Good morning. My name is Shirley, and I will be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group first quarter 2014 conference call. (Operator Instructions) This call will be available for replay beginning at 1 PM Eastern Time today through 11:59 PM Eastern on May 15. The conference ID number for the replay is 23827719. Again, the conference ID number for the replay is 23827719. The number to dial for the replay is 1-855-859-2056 or 404-537-3406. I would now like to turn the call over to Doran Schwartz, Vice President and Chief Financial Officer of MDU Resources Group. Thank you, Mr. Schwartz. You may begin your conference.

Thank you, Shirley, and welcome to our earnings conference call. Before I turn the presentation over to Dave Goodin, our President and Chief Executive Officer, I'd like to mention that this conference call is being broadcast live to the public over the internet and slides will accompany our remarks. If you would like to view the slides, go to our website at www.mdu.com and follow the link to the conference call. Our earnings release is also available on our website. During the course of this presentation, we will make certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although, the company believes that its expectations and beliefs are based on reasonable assumptions, actual results may differ materially. For a discussion of factors that may cause actual results to differ, refer to Item 1A Risk Factors in our most recent Form 10-K and the Risk Factor section in our most recent Form 8-K. Our format today will include formal remarks from Dave Goodin, President and CEO of MDU Resources 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: Dave Barney, President and CEO of Knife River Corporation; Steve Bietz, President and CEO of WBI Energy; Frank Morehouse, President and CEO of Montana-Dakota, Great Plains Natural Gas, Cascade Natural Gas and Intermountain Gas; Jeff Thiede, President and CEO of MDU Construction Services Group; Kent Wells, Vice Chairman of the Corporation and President and CEO of Fidelity Exploration and Production; and Nathan Ring, Vice President, Controller and Chief Accounting Officer for MDU Resources. And with that, I'll turn the presentation over to Dave for his formal remarks. Dave?

Well, thank you, Doran, and good morning. Thank you for your interest in MDU Resources and for taking the time to join us today to discuss our first quarter results. Our business has performed well throughout the quarter and we are pleased with the results. Some highlights include, achieving a new quarterly earnings record at construction services of $16.6 million, realizing oil production growth of 14%, despite a slow start in our Bakken acreage and we are pleased with our first quarter acquisition of our oil-focused acreage in the part of Powder River Basin of Congress County, Wyoming. Our investments and customer growth continue to meet increasing electric sales and drive earnings growth. And our pipeline business experienced earnings growth from 2012 acquisition of the Pronghorn natural gas processing and oil gathering facilities. Our construction materials business had built its largest first quarter backlog since 2007. And at the Natural Gas Distribution business, 2013 benefited from a $2.9 million gain on the sale of our preferred service business. And 2014 generally reflects normalization in our service territories, where it was colder and warmer weather in areas where we were not normalized. This business is performing well and in a longer-term investment in customer growth prospects are very bright. So while there were some challenges in the first quarter, our business units and their teams continued to execute and take advantage of opportunities, which is reflected in our consolidated adjusted earnings for the quarter of $60.8 million or $0.32 per share. This compares with $60.1 million or $0.32 per share in the first quarter of 2013. Our construction groups had another solid quarter, achieving year-over-year earnings improvement for the 10th consecutive quarter. On a combined basis, results improved by $1.9 million compared to the same period a year ago. On a…

(Operator Instructions) Our first question comes from the line of Brent Thielman with D.A. Davidson.

Nice quarter in construction services. Is the margin expansion more of a function of mix of work or improving pricing environment?

I'm going to ask Jeff Thiede to take on that one.

We had a few large projects ramp up faster than anticipated. We had favorable conditions in weather. And we're still anticipating good performance going forward. If you take a look at our outside businesses, we had a strong first quarter. But also contributions from our industrial, our equipment rental and supply and the Vegas markets is improving. We're well-positioned with our electrical, mechanical, fire protection, excavation and supply companies. And we're looking forward to a good rest of the year.

And kind of on that, it sounds like you've been able to build on the backlog at the end of quarter, in what areas are you seeing the most strength in?

We're really seeing strength in all of our business volumes. Our industrial companies have had a good first quarter. And as the weather breaks we see additional volumes there. Our outside line companies have decent backlog. And even though our backlog is down, we've got several pending projects, primarily in our inside businesses that will help bring those levels up.

And then just lastly, can you help me with some of the puts and takes for the flat margin expectations for construction this year? Are there some headwinds this year that will make it a little more challenging to exceed last year's levels?

Brent, I missed the first part of your question there, if you could just repeat. I think I got the last part as to wondering about margins in construction materials. But you just broke up a little bit on the first part.

Just wondering what kind of some of the puts and takes are for the flat margin expectations for construction this year?

On the construction material side, our backlog margins are about flat compared to last year. However, with our higher backlog that we have, we're expecting to increase some margins on the backlog as we go forward in the second, third quarters.

Our next question comes from the line of Matt Tucker from KeyBanc Capital Markets.

First question on the guidance revision. Can you just talk a little bit more about what more specifically drove the higher guidance? Did first quarter earnings come in above your expectations? Was it the PRB acquisition or combination?

I would say, you hit a couple of the items, right first off. Clearly, CSG having a record first quarter for us was a nice start to the year there. And you heard Jeff earlier just answer Brent's question about what you're seeing in some of the markets. And then you couple that to your other point on our entry and acquisition of the 24,500 acres into the Powder River Basin play that we closed on or about, I think March 6, both of those led to, looking at our guidance for the year and raising it by that $0.05. And so clearly there is a lot of the year left. And there is influences there within our control and outside of our control, from the variability, when you think forward, whether it would be weather, commodity pricing, outside our control. Inside our control would be things like execution, net backlog of $1.5 billion and construction of things that we've got, as Kent and his team, are learning more about the Powder River Basin play. So those would be kind of a future look. I don't know if that was really a question, but that's why we moved it up a $0.05 at this point.

And then just looking at the Natural Gas Distribution, the O&M there, as you pointed out was up quite a bit year-on-year. Just talk a little bit about what drove that and also kind of your outlook for the rest of the year there?

Sure, Matt. I'll turn it over to Frank Morehouse for that one.

Clearly, our driving factor for the increased cost on the gas side is regulatory compliance. We have more and more scrutiny regarding safe operations of our pipelines. We recently have had some reviews of our control room security. So we've had to add gas control facilities, at both the Cascade operation and the Intermountain operation. And then throughout the entire gas utility, we've added Pipeline Safety Specialist with the increased focus on safe and reliable operation of these pipelines. I think one of the important factors as we look at those increased costs, as we move forward with our business plans they also include rate recovery of those additional costs as we move forward. And the regulators take a very positive look when you're expending the O&M dollar to increase your safety and reliability of a pipeline. You get very favorable response from the regulators on that.

I guess from the sound of it, I mean should we be assuming kind of similar growth then for the rest of this year?

Matt, are you wondering about the growth at the utility business from a throughput and a customer basis?

I'm sorry, Just on in terms of O&M, in that Natural Gas Distribution business, it sounds like a lot of those additional costs will continue going forward. So I guess, I'm just curious, should we kind of look at a similar growth rate or magnitude of increase as the year goes on versus last year?

I think that you can see similar growth in those expenses as we move forward, but that's also coupled directly with the growth of our utility. We see growth of the utility customer base within our gas utility of around 2%. We've got a great growth rate going on with our Electric side, again, recently 10%, we're going to modify that I think a little. And on the conservative side, I think out for a number of years, we see at least a 5% growth on that. So again, we're very positive about what we see. We've got great regulatory relationships with all of our regulators. And as we move forward with this, as it's typical of utility business is your cost increase, we'll need to go in for a rate relief on that.

And then just last question. On the PRB, you gave your total CapEx number for the year. I was hoping you could tell us how much of that would be for drilling CapEx versus the acquisition itself?

I will turn it over to Kent to talk about our PRB investment. I think we've stated about $250 million to $270 million, but he will add more color to that.

Matt, we're pretty excited about the acquisition we made. We're right on track with where we thought we'd be. We've been focusing on the second bench in the Frontier and it's been coming in like we've expected. In fact, our main operator out there is completing another well right now. Going forward for the year, we're going to drill in the range of six to nine wells. Right now, they're in, I will call it, a time out period where there is a wildlife stipulations that avoid drilling activity going on. We'll pickup a rig at the end of May, another one in August. And during the third and fourth quarter, we'll have anywhere between two and three rigs running and we'll expect to focus on not only the second bench in the Frontier, but also the first bench as well. So we could invest anywhere between $50 million to $70 million over this period on top of the acquisition cost. And we sort of expect EURs in the range of anywhere from 800,000 barrels to 1.2 million barrels, but its early days, we're just really starting to get comfortable with this. But we're encouraged what we're seeing forward at this point. And we expect this to be a part of our important growth portfolio overall the years to come.

This marks the last call for question. (Operator Instructions) This call will be available for replay beginning at 1 PM Eastern Time today through 11:59 PM Eastern Time on May 15. The conference ID number for the replay is 23827719. Again, the conference ID number for the replay is 23827719. At this time, there are no further questions. I would now like to turn the conference back over to management for closing remarks.

Thank you very much. As you can tell, we're both excited and focused on executing our substantial growth opportunities that are really just right in front of us, folks. And we continue to push forward on better leveraging our expertise across our business lines as well. We do very much appreciate your participation on this call today. And we pledge to keep you updated, as we move throughout the year. So again, thank you. Thank you very much for your interest in MDU Resources.

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