More Than a Pipe Dream: Bakken East Upside Even Bigger Than Expected

Research evidence excerpt

More Than a Pipe Dream: Bakken East Upside Even Bigger Than Expected

USA | Power & Utilities

MDU Resources Group EquityMayResearch12, 2026

TARGET CHANGEMore Than a Pipe Dream: Bakken East Upside

RATING BUYEven Bigger Than Expected

PRICE $22.80^

Bakken East upside grows even larger after surprise capex estimate with 1Q26

results exceeding estimates. See 15% run-rate EPS CAGR from FY27-FY31 PRICE TARGET | % TO PT $28.00 ($24.00) | +23%

(doubling vs. current) with base case 32% EPS accretion. Reducing legacy 52W HIGH-LOW $22.98 - $15.76

regulated EPS CAGR to below 8% as utility growth becomes a story of earnings FLOAT (%) | ADV MM (USD) 94.6% | 35.47

power and less year-by-year execution. Rising FERC-regulated mix reduces EPS MARKET CAP $4.8B

exposure to utility under-earning. TICKER MDU ^Prior trading day's closing price unless otherwise

noted.

Bakken East upside still underappreciated. We strongly reiterate our Buy rating on MDU Resources

following the 1Q26 update and above-JEFe Bakken East Pipeline capex estimate of $2.7-$3.2Bn.

FY (Dec) CHANGE TO JEFe JEF vs CONS

We estimate base case 32% EPS accretion and acceleration to 15% EPS CAGR on run-rate FY31

2026 2027 2026 2027

EPS. MDU's rate of change narrative with EPS CAGR basically doubling is among the most substantial

in our coverage universe. Investors deliberating the valuation at a ~20% premium currently with the NA NA NA NA

utilities and existing pipeline already fully baked in are missing absolute value opportunity:we still EPS* -3% -6% -1% NM

see +25% price upside if Bakken East converts relative to current levels.

2026 ($) Q1A Q2A Q3A Q4A FY

Watch funding scenarios: EPS accretion could approach +40%. Retaining full ownership (and EPS* 0.39 0.08 0.11 0.42 0.97