period of the time it operated as a manufactured gas plant and Montana-Dakota operated the butane-air plant from 1940 to 1951, at which time it sold the plant. There are no documented wastes or by-products resulting from the mixing or distribution of butane-air gas. Preliminary assessment of a portion of the site provided a recommended remedial alternative for that portion of approximately $560,000. However, the recommended remediation would not address any potential contamination to adjacent parcels that may be impacted by contamination from the manufactured gas plant. Montana-Dakota and another party have tentatively agreed to voluntarily investigate and remediate the site and that Montana-Dakota will pay two-thirds of the costs for further investigation and remediation of the site.

Guarantees

In 2009, multiple sale agreements were signed to sell the Company's ownership interests in the Brazilian Transmission Lines. In connection with the sale, Centennial agreed to guarantee payment of any indemnity obligations of certain of the Company's indirect wholly owned subsidiaries who were the sellers in three purchase and sale agreements for periods ranging up to 10 years from the date of sale. The guarantees were required by the buyers as a condition to the sale of the Brazilian Transmission Lines.

Certain subsidiaries of the Company have outstanding guarantees to third parties that guarantee the performance of other subsidiaries of the Company. These guarantees are related to construction contracts, insurance deductibles and loss limits, and certain other guarantees. At June 30, 2019, the fixed maximum amounts guaranteed under these agreements aggregated $274.2 million. The amounts of scheduled expiration of the maximum amounts guaranteed under these agreements aggregate to $85.5 million in 2019; $181.4 million in 2020; $700,000 in 2021; $500,000 in 2022; $500,000 in 2023; $1.6 million thereafter; and $4.0 million, which has no scheduled maturity date. There were no amounts outstanding under the above guarantees at June 30, 2019. In the event of default under these guarantee obligations, the subsidiary issuing the guarantee for that particular obligation would be required to make payments under its guarantee.

Certain subsidiaries have outstanding letters of credit to third parties related to insurance policies and other agreements, some of which are guaranteed by other subsidiaries of the Company. At June 30, 2019, the fixed maximum amounts guaranteed under these letters of credit aggregated $32.8 million. The amounts of scheduled expiration of the maximum amounts guaranteed under these letters of credit aggregate to $29.4 million in 2019 and $3.4 million in 2020. There were no amounts outstanding under the above letters of credit at June 30, 2019. In the event of default under these letter of credit obligations, the subsidiary guaranteeing the letter of credit would be obligated for reimbursement of payments made under the letter of credit.

In addition, Centennial, Knife River and MDU Construction Services have issued guarantees to third parties related to the routine purchase of maintenance items, materials and lease obligations for which no fixed maximum amounts have been specified. These guarantees have no scheduled maturity date. In the event a subsidiary of the Company defaults under these obligations, Centennial, Knife River or MDU Construction Services would be required to make payments under these guarantees. Any amounts outstanding by subsidiaries of the Company were reflected on the Consolidated Balance Sheet at June 30, 2019.

In the normal course of business, Centennial has surety bonds related to construction contracts and reclamation obligations of its subsidiaries. In the event a subsidiary of Centennial does not fulfill a bonded obligation, Centennial would be responsible to the surety bond company for completion of the bonded contract or obligation. A large portion of the surety bonds is expected to expire within the next 12 months; however, Centennial will likely continue to enter into surety bonds for its subsidiaries in the future. At June 30, 2019, approximately $1.1 billion of surety bonds were outstanding, which were not reflected on the Consolidated Balance Sheet.

Variable interest entities

The Company evaluates its arrangements and contracts with other entities to determine if they are VIEs and if so, if the Company is the primary beneficiary.

Fuel Contract Coyote Station entered into a coal supply agreement with Coyote Creek that provides for the purchase of coal necessary to supply the coal requirements of the Coyote Station for the period May 2016 through December 2040. Coal purchased under the coal supply agreement is reflected in inventories on the Company's Consolidated Balance Sheets and is recovered from customers as a component of electric fuel and purchased power.

The coal supply agreement creates a variable interest in Coyote Creek due to the transfer of all operating and economic risk to the Coyote Station owners, as the agreement is structured so that the price of the coal will cover all costs of operations, as well as future reclamation costs. The Coyote Station owners are also providing a guarantee of the value of the assets of Coyote Creek as they would be required to buy the assets at book value should they terminate the contract prior to the end of the contract term and are providing a guarantee of the value of the equity of Coyote Creek in that they are required to buy the entity at the end of the contract term at equity value. Although the Company has determined that Coyote Creek is a VIE, the Company has concluded that it is not the primary beneficiary of Coyote Creek because the authority to direct the activities of the entity is shared by the four unrelated owners of the Coyote Station, with no primary beneficiary existing. As a result, Coyote Creek is not required to be consolidated in the Company's financial statements.

At June 30, 2019, the Company's exposure to loss as a result of the Company's involvement with the VIE, based on the Company's ownership percentage, was $37.3 million.

XML

Basis of presentation (Policies)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of presentation

The accompanying consolidated interim financial statements were prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Interim financial statements do not include all disclosures provided in annual financial statements and, accordingly, these financial statements should be read in conjunction with those appearing in the 2018 Annual Report. The information is unaudited but includes all adjustments that are, in the opinion of management, necessary for a fair presentation of the accompanying consolidated interim financial statements and are of a normal recurring nature. Depreciation, depletion and amortization expense is reported separately on the Consolidated Statements of Income and therefore is excluded from the other line items within operating expenses.

XML

Accounts receivable and allowance for doubtful accounts (Policies)	6 Months Ended
	Jun. 30, 2019
Receivables [Abstract]
Accounts receivable and allowance for doubtful accounts	Accounts receivable consists primarily of trade receivables from the sale of goods and services which are recorded at the invoiced amount net of allowance for doubtful accounts, and costs and estimated earnings in excess of billings on uncompleted contracts.The allowance for doubtful accounts is determined through a review of past due balances and other specific account data. Account balances are written off when management determines the amounts to be uncollectible.

XML

Inventories and natural gas in storage (Policies)	6 Months Ended
	Jun. 30, 2019
Inventory Disclosure [Abstract]
Inventories and natural gas in storage	Natural gas in storage for the Company's regulated operations is generally carried at lower of cost or net realizable value, or cost using the last-in, first-out method. All other inventories are stated at the lower of cost or net realizable value.

XML

Earnings per common share (Policies)	6 Months Ended
	Jun. 30, 2019
Earnings Per Share [Abstract]
Earnings per common share	Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share is computed by dividing net income by the total of the weighted average number of shares of common stock outstanding during the applicable period, plus the effect of nonvested performance share awards and restricted stock units. Common stock outstanding includes issued shares less shares held in treasury.

XML

New accounting standards (Policies)

6 Months Ended

Jun. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New accounting standards

Recently adopted accounting standards

ASU 2016-02 - Leases In February 2016, the FASB issued guidance regarding leases. The guidance required lessees to recognize a lease liability and a right-of-use asset on the balance sheet for operating and financing leases. The guidance remained largely the same for lessors, although some changes were made to better align lessor accounting with the new lessee accounting and to align with the revenue recognition standard. The guidance also required additional disclosures, both quantitative and qualitative, related to operating and financing leases for the lessee and sales-type, direct financing and operating leases for the lessor. The Company adopted the standard on January 1, 2019.

In July 2018, the FASB issued ASU 2018-11 - Leases: Targeted Improvements, an accounting standard update to ASU 2016-02. This ASU provided an entity the option to adopt the guidance using one of two modified retrospective approaches. An entity could adopt the guidance using the modified retrospective transition approach beginning in the earliest year presented in the financial statements. This method of adoption would have required the restatement of prior periods reported and the presentation of lease disclosures under the new guidance for all periods reported. The additional transition method of adoption, introduced by ASU 2018-11, allowed entities the option to apply the guidance on the date of adoption by recognizing a cumulative effect adjustment to retained earnings during the period of adoption and did not require prior comparative periods to be restated.

The Company adopted the standard on January 1, 2019, utilizing the additional transition method of adoption applied on the date of adoption and the practical expedient that allowed the Company to not reassess whether an expired or existing contract contained a lease, the classification of leases or initial direct costs. The Company did not identify any cumulative effect

adjustments. The Company also adopted a short-term leasing policy as the lessee where leases with a term of 12 months or less are not included on the Consolidated Balance Sheet.

As a practical expedient, a lessee may choose not to separate nonlease components from lease components and instead account for lease and nonlease components as a single lease component. The election shall be made by asset class. The Company has elected to adopt the lease/nonlease component practical expedient for all asset classes as the lessee. The Company did not elect the practical expedient to use hindsight when assessing the lease term or impairment of right-of-use assets for the existing leases on the date of adoption.

In January 2018, the FASB issued a practical expedient for land easements under the new lease guidance. The practical expedient permits an entity to elect the option to not evaluate land easements under the new guidance if they existed or expired before the adoption of the new lease guidance and were not previously accounted for as leases under the previous lease guidance. Once an entity adopts the new guidance, the entity should apply the new guidance on a prospective basis to all new or modified land easements. The Company has adopted this practical expedient.

The Company formed a lease implementation team to review and assess existing contracts to identify and evaluate those containing leases. Additionally, the team implemented new and revised existing software to meet the reporting and disclosure requirements of the standard. The Company also assessed the impact the standard had on its processes and internal controls and identified new and updated existing internal controls and processes to ensure compliance with the new lease standard; such modifications were not deemed to be significant. During the assessment phase, the Company used various surveys, reconciliations and analytic methodologies to ensure the completeness of the lease inventory. The Company determined that most of the current operating leases were subject to the guidance and were recognized as operating lease liabilities and right-of-use assets on the Consolidated Balance Sheet upon adoption. On January 1, 2019, the Company recorded approximately $112 million to right-of-use assets and lease liabilities as a result of the initial adoption of the guidance. In addition, the Company evaluated the impact the new guidance had on lease contracts where the Company is the lessor and determined it did not have a significant impact to the Company's financial statements.

ASU 2018-15 - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract In August 2018, the FASB issued guidance on the accounting for implementation costs of a hosting arrangement that is a service contract. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract similar to the costs incurred to develop or obtain internal-use software and such capitalized costs to be expensed over the term of the hosting arrangement. Costs incurred during the preliminary and postimplementation stages should continue to be expensed as activities are performed. The capitalized costs are required to be presented on the balance sheet in the same line the prepayment for the fees associated with the hosting arrangement would be presented. In addition, the expense related to the capitalized implementation costs should be presented in the same line on the income statement as the fees associated with the hosting element of the arrangements. The Company adopted the guidance effective January 1, 2019, on a prospective basis. The adoption of the guidance did not have a material impact on its results of operations, financial position, cash flows, and disclosures.

Recently issued accounting standards not yet adopted

ASU 2016-13 - Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance on the measurement of credit losses on certain financial instruments. The guidance introduces a new impairment model known as the current expected credit loss model that will replace the incurred loss impairment methodology currently included under GAAP. This guidance requires entities to present certain investments in debt securities, trade accounts receivable and other financial assets at their net carrying value of the amount expected to be collected on the financial statements. The guidance will be effective for the Company on January 1, 2020, and must be applied on a modified retrospective basis with early adoption permitted. The Company does not expect the guidance to have a material impact on its results of operations, financial position, cash flows and disclosures.

ASU 2017-04 - Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued guidance on simplifying the test for goodwill impairment by eliminating Step 2, which required an entity to measure the amount of impairment loss by comparing the implied fair value of reporting unit goodwill with the carrying amount of such goodwill. This guidance requires entities to perform a quantitative impairment test, previously Step 1, to identify both the existence of impairment and the amount of impairment loss by comparing the fair value of a reporting unit to its carrying amount. Entities will continue to have the option of performing a qualitative assessment to determine if the quantitative impairment test is necessary. The guidance also requires additional disclosures if an entity has one or more reporting units with zero or negative carrying amounts of net assets. The guidance will be effective for the Company on January 1, 2020, and must be applied on a prospective basis with early adoption permitted. The Company is evaluating the guidance and does not expect it to have a material impact on its results of operations, financial position, cash flows and disclosures.

ASU 2018-13 - Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the FASB issued guidance on modifying the disclosure requirements on fair value measurements as part of the disclosure framework project. The guidance modifies, among other things, the disclosures required for Level 3 fair value measurements, including the range and weighted average of significant unobservable inputs. The guidance removes, among other things, the disclosure requirement to disclose transfers between Levels 1 and 2. The guidance will be effective for the Company on January 1, 2020, including interim periods,

with early adoption permitted. Level 3 fair value measurement disclosures should be applied prospectively while all other amendments should be applied retrospectively. The Company is evaluating the effects the adoption of the new guidance will have on its disclosures.

ASU 2018-14 - Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued guidance on modifying the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans as part of the disclosure framework project. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. The guidance adds, among other things, the requirement to include an explanation for significant gains and losses related to changes in benefit obligations for the period. The guidance removes, among other things, the disclosure requirement to disclose the amount of net periodic benefit costs to be amortized over the next fiscal year from accumulated other comprehensive income (loss) and the effects a one percentage point change in assumed health care cost trend rates will have on certain benefit components. The guidance will be effective for the Company on January 1, 2021, and must be applied on a retrospective basis with early adoption permitted. The Company is evaluating the effects the adoption of the new guidance will have on its disclosures.

XML

Revenue from contracts with customers (Policies)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from contracts with customers

Revenue is recognized when a performance obligation is satisfied by transferring control over a product or service to a customer. Revenue is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company is considered an agent for certain taxes collected from customers. As such, the Company presents revenues net of these taxes at the time of sale to be remitted to governmental authorities, including sales and use taxes.

XML

Business Combinations (Policies)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Business Combinations Policy [Policy Text Block]

Business combinations were accounted for in accordance with ASC 805 - Business Combinations. The results of the acquired businesses have been included in the Company's construction materials and contracting segment and Consolidated Financial Statements beginning on the acquisition date. Pro forma financial amounts reflecting the effects of the business combinations are not presented, as these business combinations were not material to the Company's financial position or results of operations.

For all business combinations, the Company preliminarily allocates the purchase price of the acquisitions to the assets acquired

and liabilities assumed based on their estimated fair values as of the acquisition dates and are considered provisional until final fair values are determined, or the measurement period has passed. The Company expects to record adjustments as it accumulates the information needed to estimate the fair value of assets acquired and liabilities assumed, including working capital balances, estimated fair value of identifiable intangible assets, property, plant and equipment, total consideration and goodwill. The excess of the purchase price over the aggregate fair values is recorded as goodwill. The Company calculated the fair value of the assets acquired in 2019 and 2018 using a market or cost approach (or a combination of both). Fair values for some of the assets were determined based on Level 3 inputs including estimated future cash flows, discount rates, growth rates, sales projections, retention rates and terminal values, all of which require significant management judgment and are susceptible to change. The final fair value of the net assets acquired may result in adjustments to the assets and liabilities, including goodwill, and will be made as soon as practical, but no later than one year from the respective acquisition dates. However, any subsequent measurement period adjustments are not expected to have a material impact on the Company's results of operations.

XML

Discontinued operations (Policies)

6 Months Ended

Jun. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations

The assets and liabilities of the Company's discontinued operations have been classified as held for sale and the results of operations are shown in income (loss) from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. At the time the assets were classified as held for sale, depreciation, depletion and amortization expense was no longer recorded.

XML

Leases (Policies)	6 Months Ended
	Jun. 30, 2019
Leases [Abstract]
Lessee, Leases [Policy Text Block]	The leases the Company has entered into as part of its ongoing operations are considered operating leases and are recognized on the balance sheet as right-of-use assets, current lease liabilities and, if applicable, noncurrent lease liabilities. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The Company determines the lease term based on the non-cancelable and cancelable periods in each contract. The non-cancelable period consists of the term of the contract that is legally enforceable and cannot be canceled by either party without incurring a significant penalty. The cancelable period is determined by various factors that are based on who has the right to cancel a contract. If only the lessor has the right to cancel the contract, the Company will assume the contract will continue. If the lessee is the only party that has the right to cancel the contract, the Company looks to asset, entity and market-based factors. If both the lessor and the lessee have the right to cancel the contract, the Company assumes the contract will not continue.

XML

Fair value disclosures (Policies)	6 Months Ended
	Jun. 30, 2019
Fair Value Disclosures [Abstract]
Fair value measurements	The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income.
Investments	The Company did not elect the fair value option, which records gains and losses in income, for its available-for-sale securities. The available-for-sale securities include mortgage-backed securities and U.S. Treasury securities. These available-for-sale securities are recorded at fair value and are classified as investments on the Consolidated Balance Sheets.

XML

Business segment data (Policies)	6 Months Ended
	Jun. 30, 2019
Segment Reporting [Abstract]
Business segment data	The Company's reportable segments are those that are based on the Company's method of internal reporting, which generally segregates the strategic business units due to differences in products, services and regulation. The internal reporting of these operating segments is defined based on the reporting and review process used by the Company's chief executive officer.

XML

Contingencies (Policies)

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Contingencies

The Company is party to claims and lawsuits arising out of its business and that of its consolidated subsidiaries, which may include, but are not limited to, matters involving property damage, personal injury, and environmental, contractual, statutory and regulatory obligations. The Company accrues a liability for those contingencies when the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss. Accruals are based on the best information available, but in certain situations management is unable to estimate an amount or range of a reasonably possible loss including, but not limited to when: (1) the damages are unsubstantiated or indeterminate, (2) the proceedings are in the early stages, (3) numerous parties are involved, or (4) the matter involves novel or unsettled legal theories.

Variable interest entity

The Company evaluates its arrangements and contracts with other entities to determine if they are VIEs and if so, if the Company is the primary beneficiary.

XML

Inventories and natural gas in storage (Tables)

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories on the Consolidated Balance Sheets were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Aggregates held for resale	$	147,030	$	131,784	$	139,681
Asphalt oil	80,418		64,560		54,741
Materials and supplies	28,746		24,688		23,611
Merchandise for resale	27,167		17,502		22,552
Natural gas in storage (current)	15,841		13,774		22,117
Other	26,742		25,931		24,607
Total	$	325,944	$	278,239	$	287,309

XML

Earnings per common share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Weighted average common shares outstanding

A reconciliation of the weighted average common shares outstanding used in the basic and diluted earnings per share calculations follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands, except per share amounts)
Weighted average common shares outstanding - basic	198,270		195,524		197,341		195,415
Effect of dilutive performance share awards and restricted stock units	17		645		15		662
Weighted average common shares outstanding - diluted	198,287		196,169		197,356		196,077
Shares excluded from the calculation of diluted earnings per share	—		—		93		—
Dividends declared per common share	$	.2025	$	.1975	$	.4050	$	.3950

XML

Accumulated other comprehensive income (loss) (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Accumulated comprehensive loss

The after-tax changes in the components of accumulated other comprehensive income (loss) were as follows:

Six Months Ended June 30, 2019	Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Hedges			Postretirement Liability Adjustment			Net Unrealized Gain (Loss) on Available-for-sale Investments			Total Accumulated Other Comprehensive Loss
	(In thousands)
At December 31, 2018	$	(2,161	)	$	(36,069	)	$	(112	)	$	(38,342	)
Other comprehensive income before reclassifications	—			—			39			39
Amounts reclassified from accumulated other comprehensive loss	397			310			28			735
Net current-period other comprehensive income	397			310			67			774
At March 31, 2019	$	(1,764	)	$	(35,759	)	$	(45	)	$	(37,568	)
Other comprehensive income before reclassifications	—			—			79			79
Amounts reclassified from accumulated other comprehensive loss	111			276			12			399
Net current-period other comprehensive income	111			276			91			478
At June 30, 2019	$	(1,653	)	$	(35,483	)	$	46		$	(37,090	)

Six Months Ended June 30, 2018	Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Hedges			Postretirement Liability Adjustment			Foreign Currency Translation Adjustment			Net Unrealized Gain (Loss) on Available-for-sale Investments			Total Accumulated Other Comprehensive Loss
	(In thousands)
At December 31, 2017	$	(1,934	)	$	(35,163	)	$	(155	)	$	(82	)	$	(37,334	)
Other comprehensive loss before reclassifications	—			—			(2		)	(105		)	(107		)
Amounts reclassified from accumulated other comprehensive loss	92			418			—			30			540
Net current-period other comprehensive income (loss)	92			418			(2		)	(75		)	433
Reclassification adjustment of prior period tax effects related to TCJA included in accumulated other comprehensive loss	(389		)	(7,520		)	(33		)	(17		)	(7,959		)
At March 31, 2018	$	(2,231	)	$	(42,265	)	$	(190	)	$	(174	)	$	(44,860	)
Other comprehensive loss before reclassifications	—			—			(59		)	(43		)	(102		)
Amounts reclassified from accumulated other comprehensive loss	95			449			249			34			827
Net current-period other comprehensive income (loss)	95			449			190			(9		)	725
At June 30, 2018	$	(2,136	)	$	(41,816	)	$	—		$	(183	)	$	(44,135	)

Reclassification out of accumulated other comprehensive loss

The following amounts were reclassified out of accumulated other comprehensive loss into net income. The amounts presented in parenthesis indicate a decrease to net income on the Consolidated Statements of Income. The reclassifications were as follows:

	Three Months Ended						Six Months Ended						Location on Consolidated Statements of Income
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Reclassification adjustment for loss on derivative instruments included in net income	$	(147	)	$	(148	)	$	(295	)	$	(296	)	Interest expense
	36			53			(213		)	109			Income taxes
	(111		)	(95		)	(508		)	(187		)
Amortization of postretirement liability losses included in net periodic benefit cost (credit)	(365		)	(594		)	(775		)	(1,167		)	Other income
	89			145			189			300			Income taxes
	(276		)	(449		)	(586		)	(867		)
Reclassification adjustment for loss on foreign currency translation adjustment included in net income	—			(324		)	—			(324		)	Other income
	—			75			—			75			Income taxes
	—			(249		)	—			(249		)
Reclassification adjustment on available-for-sale investments included in net income	(15		)	(44		)	(50		)	(81		)	Other income
	3			10			10			17			Income taxes
	(12		)	(34		)	(40		)	(64		)
Total reclassifications	$	(399	)	$	(827	)	$	(1,134	)	$	(1,367	)

XML

Revenue from contracts with customers (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of revenue

In the following table, revenue is disaggregated by the type of customer or service provided. The Company believes this level of disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The table also includes a reconciliation of the disaggregated revenue by reportable segments. For more information on the Company's business segments, see Note 17.

Three Months Ended June 30, 2019	Electric		Natural gas distribution		Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	26,437	$	71,010	$	—		$	—		$	—		$	—		$	97,447
Commercial utility sales	33,231		41,250		—			—			—			—			74,481
Industrial utility sales	9,344		5,577		—			—			—			—			14,921
Other utility sales	1,879		—		—			—			—			—			1,879
Natural gas transportation	—		10,706		24,804			—			—			—			35,510
Natural gas gathering	—		—		2,396			—			—			—			2,396
Natural gas storage	—		—		2,623			—			—			—			2,623
Contracting services	—		—		—			297,124			—			—			297,124
Construction materials	—		—		—			444,768			—			—			444,768
Intrasegment eliminations*	—		—		—			(145,925		)	—			—			(145,925		)
Inside specialty contracting	—		—		—			—			319,276			—			319,276
Outside specialty contracting	—		—		—			—			133,288			—			133,288
Other	8,417		2,923		6,293			—			9			2,903			20,545
Intersegment eliminations	—		—		(7,513		)	(168		)	(721		)	(2,879		)	(11,281		)
Revenues from contracts with customers	79,308		131,466		28,603			595,799			451,852			24			1,287,052
Revenues out of scope	1,703		2,401		77			—			12,340			—			16,521
Total external operating revenues	$	81,011	$	133,867	$	28,680		$	595,799		$	464,192		$	24		$	1,303,573

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Three Months Ended June 30, 2018	Electric		Natural gas distribution		Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	26,752	$	68,688	$	—		$	—		$	—		$	—		$	95,440
Commercial utility sales	32,676		40,820		—			—			—			—			73,496
Industrial utility sales	8,226		5,227		—			—			—			—			13,453
Other utility sales	1,874		—		—			—			—			—			1,874
Natural gas transportation	—		10,084		21,287			—			—			—			31,371
Natural gas gathering	—		—		2,310			—			—			—			2,310
Natural gas storage	—		—		2,634			—			—			—			2,634
Contracting services	—		—		—			247,558			—			—			247,558
Construction materials	—		—		—			387,632			—			—			387,632
Intrasegment eliminations*	—		—		—			(125,567		)	—			—			(125,567		)
Inside specialty contracting	—		—		—			—			216,371			—			216,371
Outside specialty contracting	—		—		—			—			95,261			—			95,261
Other	8,425		3,614		4,326			—			103			2,757			19,225
Intersegment eliminations	—		—		(6,539		)	(235		)	(540		)	(2,667		)	(9,981		)
Revenues from contracts with customers	77,953		128,433		24,018			509,388			311,195			90			1,051,077
Revenues out of scope	546		1,107		42			—			11,825			—			13,520
Total external operating revenues	$	78,499	$	129,540	$	24,060		$	509,388		$	323,020		$	90		$	1,064,597

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Six Months Ended June 30, 2019	Electric		Natural gas distribution			Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	62,993	$	271,619		$	—		$	—		$	—		$	—		$	334,612
Commercial utility sales	68,902		163,043			—			—			—			—			231,945
Industrial utility sales	18,228		14,188			—			—			—			—			32,416
Other utility sales	3,678		—			—			—			—			—			3,678
Natural gas transportation	—		22,276			49,862			—			—			—			72,138
Natural gas gathering	—		—			4,517			—			—			—			4,517
Natural gas storage	—		—			5,269			—			—			—			5,269
Contracting services	—		—			—			380,164			—			—			380,164
Construction materials	—		—			—			624,077			—			—			624,077
Intrasegment eliminations*	—		—			—			(181,066		)	—			—			(181,066		)
Inside specialty contracting	—		—			—			—			618,805			—			618,805
Outside specialty contracting	—		—			—			—			240,686			—			240,686
Other	17,538		6,836			8,989			—			26			10,747			44,136
Intersegment eliminations	—		—			(31,468		)	(264		)	(849		)	(10,704		)	(43,285		)
Revenues from contracts with customers	171,339		477,962			37,169			822,911			858,668			43			2,368,092
Revenues out of scope	2,239		(1,948		)	124			—			26,257			—			26,672
Total external operating revenues	$	173,578	$	476,014		$	37,293		$	822,911		$	884,925		$	43		$	2,394,764

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Six Months Ended June 30, 2018	Electric			Natural gas distribution		Pipeline and midstream			Construction materials and contracting			Construction services			Other			Total
	(In thousands)
Residential utility sales	$	61,935		$	261,574	$	—		$	—		$	—		$	—		$	323,509
Commercial utility sales	67,377			157,711		—			—			—			—			225,088
Industrial utility sales	16,996			13,036		—			—			—			—			30,032
Other utility sales	3,710			—		—			—			—			—			3,710
Natural gas transportation	—			21,263		43,105			—			—			—			64,368
Natural gas gathering	—			—		4,580			—			—			—			4,580
Natural gas storage	—			—		5,768			—			—			—			5,768
Contracting services	—			—		—			321,622			—			—			321,622
Construction materials	—			—		—			561,223			—			—			561,223
Intrasegment eliminations*	—			—		—			(159,837		)	—			—			(159,837		)
Inside specialty contracting	—			—		—			—			450,192			—			450,192
Outside specialty contracting	—			—		—			—			182,442			—			182,442
Other	16,678			7,613		7,652			—			17			5,452			37,412
Intersegment eliminations	—			—		(28,298		)	(336		)	(550		)	(5,306		)	(34,490		)
Revenues from contracts with customers	166,696			461,197		32,807			722,672			632,101			146			2,015,619
Revenues out of scope	(792		)	1,007		86			—			24,970			—			25,271
Total external operating revenues	$	165,904		$	462,204	$	32,893		$	722,672		$	657,071		$	146		$	2,040,890

* Intrasegment revenues are presented within the construction materials and contracting segment to highlight the focus on vertical integration as this segment sells materials to both third parties and internal customers. Due to consolidation requirements, these revenues must be eliminated against construction materials to arrive at the external operating revenue total for the segment.

Contract balances

The changes in contract assets and liabilities were as follows:

	June 30, 2019			December 31, 2018			Change		Location on Consolidated Balance Sheets
	(In thousands)
Contract assets	$	153,641		$	104,239		$	49,402	Receivables, net
Contract liabilities - current	(90,031		)	(93,901		)	3,870		Accounts payable
Contract liabilities - noncurrent	(25		)	(135		)	110		Deferred credits and other liabilities - other
Net contract assets	$	63,585		$	10,203		$	53,382

XML

Discontinued operations (Tables)

6 Months Ended

Jun. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Disposal groups, including discontinued operations

The carrying amounts of the major classes of assets and liabilities classified as held for sale on the Consolidated Balance Sheets were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Assets
Current assets:
Receivables, net	$	428	$	572	$	430
Income taxes receivable (a)	—		1,689		—
Total current assets held for sale	428		2,261		430
Noncurrent assets:
Net property, plant and equipment	—		1,236		—
Deferred income taxes	1,926		2,637		1,926
Other	161		162		161
Total noncurrent assets held for sale	2,087		4,035		2,087
Total assets held for sale	$	2,515	$	6,296	$	2,517
Liabilities
Current liabilities:
Accounts payable	$	82	$	—	$	80
Taxes payable	3,114		10,656		1,451
Other accrued liabilities	3,021		2,746		2,470
Total current liabilities held for sale	6,217		13,402		4,001
Noncurrent liabilities:
Deferred income taxes (b)	—		37		—
Total noncurrent liabilities held for sale	—		37		—
Total liabilities held for sale	$	6,217	$	13,439	$	4,001

(a) On the Company's Consolidated Balance Sheets, these amounts were reclassified to taxes payable and are reflected in current liabilities held for sale.

(b) On the Company's Consolidated Balance Sheets, these amounts were reclassified to deferred charges and other assets - deferred income taxes and are reflected in noncurrent assets held for sale.

Reconciliation of major classes of income and expense

The reconciliation of the major classes of income and expense constituting pretax loss from discontinued operations to the after-tax income (loss) from discontinued operations on the Consolidated Statements of Income was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Operating revenues	$	37		$	75		$	67		$	140
Operating expenses	1,778			435			2,023			609
Operating loss	(1,741		)	(360		)	(1,956		)	(469		)
Other income	—			—			—			12
Interest expense	—			—			—			575
Loss from discontinued operations before income taxes	(1,741		)	(360		)	(1,956		)	(1,032		)
Income taxes	(421		)	(87		)	(473		)	(1,235		)
Income (loss) from discontinued operations	$	(1,320	)	$	(273	)	$	(1,483	)	$	203

XML

Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Lease, Cost [Table Text Block]

The following tables provide information on the Company's operating leases:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019		2019
	(In thousands)
Lease costs:
Operating lease cost	$	10,387	$	21,908
Variable lease cost	400		799
Short-term lease cost	40,474		57,712
Total lease costs	$	51,261	$	80,419

	June 30, 2019
	(Dollars in thousands)
Weighted average remaining lease term	3.02 years
Weighted average discount rate	4.46		%
Cash paid for amounts included in the measurement of lease liabilities	$	21,798

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

The reconciliation of the future undiscounted cash flows to the operating lease liabilities presented on the Company's Consolidated Balance Sheet is as follows:

	June 30, 2019
	(In thousands)
Remainder of 2019	$	19,276
2020	30,065
2021	22,850
2022	14,816
2023	8,941
Thereafter	51,335
Total	147,283
Less discount	28,496
Total operating lease liabilities	$	118,787

As previously disclosed in the 2018 Annual Report, the undiscounted annual minimum lease payments due under the Company's leases following the previous lease accounting standard as of December 31, 2018, were as follows:

	2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Operating leases	$	37,740	$	26,255	$	17,868	$	11,647	$	7,278	$	49,098

XML

Goodwill and other intangible assets (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of goodwill

The changes in the carrying amount of goodwill were as follows:

Six Months Ended June 30, 2019	Balance at January 1, 2019		Goodwill Acquired During  the Year		Balance at June 30, 2019
	(In thousands)
Natural gas distribution	$	345,736	$	—	$	345,736
Construction materials and contracting	209,421		14,473		223,894
Construction services	109,765		—		109,765
Total	$	664,922	$	14,473	$	679,395

Six Months Ended June 30, 2018	Balance at January 1, 2018		Goodwill Acquired During  the Year		Balance at June 30, 2018
	(In thousands)
Natural gas distribution	$	345,736	$	—	$	345,736
Construction materials and contracting	176,290		10,583		186,873
Construction services	109,765		—		109,765
Total	$	631,791	$	10,583	$	642,374

Year Ended December 31, 2018	Balance at January 1, 2018		Goodwill Acquired During  the Year		Balance at December 31, 2018
	(In thousands)
Natural gas distribution	$	345,736	$	—	$	345,736
Construction materials and contracting	176,290		33,131		209,421
Construction services	109,765		—		109,765
Total	$	631,791	$	33,131	$	664,922

Other amortizable intangible assets

Other amortizable intangible assets were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Customer relationships	$	14,601	$	15,587	$	22,720
Less accumulated amortization	5,629		13,191		13,535
	8,972		2,396		9,185
Noncompete agreements	3,179		2,546		2,605
Less accumulated amortization	1,798		1,877		1,956
	1,381		669		649
Other	6,578		6,458		6,458
Less accumulated amortization	5,608		5,333		5,477
	970		1,125		981
Total	$	11,323	$	4,190	$	10,815

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Estimated amortization expense for identifiable intangible assets as of June 30, 2019, was:

	Remainder of 2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Amortization expense	$	938	$	1,644	$	1,254	$	1,231	$	1,249	$	5,007

XML

Regulatory assets and liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets

The following table summarizes the individual components of unamortized regulatory assets and liabilities:

	Estimated Recovery Period	*	June 30, 2019			December 31, 2018
			(In thousands)
Regulatory assets:
Pension and postretirement benefits (a)	(e)		$	165,861		$	165,898
Natural gas costs recoverable through rate adjustments (a) (b)	Up to 3 years		94,543			42,652
Asset retirement obligations (a)	Over plant lives		64,215			60,097
Cost recovery mechanisms (a) (b)	Up to 4 years		18,488			17,948
Manufactured gas plant site remediation (a)	-		15,619			17,068
Taxes recoverable from customers (a)	Over plant lives		11,755			11,946
Plants to be retired (a)	-		16,933			—
Conservation programs (b)	Up to 1 year		7,627			7,494
Long-term debt refinancing costs (a)	Up to 19 years		4,592			4,898
Costs related to identifying generation development (a)	Up to 8 years		2,280			2,508
Other (a) (b)	Up to 20 years		5,761			9,608
Total regulatory assets			$	407,674		$	340,117
Regulatory liabilities:
Taxes refundable to customers (c) (d)			$	264,025		$	277,833
Plant removal and decommissioning costs (c) (d)			175,003			173,143
Natural gas costs refundable through rate adjustments (d)			25,737			29,995
Pension and postretirement benefits (c)			12,967			15,264
Other (c) (d)			27,955			25,197
Total regulatory liabilities			$	505,687		$	521,432
Net regulatory position			$	(98,013	)	$	(181,315	)

* Estimated recovery period for regulatory assets currently being recovered in rates charged to customers.

(a) Included in deferred charges and other assets - other on the Consolidated Balance Sheets.

(b) Included in prepayments and other current assets on the Consolidated Balance Sheets.

(c) Included in deferred credits and other liabilities - other on the Consolidated Balance Sheets.

(d) Included in other accrued liabilities on the Consolidated Balance Sheets.

(e) Recovered as expense is incurred or cash contributions are made.

Regulatory Liabilities

The following table summarizes the individual components of unamortized regulatory assets and liabilities:

	Estimated Recovery Period	*	June 30, 2019			December 31, 2018
			(In thousands)
Regulatory assets:
Pension and postretirement benefits (a)	(e)		$	165,861		$	165,898
Natural gas costs recoverable through rate adjustments (a) (b)	Up to 3 years		94,543			42,652
Asset retirement obligations (a)	Over plant lives		64,215			60,097
Cost recovery mechanisms (a) (b)	Up to 4 years		18,488			17,948
Manufactured gas plant site remediation (a)	-		15,619			17,068
Taxes recoverable from customers (a)	Over plant lives		11,755			11,946
Plants to be retired (a)	-		16,933			—
Conservation programs (b)	Up to 1 year		7,627			7,494
Long-term debt refinancing costs (a)	Up to 19 years		4,592			4,898
Costs related to identifying generation development (a)	Up to 8 years		2,280			2,508
Other (a) (b)	Up to 20 years		5,761			9,608
Total regulatory assets			$	407,674		$	340,117
Regulatory liabilities:
Taxes refundable to customers (c) (d)			$	264,025		$	277,833
Plant removal and decommissioning costs (c) (d)			175,003			173,143
Natural gas costs refundable through rate adjustments (d)			25,737			29,995
Pension and postretirement benefits (c)			12,967			15,264
Other (c) (d)			27,955			25,197
Total regulatory liabilities			$	505,687		$	521,432
Net regulatory position			$	(98,013	)	$	(181,315	)

* Estimated recovery period for regulatory assets currently being recovered in rates charged to customers.

(a) Included in deferred charges and other assets - other on the Consolidated Balance Sheets.

(b) Included in prepayments and other current assets on the Consolidated Balance Sheets.

(c) Included in deferred credits and other liabilities - other on the Consolidated Balance Sheets.

(d) Included in other accrued liabilities on the Consolidated Balance Sheets.

(e) Recovered as expense is incurred or cash contributions are made.

XML

Fair value measurements (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Available-for-sale securities

Details of available-for-sale securities were as follows:

June 30, 2019	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed securities	$	10,771	$	94	$	35	$	10,830
U.S. Treasury securities	180		—		—		180
Total	$	10,951	$	94	$	35	$	11,010

June 30, 2018	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed securities	$	10,015	$	6	$	236	$	9,785
U.S. Treasury securities	242		—		2		240
Total	$	10,257	$	6	$	238	$	10,025

December 31, 2018	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed securities	$	10,473	$	21	$	162	$	10,332
U.S. Treasury securities	179		—		—		179
Total	$	10,652	$	21	$	162	$	10,511

Assets and liabilities measured at fair value on a recurring basis

The Company's assets and liabilities measured at fair value on a recurring basis were as follows:

	Fair Value Measurements at June 30, 2019, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2019
	(In thousands)
Assets:
Money market funds	$	—	$	10,816	$	—	$	10,816
Insurance contract*	—		83,134		—		83,134
Available-for-sale securities:
Mortgage-backed securities	—		10,830		—		10,830
U.S. Treasury securities	—		180		—		180
Total assets measured at fair value	$	—	$	104,960	$	—	$	104,960

* The insurance contract invests approximately 51 percent in fixed-income investments, 22 percent in common stock of large-cap companies, 12 percent in common stock of mid-cap companies, 10 percent in common stock of small-cap companies, 4 percent in target date investments and 1 percent in cash equivalents.

	Fair Value Measurements at June 30, 2018, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2018
	(In thousands)
Assets:
Money market funds	$	—	$	9,904	$	—	$	9,904
Insurance contract*	—		78,312		—		78,312
Available-for-sale securities:
Mortgage-backed securities	—		9,785		—		9,785
U.S. Treasury securities	—		240		—		240
Total assets measured at fair value	$	—	$	98,241	$	—	$	98,241

* The insurance contract invests approximately 48 percent in fixed-income investments, 23 percent in common stock of large-cap companies, 13 percent in common stock of mid-cap companies, 11 percent in common stock of small-cap companies, 3 percent in target date investments and 2 percent in cash equivalents.

	Fair Value Measurements at December 31, 2018, Using
	Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs  (Level 3)		Balance at December 31, 2018
	(In thousands)
Assets:
Money market funds	$	—	$	10,799	$	—	$	10,799
Insurance contract*	—		73,838		—		73,838
Available-for-sale securities:
Mortgage-backed securities	—		10,332		—		10,332
U.S. Treasury securities	—		179		—		179
Total assets measured at fair value	$	—	$	95,148	$	—	$	95,148

* The insurance contract invests approximately 53 percent in fixed-income investments, 21 percent in common stock of large-cap companies, 11 percent in common stock of mid-cap companies, 10 percent in common stock of small-cap companies, 3 percent in target date investments and 2 percent in cash equivalents.

Fair value of long term debt outstanding

The estimated fair value of the Company's Level 2 long-term debt was as follows:

	Carrying Amount		Fair Value
	(In thousands)
Long-term debt at June 30, 2019	$	2,379,806	$	2,521,325
Long-term debt at June 30, 2018	$	1,852,910	$	1,949,564
Long-term debt at December 31, 2018	$	2,108,695	$	2,183,819

XML

Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Long-term debt outstanding

Long-term debt outstanding was as follows:

	Weighted Average Interest Rate at June 30, 2019		June 30, 2019		December 31, 2018
			(In thousands)
Senior notes due on dates ranging from July 1, 2019 to January 15, 2055	4.52	%	$	1,656,000	$	1,381,000
Commercial paper supported by revolving credit agreements	2.77	%	433,350		338,100
Term loan agreements due on dates ranging from October 17, 2019 to September 3, 2032	2.75	%	209,800		209,800
Credit agreements due on June 7, 2024	5.50	%	11,075		110,100
Medium-term notes due on dates ranging from September 1, 2020 to March 16, 2029	6.68	%	50,000		50,000
Other notes due on dates ranging from January 2, 2022 to November 30, 2038	5.01	%	26,105		25,229
Less unamortized debt issuance costs			6,164		5,207
Less discount			360		327
Total long-term debt			2,379,806		2,108,695
Less current maturities			51,822		251,854
Net long-term debt			$	2,327,984	$	1,856,841

Schedule of debt maturities

Long-term debt maturities, which excludes unamortized debt issuance costs and discount, as of June 30, 2019, were as follows:

	Remainder of 2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Long-term debt maturities	$	51,761	$	15,926	$	386,430	$	147,434	$	125,188	$	1,659,591

XML

Cash flow information (Tables)

6 Months Ended

Jun. 30, 2019

Supplemental Cash Flow Information [Abstract]

Cash expenditures for interest and income taxes and noncash investing and financing transactions

Cash expenditures for interest and income taxes were as follows:

	Six Months Ended
	June 30,
	2019		2018
	(In thousands)
Interest, net*	$	45,702	$	39,467
Income taxes paid, net**	$	4,124	$	4,034

* AFUDC - borrowed was $1.2 million and $1.0 million for the six months ended June 30, 2019 and 2018, respectively.

** Income taxes paid, net of discontinued operations, were $2.0 million and $3.1 million for the six months ended June 30, 2019 and 2018, respectively.

Noncash investing and financing transactions were as follows:

	June 30, 2019		June 30, 2018		December 31, 2018
	(In thousands)
Right-of-use assets obtained in exchange for new operating lease liabilities	$	24,990	$	—	$	—
Property, plant and equipment additions in accounts payable	$	27,312	$	30,985	$	42,355
Debt assumed in connection with a business combination	$	1,163	$	—	$	—
Issuance of common stock in connection with a business combination	$	—	$	17,993	$	18,186

XML

Business segment data (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Information on the Company's businesses

Information on the Company's segments was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In thousands)
External operating revenues:
Regulated operations:
Electric	$	81,011	$	78,499	$	173,578	$	165,904
Natural gas distribution	133,867		129,540		476,014		462,204
Pipeline and midstream	21,369		18,645		26,272		23,035
	236,247		226,684		675,864		651,143
Nonregulated operations:
Pipeline and midstream	7,311		5,415		11,021		9,858
Construction materials and contracting	595,799		509,388		822,911		722,672
Construction services	464,192		323,020		884,925		657,071
Other	24		90		43		146
	1,067,326		837,913		1,718,900		1,389,747
Total external operating revenues	$	1,303,573	$	1,064,597	$	2,394,764	$	2,040,890

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Intersegment operating revenues:
Regulated operations:
Electric	$	—		$	—		$	—		$	—
Natural gas distribution	—			—			—			—
Pipeline and midstream	7,426			6,446			31,349			28,182
	7,426			6,446			31,349			28,182
Nonregulated operations:
Pipeline and midstream	87			93			119			116
Construction materials and contracting	168			235			264			336
Construction services	721			540			849			550
Other	2,879			2,667			10,704			5,306
	3,855			3,535			11,936			6,308
Intersegment eliminations	(11,281		)	(9,981		)	(43,285		)	(34,490		)
Total intersegment operating revenues	$	—		$	—		$	—		$	—
Operating income (loss):
Electric	$	9,791		$	13,027		$	27,779		$	31,182
Natural gas distribution	(2,621		)	(4,371		)	47,696			44,169
Pipeline and midstream	10,698			8,482			20,602			16,650
Construction materials and contracting	46,178			37,301			4,597			10,992
Construction services	31,966			19,356			59,431			39,990
Other	1,299			197			1,425			385
Total operating income	$	97,311		$	73,992		$	161,530		$	143,368
Net income (loss):
Regulated operations:
Electric	$	7,471		$	9,133		$	22,976		$	22,216
Natural gas distribution	(6,252		)	(6,852		)	30,248			25,771
Pipeline and midstream	6,378			5,240			13,382			10,699
	7,597			7,521			66,606			58,686
Nonregulated operations:
Pipeline and midstream	742			467			579			288
Construction materials and contracting	29,166			24,336			(5,283		)	815
Construction services	22,845			14,088			42,869			29,179
Other	2,795			(2,337		)	(537		)	(2,932		)
	55,548			36,554			37,628			27,350
Income from continuing operations	63,145			44,075			104,234			86,036
Income (loss) from discontinued operations, net of tax	(1,320		)	(273		)	(1,483		)	203
Net income	$	61,825		$	43,802		$	102,751		$	86,239

XML

Employee benefit plans (Tables)

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Schedule of net benefit costs

Components of net periodic benefit cost (credit) for the Company's pension and other postretirement benefit plans were as follows:

	Pension Benefits						Other Postretirement Benefits
Three Months Ended June 30,	2019			2018			2019			2018
	(In thousands)
Components of net periodic benefit cost (credit):
Service cost	$	—		$	—		$	227		$	340
Interest cost	3,840			3,488			713			672
Expected return on assets	(3,998		)	(5,379		)	(1,182		)	(1,266		)
Amortization of prior service credit	—			—			(228		)	(348		)
Amortization of net actuarial (gain) loss	1,418			1,721			(42		)	82
Net periodic benefit cost (credit), including amount capitalized	1,260			(170		)	(512		)	(520		)
Less amount capitalized	—			—			27			43
Net periodic benefit cost (credit)	$	1,260		$	(170	)	$	(539	)	$	(563	)

	Pension Benefits						Other Postretirement Benefits
Six Months Ended June 30,	2019			2018			2019			2018
	(In thousands)
Components of net periodic benefit cost (credit):
Service cost	$	—		$	—		$	571		$	747
Interest cost	7,613			7,295			1,493			1,450
Expected return on assets	(9,118		)	(10,377		)	(2,402		)	(2,433		)
Amortization of prior service credit	—			—			(577		)	(697		)
Amortization of net actuarial loss	2,773			3,503			55			320
Net periodic benefit cost (credit), including amount capitalized	1,268			421			(860		)	(613		)
Less amount capitalized	—			—			58			83
Net periodic benefit cost (credit)	$	1,268		$	421		$	(918	)	$	(696	)

XML

Accounts receivable and allowance for doubtful accounts (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Receivables [Abstract]
Receivables past due 90 days or more	$ 47.2	$ 30.0	$ 36.6
Allowance for doubtful accounts receivable	$ 8.2	$ 8.9	$ 7.8

XML

Inventories and natural gas in storage (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Inventory Disclosure [Abstract]
Aggregates held for resale	$ 147,030	$ 139,681	$ 131,784
Asphalt oil	80,418	54,741	64,560
Materials and supplies	28,746	23,611	24,688
Merchandise for resale	27,167	22,552	17,502
Natural gas in storage (current)	15,841	22,117	13,774
Other	26,742	24,607	25,931
Total	325,944	287,309	278,239
Natural gas in storage noncurrent	$ 48,200	$ 48,500	$ 47,800

XML

Earnings per common share (Details) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Weighted average common shares outstanding - basic	198,270	195,524	197,341	195,415
Effect of dilutive performance share awards and restricted stock units	17	645	15	662
Weighted average common shares outstanding - diluted	198,287	196,169	197,356	196,077
Shares excluded from the calculation of diluted earnings per share	0	0	93	0
Dividends declared per common share	$ 0.2025	$ 0.1975	$ 0.4050	$ 0.3950

XML

New accounting standards ASU 2016-02 (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Accounting Standards Update 2016-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ 112

XML

Accumulated other comprehensive income (loss) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Accumulated other comprehensive income (loss) [Roll Forward]
Balance	$ 2,605,692	$ 2,566,775	$ 2,426,111	$ 2,429,043	$ 2,566,775	$ 2,429,043
Other comprehensive income	478	774	725	433	1,252	1,158
Balance	2,660,301	2,605,692	2,451,078	2,426,111	2,660,301	2,451,078
Net unrealized gain (loss) on derivative instruments qualifying as hedges
Accumulated other comprehensive income (loss) [Roll Forward]
Balance	(1,764)	(2,161)	(2,231)	(1,934)	(2,161)	(1,934)
Other comprehensive income before reclassifications	0	0	0	0
Amounts reclassified from accumulated other comprehensive loss	111	397	95	92
Other comprehensive income	111	397	95	92
Balance	(1,653)	(1,764)	(2,136)	(2,231)	(1,653)	(2,136)
Postretirement liability adjustment
Accumulated other comprehensive income (loss) [Roll Forward]
Balance	(35,759)	(36,069)	(42,265)	(35,163)	(36,069)	(35,163)
Other comprehensive income before reclassifications	0	0	0	0
Amounts reclassified from accumulated other comprehensive loss	276	310	449	418
Other comprehensive income	276	310	449	418
Balance	(35,483)	(35,759)	(41,816)	(42,265)	(35,483)	(41,816)
Foreign currency translation adjustment
Accumulated other comprehensive income (loss) [Roll Forward]
Balance			(190)	(155)		(155)
Other comprehensive income before reclassifications			(59)	(2)
Amounts reclassified from accumulated other comprehensive loss			249	0
Other comprehensive income			190	(2)
Balance			0	(190)		0
Net unrealized gain (loss) on available-for-sale investments
Accumulated other comprehensive income (loss) [Roll Forward]
Balance	(45)	(112)	(174)	(82)	(112)	(82)
Other comprehensive income before reclassifications	79	39	(43)	(105)
Amounts reclassified from accumulated other comprehensive loss	12	28	34	30
Other comprehensive income	91	67	(9)	(75)
Balance	46	(45)	(183)	(174)	46	(183)
Total accumulated other comprehensive loss
Accumulated other comprehensive income (loss) [Roll Forward]
Balance	(37,568)	(38,342)	(44,860)	(37,334)	(38,342)	(37,334)
Other comprehensive income before reclassifications	79	39	(102)	(107)
Amounts reclassified from accumulated other comprehensive loss	399	735	827	540
Other comprehensive income	478	774	725	433
Balance	$ (37,090)	$ (37,568)	$ (44,135)	(44,860)	$ (37,090)	$ (44,135)
Tax Cuts and Jobs Act [Member] | Adjustments for New Accounting Principle, Early Adoption [Member] | Net unrealized gain (loss) on derivative instruments qualifying as hedges
Accumulated other comprehensive income (loss) [Roll Forward]
Reclassification adjustment of prior period tax effects related to TCJA included in accumulated other comprehensive loss				(389)
Tax Cuts and Jobs Act [Member] | Adjustments for New Accounting Principle, Early Adoption [Member] | Postretirement liability adjustment
Accumulated other comprehensive income (loss) [Roll Forward]
Reclassification adjustment of prior period tax effects related to TCJA included in accumulated other comprehensive loss				(7,520)
Tax Cuts and Jobs Act [Member] | Adjustments for New Accounting Principle, Early Adoption [Member] | Foreign currency translation adjustment
Accumulated other comprehensive income (loss) [Roll Forward]
Reclassification adjustment of prior period tax effects related to TCJA included in accumulated other comprehensive loss				(33)
Tax Cuts and Jobs Act [Member] | Adjustments for New Accounting Principle, Early Adoption [Member] | Net unrealized gain (loss) on available-for-sale investments
Accumulated other comprehensive income (loss) [Roll Forward]
Reclassification adjustment of prior period tax effects related to TCJA included in accumulated other comprehensive loss				(17)
Tax Cuts and Jobs Act [Member] | Adjustments for New Accounting Principle, Early Adoption [Member] | Total accumulated other comprehensive loss
Accumulated other comprehensive income (loss) [Roll Forward]
Reclassification adjustment of prior period tax effects related to TCJA included in accumulated other comprehensive loss				$ (7,959)

XML

Reclassification out of accumulated other comprehensive income (loss) (Details 2) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Reclassification adjustment out of accumulated other comprehensive income [Line Items]
Interest expense	$ (25,429)		$ (20,800)		$ (48,836)	$ (41,246)
Income taxes	(10,352)		(10,716)		(17,668)	(18,267)
Other income	1,615		1,599		9,208	2,181
Net Income	61,825	$ 40,926	43,802	$ 42,437	102,751	86,239
Reclassification out of accumulated other comprehensive income
Reclassification adjustment out of accumulated other comprehensive income [Line Items]
Net Income	(399)		(827)		(1,134)	(1,367)
Reclassification adjustment for loss on derivative instruments included in net income | Reclassification out of accumulated other comprehensive income | Interest rate contract
Reclassification adjustment out of accumulated other comprehensive income [Line Items]
Interest expense	(147)		(148)		(295)	(296)
Income taxes	36		53		(213)	109
Net Income	(111)		(95)		(508)	(187)
Amortization of postretirement liability losses included in net periodic benefit cost (credit) | Reclassification out of accumulated other comprehensive income
Reclassification adjustment out of accumulated other comprehensive income [Line Items]
Income taxes	89		145		189	300
Other income	(365)		(594)		(775)	(1,167)
Net Income	(276)		(449)		(586)	(867)
Reclassification adjustment for loss on foreign currency translation adjustment included in net income | Reclassification out of accumulated other comprehensive income
Reclassification adjustment out of accumulated other comprehensive income [Line Items]
Income taxes	0		75		0	75
Other income	0		(324)		0	(324)
Net Income	0		(249)		0	(249)
Reclassification adjustment on available-for-sale investments included in net income | Reclassification out of accumulated other comprehensive income
Reclassification adjustment out of accumulated other comprehensive income [Line Items]
Income taxes	3		10		10	17
Other income	(15)		(44)		(50)	(81)
Net Income	$ (12)		$ (34)		$ (40)	$ (64)

XML

Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 1,303,573	$ 1,064,597	$ 2,394,764	$ 2,040,890
Intersegment eliminations
Disaggregation of Revenue [Line Items]
Revenues	(11,281)	(9,981)	(43,285)	(34,490)
Intrasegment eliminations
Disaggregation of Revenue [Line Items]
Revenues	(145,925)	(125,567)	(181,066)	(159,837)
Natural gas transportation
Disaggregation of Revenue [Line Items]
Revenues	35,510	31,371	72,138	64,368
Natural gas gathering
Disaggregation of Revenue [Line Items]
Revenues	2,396	2,310	4,517	4,580
Natural gas storage
Disaggregation of Revenue [Line Items]
Revenues	2,623	2,634	5,269	5,768
Contracting services
Disaggregation of Revenue [Line Items]
Revenues	297,124	247,558	380,164	321,622
Construction materials
Disaggregation of Revenue [Line Items]
Revenues	444,768	387,632	624,077	561,223
Inside specialty contracting
Disaggregation of Revenue [Line Items]
Revenues	319,276	216,371	618,805	450,192
Outside specialty contracting
Disaggregation of Revenue [Line Items]
Revenues	133,288	95,261	240,686	182,442
Other
Disaggregation of Revenue [Line Items]
Revenues	20,545	19,225	44,136	37,412
Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Revenues	1,287,052	1,051,077	2,368,092	2,015,619
Revenues out of scope
Disaggregation of Revenue [Line Items]
Revenues	16,521	13,520	26,672	25,271
Residential utility sales
Disaggregation of Revenue [Line Items]
Revenues	97,447	95,440	334,612	323,509
Commercial utility sales
Disaggregation of Revenue [Line Items]
Revenues	74,481	73,496	231,945	225,088
Industrial utility sales
Disaggregation of Revenue [Line Items]
Revenues	14,921	13,453	32,416	30,032
Other utility sales
Disaggregation of Revenue [Line Items]
Revenues	1,879	1,874	3,678	3,710
Electric
Disaggregation of Revenue [Line Items]
Revenues	81,011	78,499	173,578	165,904
Electric | Intersegment eliminations
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Electric | Other
Disaggregation of Revenue [Line Items]
Revenues	8,417	8,425	17,538	16,678
Electric | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Revenues	79,308	77,953	171,339	166,696
Electric | Revenues out of scope
Disaggregation of Revenue [Line Items]
Revenues	1,703	546	2,239	(792)
Electric | Residential utility sales
Disaggregation of Revenue [Line Items]
Revenues	26,437	26,752	62,993	61,935
Electric | Commercial utility sales
Disaggregation of Revenue [Line Items]
Revenues	33,231	32,676	68,902	67,377
Electric | Industrial utility sales
Disaggregation of Revenue [Line Items]
Revenues	9,344	8,226	18,228	16,996
Electric | Other utility sales
Disaggregation of Revenue [Line Items]
Revenues	1,879	1,874	3,678	3,710
Natural gas distribution
Disaggregation of Revenue [Line Items]
Revenues	133,867	129,540	476,014	462,204
Natural gas distribution | Intersegment eliminations
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Natural gas distribution | Natural gas transportation
Disaggregation of Revenue [Line Items]
Revenues	10,706	10,084	22,276	21,263
Natural gas distribution | Other
Disaggregation of Revenue [Line Items]
Revenues	2,923	3,614	6,836	7,613
Natural gas distribution | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Revenues	131,466	128,433	477,962	461,197
Natural gas distribution | Revenues out of scope
Disaggregation of Revenue [Line Items]
Revenues	2,401	1,107	(1,948)	1,007
Natural gas distribution | Residential utility sales
Disaggregation of Revenue [Line Items]
Revenues	71,010	68,688	271,619	261,574
Natural gas distribution | Commercial utility sales
Disaggregation of Revenue [Line Items]
Revenues	41,250	40,820	163,043	157,711
Natural gas distribution | Industrial utility sales
Disaggregation of Revenue [Line Items]
Revenues	5,577	5,227	14,188	13,036
Natural gas distribution | Other utility sales
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Pipeline and midstream
Disaggregation of Revenue [Line Items]
Revenues	28,680	24,060	37,293	32,893
Pipeline and midstream | Intersegment eliminations
Disaggregation of Revenue [Line Items]
Revenues	(7,513)	(6,539)	(31,468)	(28,298)
Pipeline and midstream | Natural gas transportation
Disaggregation of Revenue [Line Items]
Revenues	24,804	21,287	49,862	43,105
Pipeline and midstream | Natural gas gathering
Disaggregation of Revenue [Line Items]
Revenues	2,396	2,310	4,517	4,580
Pipeline and midstream | Natural gas storage
Disaggregation of Revenue [Line Items]
Revenues	2,623	2,634	5,269	5,768
Pipeline and midstream | Other
Disaggregation of Revenue [Line Items]
Revenues	6,293	4,326	8,989	7,652
Pipeline and midstream | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Revenues	28,603	24,018	37,169	32,807
Pipeline and midstream | Revenues out of scope
Disaggregation of Revenue [Line Items]
Revenues	77	42	124	86
Construction materials and contracting
Disaggregation of Revenue [Line Items]
Revenues	595,799	509,388	822,911	722,672
Construction materials and contracting | Intersegment eliminations
Disaggregation of Revenue [Line Items]
Revenues	(168)	(235)	(264)	(336)
Construction materials and contracting | Intrasegment eliminations
Disaggregation of Revenue [Line Items]
Revenues	(145,925)	(125,567)	(181,066)	(159,837)
Construction materials and contracting | Contracting services
Disaggregation of Revenue [Line Items]
Revenues	297,124	247,558	380,164	321,622
Construction materials and contracting | Construction materials
Disaggregation of Revenue [Line Items]
Revenues	444,768	387,632	624,077	561,223
Construction materials and contracting | Other
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Construction materials and contracting | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Revenues	595,799	509,388	822,911	722,672
Construction materials and contracting | Revenues out of scope
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Construction services
Disaggregation of Revenue [Line Items]
Revenues	464,192	323,020	884,925	657,071
Construction services | Intersegment eliminations
Disaggregation of Revenue [Line Items]
Revenues	(721)	(540)	(849)	(550)
Construction services | Inside specialty contracting
Disaggregation of Revenue [Line Items]
Revenues	319,276	216,371	618,805	450,192
Construction services | Outside specialty contracting
Disaggregation of Revenue [Line Items]
Revenues	133,288	95,261	240,686	182,442
Construction services | Other
Disaggregation of Revenue [Line Items]
Revenues	9	103	26	17
Construction services | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Revenues	451,852	311,195	858,668	632,101
Construction services | Revenues out of scope
Disaggregation of Revenue [Line Items]
Revenues	12,340	11,825	26,257	24,970
Other
Disaggregation of Revenue [Line Items]
Revenues	24	90	43	146
Other | Intersegment eliminations
Disaggregation of Revenue [Line Items]
Revenues	(2,879)	(2,667)	(10,704)	(5,306)
Other | Other
Disaggregation of Revenue [Line Items]
Revenues	2,903	2,757	10,747	5,452
Other | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Revenues	24	90	43	146
Other | Revenues out of scope
Disaggregation of Revenue [Line Items]
Revenues	$ 0	$ 0	$ 0	$ 0

XML

Contract balances (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Contract assets	$ 153,641		$ 153,641		$ 104,239
Change in contract assets			49,402
Contract liabilities - current	(90,031)		(90,031)		(93,901)
Change in contract liabilities - current			3,870
Contract liabilities - noncurrent	(25)		(25)		(135)
Change in contract liabilities - noncurrent			110
Net contract assets	63,585		63,585		$ 10,203
Change in net contract assets			53,382
Amounts included in contract liability at the beginning of the period	22,600	$ 16,900	79,000	$ 68,900
Amounts from performance obligations satisfied in prior periods	$ 20,600	$ 2,600	$ 32,500	$ 5,300

XML

Revenue from contracts with customers Remaining performance obligations (Details 3) $ in Millions	Jun. 30, 2019 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Amount	$ 1,800.0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Amount	269.4
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Amount	248.6
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Amount	$ 2,300.0

XML

Business Combinations (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Business Combinations [Abstract]
Payments to Acquire Businesses, Gross	$ 32.1
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt	$ 1.2

XML

Discontinued operations Noncontrolling interest (Details)	Jun. 27, 2016	Jun. 24, 2016
WBI Energy | Dakota Prairie Refining, LLC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Previous percentage of ownership	50.00%	50.00%

XML

Major classes of assets and liabilities held for sale (Details 2) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Current assets:
Total current assets held for sale	$ 428	$ 430	$ 572
Noncurrent assets:
Total noncurrent assets held for sale	2,087	2,087	3,998
Current liabilities:
Total current liabilities held for sale	6,217	4,001	11,713
Discontinued operations, held-for-sale or disposed of by sale
Current assets:
Receivables, net	428	430	572
Income taxes receivable (a)	0	0	1,689
Total current assets held for sale	428	430	2,261
Noncurrent assets:
Net property, plant and equipment	0	0	1,236
Deferred income taxes	1,926	1,926	2,637
Other	161	161	162
Total noncurrent assets held for sale	2,087	2,087	4,035
Total assets held for sale	2,515	2,517	6,296
Current liabilities:
Accounts payable	82	80	0
Taxes payable	3,114	1,451	10,656
Other accrued liabilities	3,021	2,470	2,746
Total current liabilities held for sale	6,217	4,001	13,402
Noncurrent liabilities:
Deferred income taxes (b)	0	0	37
Total noncurrent liabilities held for sale	0	0	37
Total liabilities held for sale	$ 6,217	$ 4,001	$ 13,439

XML

Reconciliation of income and expenses (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from discontinued operations	$ (1,320)	$ (273)	$ (1,483)	$ 203
Discontinued operations, held-for-sale or disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Operating revenues	37	75	67	140
Operating expenses	1,778	435	2,023	609
Operating loss	(1,741)	(360)	(1,956)	(469)
Other income	0	0	0	12
Interest expense	0	0	0	575
Loss from discontinued operations before income taxes	(1,741)	(360)	(1,956)	(1,032)
Income taxes	(421)	(87)	(473)	(1,235)
Income (loss) from discontinued operations	$ (1,320)	$ (273)	$ (1,483)	$ 203

XML

Lease costs (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)
Leases [Abstract]
Operating lease cost	$ 10,387	$ 21,908
Variable lease cost	400	799
Short-term lease cost	40,474	57,712
Total lease costs	$ 51,261	$ 80,419
Weighted average remaining lease term	3 years 7 days	3 years 7 days
Weighted average discount rate	4.46%	4.46%
Cash paid for amounts included in the measurement of lease liabilities		$ 21,798

XML

Operating lease liabilities undiscounted cash flows maturity schedule (Details 2) $ in Thousands	Jun. 30, 2019 USD ($)
Leases [Abstract]
Remainder of 2019	$ 19,276
2020	30,065
2021	22,850
2022	14,816
2023	8,941
Thereafter	51,335
Total	147,283
Less discount	28,496
Total operating lease liabilities	$ 118,787

XML

Leases Operating lease future minimum lease payments (Details 3) $ in Thousands	Dec. 31, 2018 USD ($)
Operating leases future minimum lease payments due [Abstract]
2019	$ 37,740
2020	26,255
2021	17,868
2022	11,647
2023	7,278
Thereafter	$ 49,098

XML

Lessor accounting (Details 4) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)
Leases [Abstract]
Operating Lease, Lease Income	$ 12.5	$ 26.5
Lessor, Operating Lease, Payments to be Received, Next Twelve Months	$ 10.6	$ 10.6

XML

Goodwill rollforward (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Goodwill [Roll Forward]
Balance at beginning of period	$ 664,922	$ 631,791	$ 631,791
Goodwill acquired during the year	14,473	10,583	33,131
Balance at end of period	679,395	642,374	664,922
Natural gas distribution
Goodwill [Roll Forward]
Balance at beginning of period	345,736	345,736	345,736
Goodwill acquired during the year	0	0	0
Balance at end of period	345,736	345,736	345,736
Construction materials and contracting
Goodwill [Roll Forward]
Balance at beginning of period	209,421	176,290	176,290
Goodwill acquired during the year	14,473	10,583	33,131
Balance at end of period	223,894	186,873	209,421
Construction services
Goodwill [Roll Forward]
Balance at beginning of period	109,765	109,765	109,765
Goodwill acquired during the year	0	0	0
Balance at end of period	$ 109,765	$ 109,765	$ 109,765

XML

Other intangible assets (Details 2) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Intangible assets, net (excluding goodwill)	$ 11,323,000	$ 4,190,000	$ 11,323,000	$ 4,190,000	$ 10,815,000
Amortization of intangible assets	500,000	300,000	1,100,000	700,000
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	14,601,000	15,587,000	14,601,000	15,587,000	22,720,000
Intangible assets, less accumulated amortization	5,629,000	13,191,000	5,629,000	13,191,000	13,535,000
Intangible assets, net (excluding goodwill)	8,972,000	2,396,000	8,972,000	2,396,000	9,185,000
Noncompete agreements
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	3,179,000	2,546,000	3,179,000	2,546,000	2,605,000
Intangible assets, less accumulated amortization	1,798,000	1,877,000	1,798,000	1,877,000	1,956,000
Intangible assets, net (excluding goodwill)	1,381,000	669,000	1,381,000	669,000	649,000
Other intangible assets
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	6,578,000	6,458,000	6,578,000	6,458,000	6,458,000
Intangible assets, less accumulated amortization	5,608,000	5,333,000	5,608,000	5,333,000	5,477,000
Intangible assets, net (excluding goodwill)	$ 970,000	$ 1,125,000	970,000	$ 1,125,000	$ 981,000
Construction materials and contracting [Member] | Series of Individually Immaterial Business Acquisitions [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 1,600,000

XML

Goodwill and other intangible assets Future amortization expense (Details 3) $ in Thousands	Jun. 30, 2019 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2019	$ 938
2020	1,644
2021	1,254
2022	1,231
2023	1,249
Thereafter	$ 5,007

XML

Regulatory assets and liabilities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Regulatory Assets and Liabilities
Regulatory Assets	$ 407,674	$ 340,117
Regulatory Liabilities	505,687	521,432
Net Regulatory Position	(98,013)	(181,315)
Regulatory assets not earning a rate of return	290,500	313,500
Taxes recoverable from/refundable to customers
Regulatory Assets and Liabilities
Regulatory Liabilities	264,025	277,833
Plant removal
Regulatory Assets and Liabilities
Regulatory Liabilities	175,003	173,143
Natural gas costs refundable through rate adjustments
Regulatory Assets and Liabilities
Regulatory Liabilities	25,737	29,995
Pension and postretirement benefits
Regulatory Assets and Liabilities
Regulatory Liabilities	12,967	15,264
Other Regulatory Assets/Liabilities
Regulatory Assets and Liabilities
Regulatory Liabilities	$ 27,955	25,197
Pension and postretirement benefits
Regulatory Assets and Liabilities
Estimated Recovery Period	(e)
Regulatory Assets	$ 165,861	165,898
Natural gas costs recoverable through rate adjustments
Regulatory Assets and Liabilities
Estimated Recovery Period	Up to 3 years
Regulatory Assets	$ 94,543	42,652
Asset Retirement Obligation Costs
Regulatory Assets and Liabilities
Estimated Recovery Period	Over plant lives
Regulatory Assets	$ 64,215	60,097
Cost recovery mechanisms
Regulatory Assets and Liabilities
Estimated Recovery Period	Up to 4 years
Regulatory Assets	$ 18,488	17,948
Manufactured gas plant site remediation
Regulatory Assets and Liabilities
Estimated Recovery Period	-
Regulatory Assets	$ 15,619	17,068
Taxes recoverable from/refundable to customers
Regulatory Assets and Liabilities
Estimated Recovery Period	Over plant lives
Regulatory Assets	$ 11,755	11,946
Plant removal
Regulatory Assets and Liabilities
Estimated Recovery Period	-
Regulatory Assets	$ 16,933	0
Conservation programs
Regulatory Assets and Liabilities
Estimated Recovery Period	Up to 1 year
Regulatory Assets	$ 7,627	7,494
Long-term debt refinancing costs
Regulatory Assets and Liabilities
Estimated Recovery Period	Up to 19 years
Regulatory Assets	$ 4,592	4,898
Costs related to identifying generation development
Regulatory Assets and Liabilities
Estimated Recovery Period	Up to 8 years
Regulatory Assets	$ 2,280	2,508
Other Regulatory Assets/Liabilities
Regulatory Assets and Liabilities
Estimated Recovery Period	Up to 20 years
Regulatory Assets	$ 5,761	$ 9,608

XML

Fair value measurements Insurance contracts (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Investments used to satisfy nonqualified benefit plans obligations	$ 83,100,000	$ 78,300,000	$ 83,100,000	$ 78,300,000	$ 73,800,000
Net unrealized gain (loss) on investments used to satisfy obligations under nonqualified benefit plans	$ 2,900,000	$ 1,400,000	$ 9,300,000	$ 900,000

XML

Available-for-sale securities (Details 2) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Available-for-sale securities [Abstract]
Cost	$ 10,951	$ 10,652	$ 10,257
Gross Unrealized Gains	94	21	6
Gross Unrealized Losses	35	162	238
Fair Value	11,010	10,511	10,025
Mortgage-backed securities
Available-for-sale securities [Abstract]
Cost	10,771	10,473	10,015
Gross Unrealized Gains	94	21	6
Gross Unrealized Losses	35	162	236
Fair Value	10,830	10,332	9,785
U.S. Treasury securities
Available-for-sale securities [Abstract]
Cost	180	179	242
Gross Unrealized Gains	0	0	0
Gross Unrealized Losses	0	0	2
Fair Value	$ 180	$ 179	$ 240

XML

Fair value measurements (Details 3) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Concentration risks, percentage [Abstract]
Percentage in fixed-income and other investments	51.00%	53.00%	48.00%
Percentage investment in common stock of large-cap companies	22.00%	21.00%	23.00%
Percentage investment in common stock of mid-cap companies	12.00%	11.00%	13.00%
Percentage investment in common stock of small-cap companies	10.00%	10.00%	11.00%
Percentage investment in target date investments	4.00%	3.00%	3.00%
Percentage investment in cash and cash equivalents	1.00%	2.00%	2.00%
Fair value, measurements, recurring
Fair value measurements [Line Items]
Assets, fair value disclosure	$ 104,960	$ 95,148	$ 98,241
Fair value, measurements, recurring | Money market funds
Fair value measurements [Line Items]
Assets, fair value disclosure	10,816	10,799	9,904
Fair value, measurements, recurring | Insurance contract
Fair value measurements [Line Items]
Assets, fair value disclosure	83,134	73,838	78,312
Fair value, measurements, recurring | Mortgage-backed securities
Fair value measurements [Line Items]
Assets, fair value disclosure	10,830	10,332	9,785
Fair value, measurements, recurring | U.S. Treasury securities
Fair value measurements [Line Items]
Assets, fair value disclosure	180	179	240
Fair value, measurements, recurring | Fair value, inputs, level 2
Fair value measurements [Line Items]
Assets, fair value disclosure	104,960	95,148	98,241
Fair value, measurements, recurring | Fair value, inputs, level 2 | Money market funds
Fair value measurements [Line Items]
Assets, fair value disclosure	10,816	10,799	9,904
Fair value, measurements, recurring | Fair value, inputs, level 2 | Insurance contract
Fair value measurements [Line Items]
Assets, fair value disclosure	83,134	73,838	78,312
Fair value, measurements, recurring | Fair value, inputs, level 2 | Mortgage-backed securities
Fair value measurements [Line Items]
Assets, fair value disclosure	10,830	10,332	9,785
Fair value, measurements, recurring | Fair value, inputs, level 2 | U.S. Treasury securities
Fair value measurements [Line Items]
Assets, fair value disclosure	$ 180	$ 179	$ 240

XML

Fair value measurements Fair value measurements (Details 4)	3 Months Ended
	Jun. 30, 2019 USD ($)
Fair Value Disclosures [Abstract]
Investments, Fair Value Disclosure	$ 0
Asset Impairment Charges	$ 2,000,000.0

XML

Fair value measurements (Details 5) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Fair value, balance sheet grouping [Line Items]
Long-term debt	$ 2,379,806	$ 2,108,695
Carrying Amount
Fair value, balance sheet grouping [Line Items]
Long-term debt	2,379,806	2,108,695	$ 1,852,910
Fair Value
Fair value, balance sheet grouping [Line Items]
Long-term debt, fair value	$ 2,521,325	$ 2,183,819	$ 1,949,564

XML

Short-term debt (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Apr. 12, 2019	Mar. 22, 2019	Dec. 31, 2018	Jun. 30, 2018
Short-term Debt [Line Items]
Short-term borrowings	$ 89,983			$ 0	$ 0
Cascade Natural Gas [Member] | Term Loan Agreements
Short-term Debt [Line Items]
Short-term borrowings			$ 40,000
Centennial Energy Holdings, Inc. [Member] | Term Loan Agreements
Short-term Debt [Line Items]
Short-term borrowings		$ 50,000

XML

Long-term debt Issued (Details 2) - USD ($) $ in Thousands	Jun. 30, 2019	Jun. 13, 2019	Jun. 07, 2019	Apr. 04, 2019	Dec. 31, 2018	Apr. 25, 2017
Long-term debt issued [Line Items]
Long-term debt	$ 2,379,806				$ 2,108,695
Senior Notes
Long-term debt issued [Line Items]
Long-term debt	$ 1,656,000				1,381,000
Weighted Average Interest Rate	4.52%
Credit Agreements
Long-term debt issued [Line Items]
Long-term debt	$ 11,075				$ 110,100
Weighted Average Interest Rate	5.50%
Centennial Energy Holdings, Inc. [Member] | Senior Notes
Long-term debt issued [Line Items]
Long-term debt				$ 150,000
Weighted Average Interest Rate				4.60%
Cascade Natural Gas [Member] | Senior Notes
Long-term debt issued [Line Items]
Long-term debt		$ 75,000
Weighted Average Interest Rate		3.93%
Cascade Natural Gas [Member] | Credit Agreements
Long-term debt issued [Line Items]
Long-term debt			$ 100,000			$ 75,000
Intermountain Gas Company [Member] | Senior Notes
Long-term debt issued [Line Items]
Long-term debt		$ 50,000
Weighted Average Interest Rate		3.92%

XML

Long-term debt outstanding (Details 3) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Long-term debt outstanding [Line Items]
Long-term debt	$ 2,379,806	$ 2,108,695
Long-term debt due within one year	51,822	251,854	$ 109,199
Long-term debt	$ 2,327,984	1,856,841	$ 1,743,711
Senior Notes
Long-term debt outstanding [Line Items]
Weighted Average Interest Rate	4.52%
Long-term debt	$ 1,656,000	1,381,000
Commercial Paper
Long-term debt outstanding [Line Items]
Weighted Average Interest Rate	2.77%
Long-term debt	$ 433,350	338,100
Term Loan Agreements
Long-term debt outstanding [Line Items]
Weighted Average Interest Rate	2.75%
Long-term debt	$ 209,800	209,800
Credit Agreements
Long-term debt outstanding [Line Items]
Weighted Average Interest Rate	5.50%
Long-term debt	$ 11,075	110,100
Medium-term Notes
Long-term debt outstanding [Line Items]
Weighted Average Interest Rate	6.68%
Long-term debt	$ 50,000	50,000
Other Notes
Long-term debt outstanding [Line Items]
Weighted Average Interest Rate	5.01%
Long-term debt	$ 26,105	25,229
Long-term Debt
Long-term debt outstanding [Line Items]
Unamortized Debt Issuance Costs	6,164	5,207
Discount	$ 360	$ 327

XML

Schedule of debt maturities (Details 4) $ in Thousands	Jun. 30, 2019 USD ($)
Long-term debt maturities [Line Items]
Remainder of 2019	$ 51,761
2020	15,926
2021	386,430
2022	147,434
2023	125,188
Thereafter	$ 1,659,591

XML

Cash flow information (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Interest, net	$ 45,702	$ 39,467
Income taxes paid, net	4,124	4,034
AFUDC borrowed	1,200	1,000
Right-of-use assets obtained in exchange for new operating lease liabilities	24,990	0	$ 0
Property, plant and equipment additions in accounts payable	27,312	30,985	42,355
Debt assumed in connection with a business combination	1,163	0	0
Issuance of common stock in connection with a business combination	0	17,993	$ 18,186
Continuing and discontinued operations
Income taxes paid, net	$ 2,000	$ 3,100

XML

Business segment data (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Segment Reporting Information [Line Items]
Revenues	$ 1,303,573		$ 1,064,597		$ 2,394,764	$ 2,040,890
Operating Income (Loss)	97,311		73,992		161,530	143,368
Income from continuing operations	63,145		44,075		104,234	86,036
Income (loss) from discontinued operations, net of tax	(1,320)		(273)		(1,483)	203
Net income	61,825	$ 40,926	43,802	$ 42,437	102,751	86,239
Electric
Segment Reporting Information [Line Items]
Revenues	81,011		78,499		173,578	165,904
Operating Income (Loss)	9,791		13,027		27,779	31,182
Natural gas distribution
Segment Reporting Information [Line Items]
Revenues	133,867		129,540		476,014	462,204
Operating Income (Loss)	(2,621)		(4,371)		47,696	44,169
Pipeline and midstream
Segment Reporting Information [Line Items]
Revenues	28,680		24,060		37,293	32,893
Operating Income (Loss)	10,698		8,482		20,602	16,650
Construction materials and contracting
Segment Reporting Information [Line Items]
Revenues	595,799		509,388		822,911	722,672
Operating Income (Loss)	46,178		37,301		4,597	10,992
Construction services
Segment Reporting Information [Line Items]
Revenues	464,192		323,020		884,925	657,071
Operating Income (Loss)	31,966		19,356		59,431	39,990
Other
Segment Reporting Information [Line Items]
Revenues	24		90		43	146
Operating Income (Loss)	1,299		197		1,425	385
Intersegment eliminations
Segment Reporting Information [Line Items]
Revenues	(11,281)		(9,981)		(43,285)	(34,490)
Intersegment eliminations | Electric
Segment Reporting Information [Line Items]
Revenues	0		0		0	0
Intersegment eliminations | Natural gas distribution
Segment Reporting Information [Line Items]
Revenues	0		0		0	0
Intersegment eliminations | Pipeline and midstream
Segment Reporting Information [Line Items]
Revenues	(7,513)		(6,539)		(31,468)	(28,298)
Intersegment eliminations | Construction materials and contracting
Segment Reporting Information [Line Items]
Revenues	(168)		(235)		(264)	(336)
Intersegment eliminations | Construction services
Segment Reporting Information [Line Items]
Revenues	(721)		(540)		(849)	(550)
Intersegment eliminations | Other
Segment Reporting Information [Line Items]
Revenues	(2,879)		(2,667)		(10,704)	(5,306)
Total intersegment operating revenues
Segment Reporting Information [Line Items]
Revenues	0		0		0	0
Regulated operation
Segment Reporting Information [Line Items]
Revenues	236,247		226,684		675,864	651,143
Income from continuing operations	7,597		7,521		66,606	58,686
Regulated operation | Electric
Segment Reporting Information [Line Items]
Revenues	81,011		78,499		173,578	165,904
Income from continuing operations	7,471		9,133		22,976	22,216
Regulated operation | Natural gas distribution
Segment Reporting Information [Line Items]
Revenues	133,867		129,540		476,014	462,204
Income from continuing operations	(6,252)		(6,852)		30,248	25,771
Regulated operation | Pipeline and midstream
Segment Reporting Information [Line Items]
Revenues	21,369		18,645		26,272	23,035
Income from continuing operations	6,378		5,240		13,382	10,699
Regulated operation | Intersegment eliminations
Segment Reporting Information [Line Items]
Revenues	7,426		6,446		31,349	28,182
Regulated operation | Intersegment eliminations | Electric
Segment Reporting Information [Line Items]
Revenues	0		0		0	0
Regulated operation | Intersegment eliminations | Natural gas distribution
Segment Reporting Information [Line Items]
Revenues	0		0		0	0
Regulated operation | Intersegment eliminations | Pipeline and midstream
Segment Reporting Information [Line Items]
Revenues	7,426		6,446		31,349	28,182
Nonregulated operation
Segment Reporting Information [Line Items]
Revenues	1,067,326		837,913		1,718,900	1,389,747
Income from continuing operations	55,548		36,554		37,628	27,350
Nonregulated operation | Pipeline and midstream
Segment Reporting Information [Line Items]
Revenues	7,311		5,415		11,021	9,858
Income from continuing operations	742		467		579	288
Nonregulated operation | Construction materials and contracting
Segment Reporting Information [Line Items]
Revenues	595,799		509,388		822,911	722,672
Income from continuing operations	29,166		24,336		(5,283)	815
Nonregulated operation | Construction services
Segment Reporting Information [Line Items]
Revenues	464,192		323,020		884,925	657,071
Income from continuing operations	22,845		14,088		42,869	29,179
Nonregulated operation | Other
Segment Reporting Information [Line Items]
Revenues	24		90		43	146
Income from continuing operations	2,795		(2,337)		(537)	(2,932)
Nonregulated operation | Intersegment eliminations
Segment Reporting Information [Line Items]
Revenues	3,855		3,535		11,936	6,308
Nonregulated operation | Intersegment eliminations | Pipeline and midstream
Segment Reporting Information [Line Items]
Revenues	87		93		119	116
Nonregulated operation | Intersegment eliminations | Construction materials and contracting
Segment Reporting Information [Line Items]
Revenues	168		235		264	336
Nonregulated operation | Intersegment eliminations | Construction services
Segment Reporting Information [Line Items]
Revenues	721		540		849	550
Nonregulated operation | Intersegment eliminations | Other
Segment Reporting Information [Line Items]
Revenues	$ 2,879		$ 2,667		$ 10,704	$ 5,306

XML

Employee benefit plans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Qualified plan | Underfunded plan | Pension benefits
Defined benefit plan disclosure, net periodic benefit cost [Line Items]
Service cost	$ 0	$ 0	$ 0	$ 0
Interest cost	3,840	3,488	7,613	7,295
Expected return on assets	(3,998)	(5,379)	(9,118)	(10,377)
Amortization of prior service credit	0	0	0	0
Amortization of net actuarial (gain) loss	1,418	1,721	2,773	3,503
Net periodic benefit cost (credit), including amount capitalized	1,260	(170)	1,268	421
Less amount capitalized	0	0	0	0
Net periodic benefit cost (credit)	1,260	(170)	1,268	421
Qualified plan | Overfunded Plan [Member] | Other postretirement benefits
Defined benefit plan disclosure, net periodic benefit cost [Line Items]
Service cost	227	340	571	747
Interest cost	713	672	1,493	1,450
Expected return on assets	(1,182)	(1,266)	(2,402)	(2,433)
Amortization of prior service credit	(228)	(348)	(577)	(697)
Amortization of net actuarial (gain) loss	(42)	82	55	320
Net periodic benefit cost (credit), including amount capitalized	(512)	(520)	(860)	(613)
Less amount capitalized	27	43	58	83
Net periodic benefit cost (credit)	(539)	(563)	(918)	(696)
Nonqualified plan | Unfunded plan | Supplemental employee retirement plans
Defined benefit plan disclosure, net periodic benefit cost [Line Items]
Net periodic benefit cost (credit)	$ 1,100	$ 1,100	$ 2,200	$ 2,200

XML

MNPUC (Details) - Tax Cuts and Jobs Act [Member] - Natural gas rate proceeding [Member] - MNPUC [Member]	Apr. 18, 2019 USD ($)
Public Utilities, General Disclosures [Line Items]
Public Utilities, Approved Rate Increase (Decrease), Amount	$ (400,000)
Public Utilities, Approved One-Time Increase (Decrease) to Customers, Amount	$ (600,000)

XML

MTPSC (Details 2) - MTPSC - USD ($)	Apr. 24, 2019	Mar. 07, 2019	Sep. 28, 2018
Electric rate proceeding
Public Utilities, General Disclosures [Line Items]
Public utilities, requested rate increase (decrease), amount	$ 9,000,000.0		$ 11,900,000
Public utilities, requested rate increase (decrease), percentage			18.90%
Public utilities, interim rate increase (decrease), amount		$ 7,900,000
Public utilities, interim rate increase (decrease), percentage		12.80%
Future Electric Rate Proceeding [Member]
Public Utilities, General Disclosures [Line Items]
Public utilities, requested rate increase (decrease), amount	$ 300,000

XML

NDPSC (Details 3) - NDPSC - USD ($)	Jul. 19, 2019	Jan. 23, 2019
Subsequent Event [Member] | Electric rate proceeding
Public Utilities, General Disclosures [Line Items]
Public utilities, requested rate increase (decrease), amount	$ 1,500,000
Tax Cuts and Jobs Act [Member] | Natural gas rate proceeding [Member]
Public Utilities, General Disclosures [Line Items]
Public Utilities, Approved Rate Increase (Decrease), Amount		$ (168,000)
Public Utilities, Approved One-Time Increase (Decrease) to Customers, Amount		$ (200,000)

XML

OPUC (Details 4) - Tax Cuts and Jobs Act [Member] - Natural gas rate proceeding [Member] - OPUC - USD ($)	Mar. 14, 2019	May 31, 2018
Public Utilities, General Disclosures [Line Items]
Public utilities, requested rate increase (decrease), amount		$ 2,300,000
Public utilities, requested rate increase (decrease), percentage		3.50%
Public Utilities, Approved Rate Increase (Decrease) in Revenues Only, Amount	$ 1,700,000
Public Utilities, Approved Rate Increase (Decrease) in Taxes Only, Amount	(500,000)
Public Utilities, Approved Rate Increase (Decrease), Amount	$ 1,200,000

XML

WUTC (Details 5) - Natural gas rate proceeding [Member] - WUTC - USD ($) $ in Millions	May 31, 2019	Mar. 29, 2019	Mar. 28, 2019
Public Utilities, General Disclosures [Line Items]
Public Utilities, Approved Rate Increase (Decrease), Amount			$ 48.0
Public utilities, requested rate increase (decrease), amount	$ 1.6	$ 12.7
Public utilities, requested rate increase (decrease), percentage	0.70%	5.50%

XML

WYPSC (Details 6) - WYPSC - USD ($)	Jul. 16, 2019	May 23, 2019	Apr. 08, 2019
Natural gas rate proceeding [Member]
Public Utilities, General Disclosures [Line Items]
Public utilities, requested rate increase (decrease), amount		$ 1,100,000
Public utilities, requested rate increase (decrease), percentage		7.00%
Tax Cuts and Jobs Act [Member] | Electric rate proceeding
Public Utilities, General Disclosures [Line Items]
Public Utilities, Approved Rate Increase (Decrease), Amount			$ (1,100,000)
Public utilities, approved rate increase (decrease), percentage			(4.20%)
Public Utilities, Approved One-Time Increase (Decrease) to Customers, Amount			$ (1,600,000)
Subsequent Event [Member] | Tax Cuts and Jobs Act [Member] | Natural gas rate proceeding [Member]
Public Utilities, General Disclosures [Line Items]
Public Utilities, Proposed One-Time Increase (Decrease) to Customers, Amount	$ (190,000)

XML

FERC (Details 7) $ in Millions	May 30, 2019 USD ($)
Tax Cuts and Jobs Act [Member] | Natural gas rate proceeding [Member] | FERC [Member]
Public Utilities, General Disclosures [Line Items]
Public utilities, interim rate increase (decrease), amount	$ 4.5

XML

Litigation (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Loss Contingencies [Line Items]
Potential liabilities related to litigation and environmental matters	$ 32.1	$ 30.4	$ 31.1

XML

Environmental matters (Details 2) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jan. 06, 2017
Portland Harbor Site
Site Contingency [Line Items]
Environmental matters investigative costs	$ 100,000,000
Environmental matters, estimated costs		$ 1,000,000,000
Eugene, OR manufactured gas plant site
Site Contingency [Line Items]
Total estimated costs for site remediation	2,400,000
Incurred costs for site remediation	$ 400,000
Estimated proportional share of cleanup liability	50.00%
Environmental matters accrual for site remediation	$ 1,000,000.0
Bremerton, WA manufactured gas plant site
Site Contingency [Line Items]
Environmental matters accrual for site remediation	6,400,000
Total estimated costs for site remedial investigation and feasibility study	7,600,000
Incurred costs for site remedial investigation and feasibility study	3,600,000
Environmental matters accrual of investigative costs	4,000,000.0
Bellingham, WA manufactured gas plant site
Site Contingency [Line Items]
Site contingency, loss exposure not accrued, preferred alternative estimate	9,300,000
Missoula, MT manufactured gas plant site
Site Contingency [Line Items]
Total estimated costs for site remediation	560,000
Minimum | Bremerton, WA manufactured gas plant site
Site Contingency [Line Items]
Site contingency, loss exposure not accrued, best estimate	340,000
Minimum | Bellingham, WA manufactured gas plant site
Site Contingency [Line Items]
Site contingency, loss exposure not accrued, best estimate	8,000,000.0
Maximum | Bremerton, WA manufactured gas plant site
Site Contingency [Line Items]
Site contingency, loss exposure not accrued, best estimate	6,400,000
Maximum | Bellingham, WA manufactured gas plant site
Site Contingency [Line Items]
Site contingency, loss exposure not accrued, best estimate	$ 20,400,000

XML

Guarantees (Details 3)	Jun. 30, 2019 USD ($)
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	$ 274,200,000
Fixed maximum amounts guaranteed by year 2019	85,500,000
Fixed maximum amounts guaranteed by year 2020	181,400,000
Fixed maximum amounts guaranteed by year 2021	700,000
Fixed maximum amounts guaranteed by year 2022	500,000
Fixed maximum amounts guaranteed by year 2023	500,000
Fixed maximum amounts guaranteed, thereafter	1,600,000
No scheduled maturity date	4,000,000.0
Amount outstanding under guarantees that is reflected on balance sheet	0
Letters of credit	32,800,000
Letters of credit set to expire - 2019	29,400,000
Letters of credit set to expire - 2020	3,400,000
Outstanding letters of credit	0
Amount of surety bonds outstanding	$ 1,100,000,000

XML

Variable interest entities (Details 4) $ in Millions	Jun. 30, 2019 USD ($)
Fuel contract
Variable Interest Entities [Line Items]
Variable interest entity, reporting entity involvement, maximum loss exposure, amount	$ 37.3