A $3 Billion Bet Just Got Fully Backed: Bakken East Is Contracted, and MDU's Data-Center Load Crossed a Gigawatt

The utility pushed past its two biggest growth hurdles in a single quarter — yet the stock sits 12% off its May peak, leaving the financing plan to decide the story.

MDU · Earnings Call · 2026-08-06

The Whole Bakken East Just Got Contracted

MDU Resources' second quarter was modest on the income statement — $21.3M, or $0.10 per share — but it was the quarter where the company's biggest strategic swing finally landed. The proposed Bakken East pipeline, a $2.7–$3.2B FERC-regulated build that is incremental to MDU's current $3.1B five-year capital program, now has executed precedent agreements with every customer that submitted binding open-season interest: roughly 1.2 Bcf/d of firm transportation, plus a negotiated option that could push contracted volumes back toward the full 1.4 Bcf/d design. CEO Nicole Kivisto:

I really want to give a shout out to the WBI team, extremely proud of the milestone here that we announced today with the recently signed precedent agreements that get us to all customers really that were in the nonbinding open season showed up here. So that's real positive news.
Nicole Kivisto, President and Chief Executive Officer · 2026-08-06

The progress is striking when set against the Bakken East trajectory in prior calls: as recently as the May 2026 call, MDU had signed “40% of that under signed precedent agreements” — Jason L. Vollmer, Chief Financial Officer or CFO · 2026-05-07 and was still “in active negotiations on the remaining interest.” — Julien Dumoulin-Smith, Analyst · 2026-05-07 Going from 40% to effectively 100% of binding interest in one quarter is the kind of commercial validation that turns a speculative pipeline concept into a near-certain build. It did cost a little time — the FERC 7(c) filing slipped from the third to the fourth quarter, with CFO Jason Vollmer noting “some of the precedent agreement negotiations took a little bit longer.” — Jason Vollmer, Unknown (likely senior management involved in project/finance) · 2026-08-06 But the FID is expected ahead of the filing, and in-service dates for Phase 1 (late 2029) and Phase 2 (late 2030) are unchanged — the timeline held.

Data Centers: A Gigawatt and Counting

The other headline is the data center load. MDU signed an electric service agreement with Applied Digital to serve the Polaris Forge 3 AI factory near Center, North Dakota — at full capacity, 430 MW — pushing total signed data center load past 1 GW, with roughly 240 MW already online. This is the fastest-moving part of the story, and it is being done on the company's own terms:

we are working under a capital-light model as of today. And so incremental margin on data center load is a benefit to the company, but I would say it's also a benefit to our customers. So we really do feel like it's a win-win.
Nicole Kivisto, President and Chief Executive Officer · 2026-08-06

The AI factory near Center theme is brand-new for MDU this quarter, and the model — data centers pay their own connection and transmission costs, with a slice of margin shared back to retail customers — is the opposite of the generation-heavy data-center strategies many utility peers are pursuing. It is a deliberate contrast, and it is why a small regional utility can ride the signed ESAs wave without the capital intensity stressing larger balance sheets. But it is also still an approval-dependent story: the Polaris Forge 3 ESA is pending before the North Dakota PSC, and management was explicit that it is not in guidance until approved.

The Financing and Valuation Squeeze

The tension is that the equity market hasn't fully rewarded any of it. MDU's stock is down ~12.5% from its May 11 peak of $22.80 even as the Bakken East and data-center news hit — partly a general cooling in AI-infrastructure names (the 30-day tape shows broad declines in "AI data centers" and "HPC data centers"), and partly investor skepticism about how a $4.6B-market-cap utility finances a $3B incremental project. CFO Jason Vollmer's answer was measured: “We feel very confident in the ability to finance a project like this and certainly some good appetite out there for these types of assets today.” — Jason Vollmer, Unknown (likely senior management involved in project/finance) · 2026-08-06 Prior guidance has been that partnerships, sell-downs, and a majority retained stake are all on the table. The balance sheet is the real constraint. Long-term debt is up 18% y/y to $2.6B, and interest coverage has compressed to 3.5x from an 8.6x peak. The valuation is priced for success — 22.4x trailing earnings, up 70% y/y — which means the stock has essentially no room for a financing misstep. If MDU lowers the net-debt-to-OFC ratio by funding Bakken East with equity or a partner, the upside is real; if it stretches the balance sheet instead, the ~4.6x net debt to annualized operating cash flow becomes a stumbling block rather than a footnote. The quarter's bottom line: a small regulated utility has de-risked its single largest growth project and, in parallel, crossed a gigawatt of data-center load on a capital-light basis. The next decision — how to finance Bakken East — is now the only thing standing between MDU and a company-transforming growth story.