Good afternoon, my name is Jamaria [ph] and I will be your conference facilitator. At this time I would like to welcome everyone to the MDU Resources Group First Quarter 2008 Earnings Results Conference Call. [Operator Instructions] This call will be available for replay beginning at 4 PM Eastern Time today through 11:59 PM Eastern Time, on May 16. The conference ID number for the replay is 42706357. Again, the conference ID number for the replay 42706357. The number to dial for the replay is 1800-642-1687 or 706-645-9291. I would now like to turn the conference over to Vernon Raile, Executive Vice President, Treasurer, and Chief Financial Officer of MDU Resources Group. Thank you. Mr. Raile, you may begin your conference.

Welcome to our earnings release conference call. Before I turn the presentation over to Terry Hildestad, our President and Chief Executive Officer, I'd like to mention that this conference call is being broadcast live to the public over the Internet and slides will accompany our remarks. If you would like to view the slides go to our website at www.mdu.com and follow the link to the conference call. During the course of this presentation, we will make certain forward-looking statements within the meaning of section 21E of the Securities and Exchange Act of 1934. Although the company believes that its expectations and beliefs are based on reasonable assumptions, actual results may differ materially. For a discussion of factors that may cause actual results to differ, refer to item 1A, Risk Factors in our most Form 10-K and the risk factors section in our most recent Form 8-K. Our format today will include formal remarks by Terry followed by a Q&A session. Other members of our management team who will be available to answer questions during the Q&A session of the conference call today are: Steve Bietz, President and CEO of WBI Holdings, Bill Schneider, President and CEO of Knife River Corporation, John Harp, President and CEO of MDU Construction Services Group, Dave Goodin, President of Montana-Dakota, Great Plains Natural Gas and Cascade Natural Gas; Doran Schwartz, Vice President and Chief Accounting officer for MDU Resources Group. With that, I'll turn the presentation over to Terry for his formal remarks. Terry?

Thank you, Vernon, and welcome. I'm pleased that you all joined us to review MDU Resources' record first quarter results. Consolidated earnings from continuing operations for the first quarter 2008 were $70.9 million compared to $41.2 million reported one year ago. Earnings per common share from continuing operations were $0.39, up 70% from 2007. Strong results underscore the value of our diversified business strategy. While our Construction Material segment volumes and margins declined as a result of the economic slowdown, our natural gas and oil production, pipeline and energy services, construction services and electric and natural gas distribution operations all had record first quarters. Higher commodity prices coupled with production increases contributed to the exceptional results at our Natural Gas and Oil Production group. The grassland expansion that occurred late last year contributed to the increased throughput at our pipeline operations. Continued success was achieved at our Construction Service segment driven by an increase in construction workloads and higher equipment sales and rentals and combined earnings at Electric and Natural Gas distribution business more than doubled. Moving to a more detailed review of the individual operating results. Our Natural Gas and Oil Production business reported record quarterly earnings of $50.6 million, an outstanding 65% increase compared to the $30.6 million reported in 2007. The increase was the result of combined natural gas and oil production increases of 8%, 89% higher average realized oil prices and average realized natural gas prices that were 17% higher in 2007. We closed down the purchase of natural gas properties in East Texas late January. These properties raised our proved reserves by 14% and have added additional on-proved reserve potential. The acquired properties are performing well. We're pleased with the results of our initial drilling. We expect to drill approximately 25 operated wells in this…

[Operator instructions]. Your first question comes from the line of Paul Patterson from Glenrock Associates.

Good afternoon, guys.

Good afternoon, Paul.

Well, I wanted to sort of just based on the margins in the Construction Services business, you guys mentioned in your release that you expect the margins to be slightly lower in 2008 and 2007 and that your backlog looks a little bit sort of flattish, yet it seems that the first quarter, you guys had a higher margin plans what's going on there, I guess?

Well, actually I think our margins were off when you compare the first quarter of last year to the first quarter of this year. A couple of things, some of our work mix is changed somewhat Paul, some of the work that we had last year were hard money, lump sum numbers and some of our work did... some of our larger work is on a documented cost plus a fee, which lowers our margins but obviously we can be able to manage our risk and the other prices, we are seeing right now are commodity increases, steel prices have increased to 100%, since the first year, we're seeing some increases obviously in fuel & gas and also copper hit over $4 or a pound here in the last... in the last quarter.

Okay. So when I'm looking at the three quarters ended March 31 on page 9, you're saying that the margins have decreased three months over the three months of ’07 versus ’08?

Our overall margins have decreased.

I guess... define margins, I guess what you mean by that, because...

I 'm talking about our operating margins.

Okay. And what are they?

1%:

Okay, okay. So what's you're saying is okay, I understand you correctly and they were... what were they in '07?

11.3%.

Okay. And then in terms of the Bakken play, what... when does it finally up and running, what do you think. I mean how big this could be in terms of, in order you got some well, you've done and what have you... where do you see that going?

Paul, this is Steve Bietz. Certainly it is an exciting area for us, as we said we've got a pretty good... pretty significant acreage position up in the area, currently it is about 75,000 net acres, any CR activity planned for this year we expect to participate some 50 wells of which about… 50 to 60 wells, which about half of that will be our operated where we will conduct the drilling, or have the drilling done I should say. As we go forward, I guess we will continue to kind of monitor results certainly would expect. If things continue where there at it provides quite a bit of drilling opportunity as we go forward here.

I hear you, I guess, I’m trying to get sort of, just sort of sense of general range of what you think the reserves might be here, what production could come out of there after you guys have had a few years to work on it. I mean I know it's early and I know you guys, but you guys sound excited and it does exciting, so I guess I'm wondering if you could just give us any kind of sense on that or would you just want to wait and see?

Paul, I guess I would say, we are kind of wait and see. Certainly the flow rates and kind of the activity not only with our properties but the properties in the area, which we are operating or active in is encouraging. In terms of reserves we've haven't had our production on for more than about a month now. We are certainly going to be working on what is our ultimate recoveries from those wells and we will continue to look at that as we go forward, but I guess we will kind of work at it as we go here and keep moving forward.

Okay guys. I appreciate it.

Thank you Paul.

Your next question comes from the line of Michael Griffins [ph] from Robert W. Baird.

Good morning or good afternoon gentlemen.

Good afternoon Michael.

On the Construction Material side, in the past you've always said that the market players have been fairly disciplined realizing the long-term value, but it seems to me your comments here now is that the market has started to get more aggressive on the pricing, is that indeed the case?

Michael, I think what you are asking is on the bidding side if it's gotten more aggressive and if that's correct that is true. What we have seen of course is the biggest impact, as you will know in the general construction field has been the slow down on the residential side. And, what we typically see and by the way our management team has been through two or three of these cycles, so we kind to know what to expect but what we do see is we will see some of the residential players will shift on over to the public work side on the small work that is. They can't do the bigger volume work the interstate work that sort of thing. But on the smaller size project, yes there has been some more aggressive bidding. Now the thing I want to remind you though is and we have said this all along because we know that's the tendency we really emphasize our bidding discipline as we go into the slow down. And consequently the pricing may get tough, but we don't go out and work just for the experience. We try and keep our margins as high as we possibly can.

Okay and hence the significant decline in the actual volume sold during the quarter, you are not willing to sacrifice prices on those volumes?

That's always a balance between price and volumes. Where our biggest downturn on the volume came out of the Northern California and our Northwest regions. Those are markets, as you know they have been very strong on the residential side and finally that of course is really slow down. We have a lot of the rest of our markets are doing well and we expect the volume decreases that you have seen for the first quarter, we are not going to see that continue at that rate for the rest of the year.

Okay and on the utility side, other than the various approvals that you have listed, one there is an air permit. I am assuming that's going to be a major component of the whole plan when is that prospectively going to be issued?

Michael, this is Dave Goodin. The air permit you are referring to is South Dakota air permit and we expect that that would be third quarter of this year.

Okay and one final question for Mr. Bietz. On the interest side for the Bakken, you less the amount of wells you are going to participate in the ownership, but do you have any sense as to your percentage ownership over all these wells?

Michael, that's kind of always a challenging question. If you look at the wells and where we are operating in the three wells that we have talked about, our interest... our working interest has generally been in the 30% to 60% range. I would say that's representative of what we would expect in terms of the wells where we are drilling and we are the operator so on about half of our expected wells there. On the balance of those wells it’s really going to depend upon the particular well locations. Our interest could be rather small and probably could range up to a size say 25% or so.

Okay. Thank you.

Yeah.

Thanks Michael.

Your next question comes from the line of Paul Ridzon from KeyBanc.

You indicated your kind of diverting resources to Bakken, what does that… where does that leaves coal-bed methane in the federal lands?

Paul, what we had in our original plans for the coal-bed area, we did not assume any drilling on federal acreage and we have not look to redeploy capital right now from our coal-bed areas up to Bakken. So we are really continuing with our expected drilling down there on fee and state acreage. Should we get some opportunity to drill on federal acreage, I guess, we will then evaluate that and go from there.

And you indicated you have been through a few business cycles, what's is your view on kind of the depth and duration of this current one around?

Paul, I assume you are talking about Knife River and Paul we expected next year 2009, we are going to be getting closer to the bottom, are we going to actually get it we don't know. I guess, the question that everybody is asking is how long are we going to be there in and we've really don't that, but the good news I guess is, if we look at the sunny side of the street is, we are starting to see some of the competition thin out is the market stays low for a while, but on the residential side, I think you know may be later part of 2009 before we are on bottom and then hopefully we will start bouncing off, back off of that.

And just at Construction Materials, you expect revenues and earnings to be off of ‘07, just from an earnings standpoint, could you hang some more kind of character on that. Is it significantly slightly, how would you characterize it from where you are sit now?

Paul, I would like to give you an answer, but I am not going to.

Paul, this is Terry Hildestad. We have included that in our guidance range for the year and we don't break out earnings by individual business units and never have.

And I just wanted a clarification. You indicated that at Construction Services, margins were 1% versus 11%?

Actually, I am just looking it right now, our margins through the first quarter of last year were at 12% and this quarter is 11.3. So, it's 0.7% gross margins.

So, 11.3% versus 12%?

Right.

And that's just earnings over revenues?

As a percent of revenue, yes.

Okay, thank you.

Your next question comes from the line of Tim Schneider [ph] from Citigroup. Hello Mr. Schneider, your line is open.

Hello, I am sorry, I was on mute, my fault. First question is do you guys have flow rates now in those two Bakken wells that came on line at the beginning of April?

Tim, what we're seeing with those two wells is those volumes are declining really as we expected, keep in mind those are free flowing, flowing up a 7-inch casing kind of a 2-mile vertical casing there. So we are going to see that the pressures declined where natural pressures are not going to allow those wells to produce much gas and that was fully expected. We would expect in the month of May we will put some tubing on those wells and pumps and see that production then come back up.

All right and going forward, what is the spacing you guys are targeting?

Right now, our development has been on 640-acre spacing. There has been some exceptions granted where there has been some 1280-acre spacing and drilling done up there by some other industry players, but right now we are focused more on 640-acre spacing.

All right. And then just kind of like to dig a little deeper in what your thoughts in the Paradox are, I know you guys are increasing the acreage out there, what are your feelings going into that play?

We see it as a good opportunity for us. We think it’s a well with kind of our mix of properties. During the quarter here we've acquired some additional interests in some of the acres that we already own and particularly in the Cane Creek Unit and some of the acres that we've owned north and south of that. We've also added some acreage further north, I will say they become more in the area of where Delta Petroleum has been active in doing some drilling up there. So, I think that provides some additional drilling opportunities for us as we go forward here. I guess we are encouraged by what we've seen so far and we plan to continue to kind of explore and work on this property.

Do you have a [inaudible] rate on that well, that one well you guys are having there that is doing 300 barrels now?

We had an initial production in the first month or so in that 500 to 600 barrels per day. We did look out over the period [inaudible] challenges from an operating perspective with paraffin and different things. That well is now been put on pumping. Productions come back up nicely and stayed over that 300 barrels a day.

All right, I am moving over to the Construction Services side, real quick. You guys had about backlog run of about 75 million, I just like to dig a little deeper as to what is the quality work that's embedded within that backlog going forward and can we expect similar levels of runoff?

The quality of our backlog I think is good. Obviously, where we've have been successful is we think we had the best people in the industry and we are very fortunate with the work force we have and we think we can continue to execute with similar margins and hopefully similar results as far as earnings.

And then on the Construction Materials side of things, which area was the worse hit which is a ... in the quarter?

Tim as I mentioned earlier the Northern California, Northwest regions which for us is Oregon, Idaho, and Washington are the ones that have impacted us the most.

How about with respect to specific product line?

Generally, the work that is down is the residential work, which won’t be surprise to you and we do a lot of sub-division work where we go in and prepare for the home site. So, it would be our contracting division more than anything else.

All right. Then in Q1, was there anything that added more to loss than anything else, any factor that stood out or it's just a combination of things.

Nothing significant.

And then you all... I guess this is both for construction materials and services, you guys talked about cost control measures you have in place, I was just wondering if you could give us little more details specifically what you have going on?

I would jump first on this Tim, one of the biggest impacts for us, it won't be surprise to you, is on diesel fuel cost. We are a large consumer of diesel fuel and right now diesel fuel cost on average is rough about 40% from where they were 12 months ago. We have a number of initiatives that are in place to mitigate this. We've seen this of course in the past two or three years. Typically in some of our contracts with the public works there will be escalator clauses in there, where in fact the diesel price moves up then we are reimbursed accordingly. The next thing we'll do is in contracts that don't have the escalator clause, will do web contracts where we will try and purchase the amount of diesel we consumed on that job at a fixed price. And then the other things that we're doing is some markets were adding fuel surcharges for example, the ready mix delivery and then we may just go an alternate route and just have a mid season price increase for our products.

On the Construction Services side, we have got three strategies that we were looking at obviously we are always trying to buy smart and where we can put a COMEX index for features of copper and in place where we can pass on increases in fuel we're doing that. Obviously, we got a right size our organization as far as cost and overheads based on where we think the market is going and then we have to be very nimble and execute in a timely manner to forecast where we think the economy is going.

Actually one last thing, on the E&P side, what's going on with the gas right now, would you explain that?

The gas that we have in our well Tim… that gas is being flared [ph] right now.

All right, that does it from me. Thank you.

Thanks, Tim.

Your next question comes from the line of Jeff Gildersleeve from Millennium Partners.

Good morning, guys. Actually I am Mark Cruz [ph] how are you? I just had… want to circle back on the Bakken well that you mentioned this morning. If I remember correctly, I think you said the IPPAA was the ones we should ride on, IPAA were naturally flowing, but that I heard you say that the one you just talked about this morning had a frac to come in at 830 a day?

On all three of them, the production volumes that we've talked about was the volumes kind of after we turned in production, to production following are fracture stimulations.

So, all three IP rates were after fracturing it?

Correct.

Okay. And then as far as the Paradox, if I remember correctly you guys were drilling a second well there right on the Analyst Day and the one that you mentioned earlier was the first well, is there an update on the second well?

Where we are at I think we have... and correct we have three additional wells in addition to the first well that's been drilled. Really all three of those are in, one was just recently completed, the other two are in just different phases of completion. So really nothing to update in terms of production at this time.

Got you. Great, thanks so much.

Your next question comes from the line of James Bellessa from D.A. Davidson & Co. James Bellessa – D.A. Davidson & Co.: Good morning. The Bakken activities that you just cited today, was that the third well that you have now completed?

Yes, Jim, that's the third well that we have completed and have on production. We've got two additional wells that have been drilled, winders have been placed on those waiting on stimulation and then we've got three wells that are currently in various phases of drilling. James Bellessa – D.A. Davidson & Co.: And the rate that the third well is that at 832 barrels per day for the last four days of April, was that right?

It was either last three or four days, I think it was the three days. James Bellessa – D.A. Davidson & Co.: Okay. And on the Construction Material side, last call you talked about the review of up to 30 potential acquisitions, in this press release you announced that you had small one I guess… I am guessing at small it wasn't brought up to press release level. So, what's the status on acquisitions?

Jim, it's still very, very much a buyers market. We have several deals that we are looking at right now and we expect this to be a very fruitful year on acquisitions. So the number of deals that we will do... I would not be surprised if we do more than 5 or 6, but we've got some in the pipeline right now and hope to be closing on a couple here within the next couple of weeks. But the market is very, very good for us as a buyer. James Bellessa – D.A. Davidson & Co.: On the Construction Services business, you've indicated the gross margins were down on the first quarter, we don't get to see that so we were unable to determine what you were saying there. When you say that the margins in '08, is it yes? When you say that the margins in '08 are to be slightly lower than in 2007, are you referring to gross margins or you are also including operating margin and things margin or net earnings margin?

Gross margin. James Bellessa – D.A. Davidson & Co.: And is there any way we will be able to ever see more details or know about the gross margin?

No, I will try to be as a candid as I can. James Bellessa – D.A. Davidson & Co.: On the utility side, today you said that you are considering the possibility of taking purchase power contract that is expiring and replacing with company-owned generation. When does that power contract expire, what might be your company-owned generation, what kind of project are you looking at?

Sure, Jim, the power purchase contract that we referred to actually expired October 31 of 2006. That was previously a 20-year contract that we all-in capacity and energy. What we're replacing or proposing to replace that with is what we talked about... it’s in other news releases has been at the Big Stone II power plant, which should be a base load resource and that's what we are currently going through the permitting process right now. James Bellessa – D.A. Davidson & Co.: So there is nothing new there, it's not a different project that you are talking about?

No, no. It's a continuation of the same project. It's just taking a while to get through the permitting process. James Bellessa – D.A. Davidson & Co.: What you believe are there probabilities now that you might get approval for that plant?

Well, we just had our hearings in North Dakota on the prudence matter just this past week and we have... we are waiting for an ALJ decision in Minnesota and then that will be forwarded to the Minnesota PUC on the [inaudible] and so it might be both little soon, and little preemptive, and a little presumptions to predict the outcome of those. We need to see what happens there. James Bellessa – D.A. Davidson & Co.: Thank you very much.

Thanks, Jim.

Your next question comes from the line of Becca Followill from Tudor and Pickering.

Good afternoon. Could you tell me the location as the latest to Deadwood well on the Bakken [inaudible]?

Becca, I don't know that I have that with me.

Do you have the Deadwood number so I can just reference it.

It’s the Deadwood Canyon, I'd say the 11-5.

I’ll keep asking and then if you can find it, that'd be great, and follow-up offline. The JV, or the JV or whatever you want to call it that you are looking at doing in Bakken, what percent of your acreage are you looking at encompassing under that agreement and how soon could you get something done and then once you get it done, how could it change the drilling pattern from you are saying 50 to 60 wells this year, how could that change with this new arrangement.

Becca some of those things are... kind of what we are working on and kind of trying to work out in terms of this agreement. Our thoughts here are looking to help accelerate our drilling in the area. I would mentioned it to guess that a portion, different interest in different portion of our acreages would be kind of contributed here in exchange for some drilling commitments and so forth and as far as what we expect to see associated with that we built that into our guidance that we provided.

So that's incorporated in the 50 to 60 wells, so that wouldn't change in 2009 then?

That wouldn't change for 2008 and then 2009 it's probably little early to kind of get into that.

Okay and then on the Bakken gas pipeline, I think you said at 32 million a day pipeline, is that just for your volumes?

No. That pipeline is really… that's an existing pipeline that project involves adding an additional unit to one of our existing compressor stations, adding another station and interconnect with northern border and right now about 20 million a day of that has been subscribed, none of that would be from... for our own gas.

Great. Is it the Deadwood Canyon 11-5H, is that the one?

Yes.

Okay. It's just to the East of Lake [inaudible]?

I think it's just... let me see here, it would be I guess just to the west and a little bit north of our Annala well.

Okay, thank you.

[Operator Instructions]. Your next question comes from the line of Paul Ridzon from KeyBanc.

Actually my question got answered. Thank you.

[Operator Instructions]. Your next question comes from the line of James Bellessa from DA Davidson & Company. James Bellessa - D.A. Davidson & Co.: You have indicated in the Bakken area that you will be partnering possibly with an experienced industry participant and that you mentioned the word, cash, what do you mean by cash, are you going to receive some cash from them as part of the consideration for them participating with you?

Yes Jim. We would certainly look for some money to be contributed on their part either cash back to us or cash that would be used to for our interest in drilling some additional wells. James Bellessa - D.A. Davidson & Co.: So how is that accounted for, is that a revenue figure or is that just a reduction on your production cost?

Jim now, that would not reflect… be reflected and really a change of income, it would change the basis in our properties there. James Bellessa - D.A. Davidson & Co.: Thank you.

This marks the last call for questions. [Operator Instructions]. This call will be available for replay beginning at 4 PM Eastern Time through 11:59 PM Eastern Time on May 16. The conference ID number for the replay is 42706357. Again the conference ID number for the replay is 42706357. At this time there are no further questions. I would now like turn the conference back over to management for closing remarks.

Okay, thank you. Certainly you can tell we are excited about how the year is unfolding, the Bakken along with the opportunities drove the Pipeline business, the Construction Services off to strong start. And certainly the acquisition that we made in the utility areas are working out well for us, we will continue to update you as we move through the year. Thank you for your interest in our company.

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