MDU Resources Group Annual Report 2022

FY2022 Annual Report · MDU Resources Group

Loading PDF…

Highlights

Years ended December 31,

Operating revenues

Operating income

Net Income
Earnings per share
Dividends declared per common share
Weighted average common shares outstanding — diluted
Total assets
Total equity
Total debt
Capitalization ratios:
Total equity
Total debt

Price/earnings from continuing operations ratio (12 months ended)
Book value per share
Market value as a percent of book value
Employees

2022

2021

(In millions, where applicable)

$6,973.9

$ 574.0

$ 367.5
1.81
$
.875
$
203.5
$ 9,661
$ 3,587
$ 3,088

53.7%
46.3
100%
16.8x
$ 17.62

172.2%

14,929

$ 5,680.7

$ 534.2

$ 378.1
1.87
$
.855
$
202.4
$ 8,910
$ 3,383
$ 2,742

55.2%
44.8
100%
16.5x
$ 16.64
185.3%
12,826

Forward-looking statements: This Annual Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements should be read with the cautionary statements and important factors included in “Part I, Forward-Looking Statements” and “Item 1A — Risk Factors” of the company’s “2022
Form 10-K.” Forward-looking statements are all statements other than statements of historic fact, including without limitation those statements that are identified by the words
anticipates, estimates, expects, intends, plans, predicts and similar expressions.

MDU Resources Group, Inc.

Electric and Natural Gas Utilities
MDU Resources Group’s utility companies serve approximately 1.18 million customers.
Cascade Natural Gas Corporation distributes natural gas in Oregon and Washington.
Intermountain Gas Company distributes natural gas in southern Idaho. Montana-Dakota
Utilities Co. generates, transmits and distributes electricity and distributes natural gas
in Montana, North Dakota, South Dakota and Wyoming. Great Plains Natural Gas Co., a
division of Montana-Dakota Utilities, distributes natural gas in western Minnesota and
southeastern North Dakota. These operations also supply related value-added services.

2022 Key Statistics
Revenues (millions)
Electric
Natural gas
Net income (millions)
Electric
Natural gas
Electric retail sales (million kWh)
Natural gas distribution (MMdk)
Retail sales
Transportation sales

$377.1
$1,273.8

$57.1
$45.2
3,343.9

131.2
167.7

Electric and natural gas utility areas

Electric generating stations

States of operations

Construction Materials and Contracting
Knife River Corporation mines aggregates and markets crushed stone, sand,
gravel and related construction materials, including ready-mix concrete, cement,
asphalt, asphalt oil and other value-added products. It also performs integrated
contracting services.

2022 Key Statistics
Revenues (millions)
Net income (millions)
Construction materials sales
Aggregates (million tons)
Asphalt (million tons)
Ready-mix concrete (million cubic yards)
Construction materials aggregate
reserves (billion tons)

$2,534.7
$116.2

34.0
7.3
4.0

1.1

States of operation

Market areas

Our Businesses

Pipeline
WBI Energy provides natural gas transportation and underground storage
services through regulated pipeline systems primarily in the Rocky
Mountain and northern Great Plains regions of the United States. It also
provides cathodic protection and other energy-related services.

2022 Key Statistics
Revenues (millions)
Net income (millions)
Pipeline transportation (MMdk)

$155.6
$35.3
482.9

Company storage ﬁelds

Pipeline systems

States of operations

Interconnecting pipeline

Construction Services
MDU Construction Services Group provides a full spectrum of construction services
through its electrical and mechanical and transmission and distribution specialty
contracting services across the United States. These specialty contracting services are
provided to utility, manufacturing, transportation, commercial, industrial, institutional,
renewable and governmental customers. Its electrical and mechanical contracting
services include construction and maintenance of electrical and communication
wiring and infrastructure, fire suppression systems, and mechanical piping and
services. Its transmission and distribution contracting services include construction
and maintenance of overhead and underground electrical, gas and communication
infrastructure, as well as manufacturing and distribution of transmission line
construction equipment and tools.

2022 Key Statistics
Revenues (millions)
Net income (millions)

$2,699.2
$124.8

Construction services ofﬁces

Authorized states of operation

AL GA

MDU Resources Group, Inc.Report to Stockholders

While our operations continued

in 2022 to do what they do
best — providing essential

products and services that are Building a
Strong America® — we also have been
working toward significant strategic
initiatives for our corporation. We
announced in 2022 that our board has
determined that moving toward two
pure-play publicly traded companies, with
one focused on regulated energy delivery
and the other on construction materials,
will unlock significant value for our
shareholders. To achieve that objective,
we announced on August 4 our intent to
separate Knife River Corporation as an
independent, publicly traded company.
The spinoff is on track to be complete in
the second quarter of 2023. Also, we
announced on November 3 that we are
undertaking a strategic review of MDU
Construction Services Group, and we
expect this to be complete in the second
quarter as well.

Our objective is to make MDU Resources
Group a pure-play energy delivery
business, primarily electric and natural
gas utilities along with a natural gas
transmission pipeline business.

In 2022, MDU Resources had revenues
of $6.97 billion and earnings of $367.5
million, or $1.81 per share, compared to
revenues of $5.68 billion and earnings of
$378.1 million, or $1.87 per share, in 2021.
Costs associated with our strategic
initiatives negatively impacted earnings in
2022 by $12.7 million, or 6 cents per share.

natural events. Montana-Dakota’s service
territory was hit with widespread power
outages during a late April blizzard in
2022. Rain that turned to thick ice on
power lines, followed by 60 mph wind
gusts, caused unprecedented system
damage. Restoration was expected to take
two weeks, but our team worked tirelessly

Earnings Per Share

2.0

$1.95

$1.87

$1.81

$1.69

100

1.5

$1.39

1.0

0.5

0.0

2018

2019

2020

2021

2022

2012

2013

2014

2015

2016

DEBT

EQUITY

11%

3 year

5 year

10 year

20 year

-8%

1 year

Utilities continue steady
customer, rate base growth

Our electric and natural gas utilities
earned $102.3 million in 2022, compared
to earnings of $103.5 million in 2021.
Retail sales volumes were 13.7 percent
higher for natural gas and 2.2 percent
higher for electricity. Increases in rates
in certain jurisdictions, as approved by
regulators, had a positive impact on the
year’s results, offset in part by higher
operation and maintenance costs and
higher interest expense.

Our utilities in 2022 continued their
growth trajectory. Customer count grew
by 1.6 percent, which aligns with our
projected 1-2 percent annual growth
over the longer term. We invested in this
business to grow our rate base 7.8 percent
in 2022. With anticipated capital
investments of $2.1 billion through 2027,
we expect rate base to continue to grow by
approximately 6.5 percent on a compound
annual basis for at least the next five years.

Our utilities again were recognized for
providing superior customer service, with
Cascade Natural Gas, Intermountain Gas
and Montana-Dakota Utilities ranking
first, third and sixth, respectively, among
West Region midsize natural gas utilities
in the J.D. Power 2022 Gas Utility
Residential Customer Satisfaction Study.
The study surveys customer satisfaction
across six factors: safety and reliability,
billing and payment, price, corporate
citizenship, communications and
customer care.

We increased our common stock dividend
in 2022, for an annualized dividend of 89
cents per share. This is the 32nd
consecutive year we have increased our
dividend, and we have paid dividends
uninterrupted for 85 years.

Our electric utility also was honored in
2022 by the Edison Electric Institute with
an Emergency Response Award, which
recognizes recovery and assistance efforts
of electric companies following service
disruptions from extreme weather or other

Montana-Dakota Utilities crews work to restore
power after unprecedented damage to company
facilities from an April blizzard.

MDU Resources Group, Inc.to restore service to our customers in just
eight days, including replacing
approximately 150 power poles and
repairing about 350 crossarms in
extremely difficult conditions.

Our electric utility continues to make
progress toward its greenhouse gas
emissions intensity reduction target of 45
percent by 2030, compared to 2005 levels,
from owned generating facilities. In 2022,
we ceased operations at our last wholly
owned coal-fired electric generating
facility, Heskett Station Units I and II in
Mandan, North Dakota. As of the end of
the year, we had reduced greenhouse gas
emissions from owned generating
facilities by approximately 40 percent. We
expect construction to be complete this
summer on Heskett Station Unit IV, an
88-megawatt natural gas-fired simple-
cycle combustion turbine. This unit will be
used primarily as a backup electric
generation source when renewable sources
may be unavailable.

WBI Energy’s North Bakken Expansion project
was placed into service in February 2022, and
natural gas capacity usage will ramp up in 2023.

We announced in 2022 another
Midcontinent Independent System
Operator-approved joint regional
transmission line project with Otter Tail
Power Company. Together, we plan to
develop, construct and co-own a 95-mile,
345-kilovolt transmission line that will
span from Jamestown to Ellendale in
North Dakota. MDU Resources will be
responsible for half the investment, with
the total project currently estimated at
$439 million. The project creates a more
resilient regional transmission grid,
helping ensure continued reliable,
affordable electric service to our
customers. We are targeting a 2028
in-service date.

On the natural gas utility side of our
business, we are investing in renewable
natural gas opportunities. We have
produced RNG from the Billings Regional
Landfill in Montana since 2010 and have
three dairy digesters in Idaho adding RNG
to our system for customer use since 2020.
We continue to explore additional RNG
projects across our system and expect to
have additional sources online soon.

Pipeline integrity remains another area of
investment focus for our natural gas
utilities as we continue to upgrade older
natural gas distribution lines with lines
made of newer materials, such as
polyethylene and coated steel. We replaced
approximately 90 miles of distribution
lines in 2022.

Natural gas pipeline
continues expanding

Our natural gas pipeline business, WBI
Energy, earned $35.3 million in 2022,
compared to $40.9 million in 2021. WBI
Energy achieved its sixth consecutive year
of record transportation volumes through
continued system expansions and steady

Dennis W. Johnson
Chair of the Board

David L. Goodin
President and Chief Executive Officer

customer demand. Results were negatively
impacted by the absence of income
recorded in 2021 as allowed by the Federal
Energy Regulatory Commission for funds
used during construction on the North
Bakken Expansion project, as well as
higher interest expense.

As we mentioned in last year’s letter, the
North Bakken Expansion project was in
service in early 2022. We saw initial
benefits from that project in 2022 and look
forward to a full year of results in 2023 as
customers’ capacity usage ramps up.

We also completed a 10-mile expansion
project in central North Dakota in 2022 to
serve an ethanol plant. The project added
approximately 6.7 million cubic feet per
day of capacity to WBI Energy’s system.

MDU Resources Group, Inc.
Report to Stockholders

As of December 31, WBI Energy had total
capacity to transport more than 2.4 billion
cubic feet of natural gas per day on its
system.

southeastern North Dakota and would add
much-needed capacity of nearly 21 million
cubic feet of natural gas per day for the
region.

WBI Energy’s natural gas pipeline system
will continue to grow, with more
expansion projects being planned than
ever before. In 2023, significant projects
include:

• Line Section 27 Expansion in

northwestern North Dakota, which is
expected to add transportation capacity
of 175 million cubic feet per day and be
in service in November.

• Grasslands South Expansion from
western North Dakota to northern
Wyoming, which is expected to add
transportation capacity of 94 million
cubic feet per day and be in service this
fall.

• Line Section 15 Expansion in western

South Dakota, which is expected to add
transportation capacity of 25 million
cubic feet per day and be in service in
November.

In total, approximately 300 million cubic
feet of additional natural gas
transportation capacity is expected to be
added in 2023, pending regulatory
approval.

WBI Energy on January 27, 2023, filed a
rate case with the FERC in which it is
seeking rate increases for its
transportation and storage services. We
expect new rates to take effect by August 1.

Bakken-related development activity
continues at a steady pace, and pipeline
capacity is key to managing natural gas
flaring. WBI Energy has a number of other
projects in the queue for 2024 and beyond,
including our Wahpeton Expansion
Project. Pending regulatory approval, it is
slated for construction in 2024 in

WBI Energy sharpened its focus on
reducing greenhouse gas emissions by
establishing a methane emissions
reduction target in 2022. WBI Energy has
a near-term goal of reducing its methane
emission intensity 25 percent by 2030
compared to 2020 levels, and it intends to
establish a longer-term methane emission
intensity reduction goal by 2030. In 2022,
WBI Energy also joined the One Nation’s
Energy Future Coalition — ONE Future
— which is a group of more than 50
natural gas companies working together to
voluntarily reduce methane emissions
across the industry to 1 percent or less by
2025.

Knife River overcoming
inflationary pressures

Knife River Corporation earned $116.2
million in 2022, compared to $129.8
million in 2021. Revenues set a record at
$2.53 billion, up 14 percent. While we were
largely able to recover expense increases
from inflationary pressures in 2022,
margins were negatively impacted by cost
increases on asphalt oil, labor, fuel and
cement, as well as higher interest expense.
Unfavorable weather early in the year and
in the fourth quarter, which compressed
the construction season for certain
markets, also dampened results.

In addition to continuing to provide the
products and services necessary for
Building a Strong America,® Knife River
was focused in 2022 on preparing to be
spun off from MDU Resources as an
independent, publicly traded company.
Functions that have been provided at the
MDU Resources level, such as information
technology, accounting processes and
human capital management, are being

established to enable Knife River to stand
separately from MDU Resources upon the
anticipated spinoff in the second quarter.

Our board of directors appointed Brian
Gray to be president of Knife River as of
January 1, 2023, and just recently

The Knife River Training Center includes an
80,000-square-foot heated indoor arena for training
truck drivers and heavy equipment operators.

MDU Construction Services Group subsidiary
Bombard Renewable Energy finished construction
on a 200-megawatt solar facility in Nevada.

MDU Resources Group, Inc.Report to Stockholders

installed 621,093 solar modules, as well as
ancillary facilities, for the project.

While some things change,
some remain the same

While our company footprint will change
following the anticipated spinoff of Knife
River and strategic review of MDU
Construction Services Group, MDU
Resources’ philosophy toward the critical
aspects of our business will remain the
same as we become a pure-play energy
delivery business.

We remain committed to operating with
integrity and safety at the forefront of all
that we do, while focusing on proper
governance, environmental stewardship
and stakeholder priorities, including
returning value to you, our shareholders.

Thank you for your investment in MDU
Resources.

Dennis W. Johnson
Chair of the Board

David L. Goodin
President and Chief Executive Officer

February 24, 2023

announced that Brian also will become
CEO of Knife River on March 1 as Dave
Barney transitions to a senior advisor role.
Brian has 29 years of experience with Knife
River and was president of Knife River’s
Northwest Region since 2012.

workload was particularly high for
hospitality, data center and renewable
projects. Utility-related transmission and
distribution demand was steady as well,
especially for power line fire-hardening
work.

Knife River’s state-of-the-art construction
training center in Oregon, which was fully
operational in 2022, was recognized by
Liberty Mutual with a prestigious Risk
Management Excellence Award for its
focus on safety in the construction
industry. The center includes an
80,000-square-foot heated indoor arena for
truck and heavy equipment training and a
16,000-square-foot office, classroom and
lab facility on a 230-acre property that also
allows for outdoor equipment training.
With an emphasis on safety at all times, it
provides both classroom and hands-on
experience that will enhance the skills of
current team members as well as recruit
and train needed new team members.

Demand remains high for Knife River’s
construction materials products and
contracting services. The company’s
backlog of work was a record $935 million
at December 31, up 32 percent compared to
$708 million at December 31, 2021.
We expect strong ongoing growth
opportunities for Knife River, including
through projects that result from the U.S.
Infrastructure Investment and Jobs Act
that provides approximately $650 billion of
reauthorized funds for the Department of
Transportation surface transportation
program and $550 billion of new
infrastructure funds.

Records abound
for construction services

MDU Construction Services Group earned
$124.8 million in 2022, compared to $109.4
million in 2021. Revenues were a record
$2.70 billion, compared to $2.05 billion in
2021. Electrical and mechanical services

Demand continues to be extremely strong
for construction services work, with MDU
Construction Services Group having a
record backlog of $2.13 billion at
December 31, up 54 percent compared to
$1.38 billion at December 31, 2021. MDU
Construction Services Group also expects
additional project opportunities to result
from the Infrastructure Investment and
Jobs Act funding.

With climbing backlog throughout 2022,
this business also had a record number of
employees during the year to meet project
demand. MDU Construction Services
Group employed approximately 9,000
skilled construction team members at
December 31.

MDU Construction Services Group in
2022 was ranked the 12th largest specialty
contractor in the United States by
Engineering News-Record magazine and
the fifth largest electrical contractor by
Electrical Construction & Maintenance
magazine.

An area of strong and growing demand for
the construction services business
continues to be what our team calls
“mission critical” projects. We build
hyperscale data centers for premier clients,
and our superior expertise in this area
provides industry-best performance to
meet schedule and project costs.

MDU Construction Services Group
continues to emphasize its premier services
for renewable electric generation projects.
Subsidiary Bombard Renewable Energy
completed construction in October on a
200-megawatt solar facility in Moapa,
Nevada. Bombard Renewable Energy

MDU Resources Group, Inc.Board of Directors

Dennis W. Johnson
73 (22)
Dickinson, North Dakota

David L. Goodin
61 (10)
Bismarck, North Dakota

Chair of MDU Resources Board
of Directors

President and Chief Executive
Officer of MDU Resources

Chair, president and chief executive
officer of TMI Group, an
architectural woodwork
manufacturer; former president of
the Dickinson City Commission; a
former director of Federal Reserve
Bank of Minneapolis.

Expertise: Business management,
specialty contracting, finance and
strategic planning.

Formerly president and chief
executive officer of Cascade
Natural Gas Corporation, Great
Plains Natural Gas Co.,
Intermountain Gas Company and
Montana-Dakota Utilities Co.

German Carmona
Alvarez
54 (1)
Wellington, Florida

Global president of applied
intelligence of Wood PLC;
formerly senior vice president and
global digital practice leader of
NEORIS and executive vice
president of finance, information
technology and shared services at
CEMEX.

Expertise: Human capital
management, digital and
information technology, finance,
and mergers and acquisitions.

Thomas Everist
73 (28)
Sioux Falls, South Dakota

Karen B. Fagg
69 (18)
Billings, Montana

President and chair of The Everist
Co., formerly a construction
materials company; a former
director of Raven Industries, Inc.,
a public company.

Retired, formerly vice president
of DOWL HKM and formerly
chair, chief executive officer and
majority owner of HKM
Engineering Inc.

Expertise: Construction materials
and contracting industry, business
leadership and management.

Expertise: Engineering, natural
resource development, environment
and business management.

Patricia L. Moss
69 (20)
Bend, Oregon

Dale S. Rosenthal
66 (2)
Washington, D.C.

Edward A. Ryan
69 (5)
Washington, D.C.

David M. Sparby
68 (5)
North Oaks, Minnesota

Chenxi Wang
52 (4)
Los Altos, California

Formerly vice chair, president
and chief executive officer of
Cascade Bancorp and Bank of
the Cascades; a director of First
Interstate BancSystem Inc., a
public company.

Expertise: Finance, compliance
oversight, business development
and public company governance.

Formerly strategic director of
Clark Construction Group, LLC;
a director of Washington Gas
Light Company.

Expertise: Construction, alternative
energy, infrastructure development,
risk management and corporate
strategy.

Formerly executive vice
president and general counsel of
Marriott International, a large
public company with
international operations.

Formerly senior vice president
and group president, revenue at
Xcel Energy Inc. and president
and chief executive officer of
NSP-Minnesota.

Expertise: Corporate governance
and transactions, legal and public
company leadership.

Expertise: Public utility, renewable
energy, finance, legal and public
company leadership.

Founder and managing general
partner of Rain Capital Fund LP,
a cybersecurity-focused venture
fund; formerly chief strategy
officer of Twistlock, a security
software company.

Expertise: Technology,
cybersecurity, capital markets and
business development.

Audit Committee
David M. Sparby, Chair
Dale S. Rosenthal
Edward A. Ryan
Chenxi Wang

Compensation
Committee
Karen B. Fagg, Chair
German Carmona Alvarez
Thomas Everist
Patricia L. Moss

Environmental and
Sustainability
Committee
Patricia L. Moss, Chair
Karen B. Fagg
David M. Sparby
Chenxi Wang

Nominating and
Governance Committee
Edward A. Ryan, Chair
German Carmona Alvarez
Thomas Everist
Dale S. Rosenthal

Director Changes
German Carmona Alvarez was appointed to the Board
of Directors on November 18, 2022.

Numbers indicate age and years of service ( ) on the
MDU Resources Board of Directors as of December 31, 2022.

MDU Resources Group, Inc.Corporate Management

David L. Goodin
61 (40)

David C. Barney
67 (37)

Stephanie A. Barth
50 (27)

Trevor J. Hastings
49 (27)

Anne M. Jones
59 (41)

President and Chief Executive
Officer of MDU Resources

Serves on the company’s Board of
Directors and as chair of the
board of all major subsidiary
companies; formerly president
and chief executive officer of
Cascade Natural Gas
Corporation, Great Plains
Natural Gas Co., Intermountain
Gas Company and Montana-
Dakota Utilities Co.

President and Chief Executive
Officer of Knife River
Corporation

Vice President, Chief Accounting
Officer and Controller of MDU
Resources

Formerly held executive and
management positions with
Knife River.

Formerly controller of MDU
Resources and vice president,
treasurer and chief accounting
officer of WBI Energy, Inc.

President and Chief Executive
Officer of WBI Energy, Inc.

Formerly vice president of
business development and
operations support of Knife River
Corporation.

Vice President and Chief
Human Resources Officer
of MDU Resources

Formerly vice president of
human resources, customer
service and safety of Cascade
Natural Gas Corporation, Great
Plains Natural Gas Co.,
Intermountain Gas Company
and Montana-Dakota Utilities
Co.

Nicole A. Kivisto
49 (28)

Karl A. Liepitz
44 (20)

Peggy A. Link
56 (18)

Jeffrey S. Thiede
60 (19)

Jason L. Vollmer
45 (18)

President and Chief Executive
Officer of Cascade Natural Gas
Corporation, Intermountain Gas
Company and Montana-Dakota
Utilities Co.

Formerly vice president of
operations of Great Plains
Natural Gas Co. and
Montana-Dakota Utilities Co.

Vice President, General Counsel
and Secretary of MDU Resources

Serves as general counsel and
secretary of all major subsidiary
companies; formerly assistant
general counsel and assistant
secretary of MDU Resources.

Vice President and Chief
Information Officer of MDU
Resources

President and Chief Executive
Officer of MDU Construction
Services Group, Inc.

Vice President and Chief
Financial Officer of MDU
Resources

Formerly assistant vice president
of technology and cybersecurity
officer of MDU Resources.

Formerly held executive and
management positions with
MDU Construction Services
Group.

Formerly vice president, chief
accounting officer and treasurer
of MDU Resources.

Numbers indicate age and years of service ( ) as of December 31, 2022.

MDU Resources Group, Inc.Stockholder Return Comparison

Comparison of One-Year
Total Stockholder Return

(as of December 31, 2022)

-18%

-3%

MDU
Resources

S&P 500
Index

Peer
Group

Comparison of Five-Year Total Stockholder Return (in dollars)

$100 invested December 31, 2017, in MDU Resources was worth $131.40 at year-end 2022.

$250

200

150

100

’17

’18

’19

’20

’21

’22

MDU Resources

S&P 500 Index

Peer Group

2009

2010

2011

2012

2013

250

200

150

100

Old Peer Group

New Peer Group

S&P 500 Index

MDU Resources Group, Inc.

Company Name / Index

12/31/17

12/31/18

12/31/19

12/31/20

12/31/21

12/31/22

MDU Resources Group, Inc. $100.00

$91.36

$117.34

$107.59

$129.51

$131.40

S&P 500 Index

Peer Group

100.00

95.62

125.72

148.85

191.58

156.88

100.00

94.84

125.08

126.38

160.10

155.39

Data is indexed to December 31, 2022, for
the one-year total stockholder return
comparison and December 31, 2017, for the
five-year total stockholder return
comparison for MDU Resources, the S&P
500 and the peer group. Total stockholder
return is calculated using the December 31
price for each year. It is assumed that all
dividends are reinvested in stock at the
frequency paid, and the returns of each

component peer issuer of the group are
weighted according to the issuer’s stock
market capitalization at the beginning of
the period.

The peer group issuers are Alliant Energy
Corporation, Ameren Corporation, Atmos
Energy Corporation, Black Hills
Corporation, CMS Energy Corporation,
Dycom Industries, Inc., EMCOR Group,

Inc., Evergy, Inc., Granite Construction
Incorporated, Jacobs Solutions Inc., KBR,
Inc., Martin Marietta Materials, Inc.,
MasTec, Inc., NiSource Inc., Pinnacle West
Capital Corporation, Portland General
Electric Company, Quanta Services, Inc.,
Southwest Gas Holdings, Inc., Summit
Materials, Inc., Vulcan Materials Company
and WEC Energy Group, Inc.

MDU Resources Group, Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2022

☐ 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

(State or other jurisdiction of
incorporation or organization)

30-1133956

(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
Common Stock, par value $1.00 per share

Trading symbol(s)

Name of each exchange on which registered

MDU

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒.
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
Non-accelerated filer

☒
☐

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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

State the aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2022: $5,488,436,473.

Indicate the number of shares outstanding of the registrant's common stock, as of February 16, 2023: 203,623,893 shares.

DOCUMENTS INCORPORATED BY REFERENCE
Relevant portions of the registrant's 2023 Proxy Statement, to be filed no later than 120 days from December 31, 2022, are incorporated by reference in
Part III, Items 10, 11, 12, 13 and 14 of this Report.

Contents

Part I

Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Items 1 and 2 Business and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Natural Gas Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Construction Materials and Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Construction Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1A

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1B

Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 3

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 4

Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II

Item 5

Market for the Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 6

Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 7

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

Item 7A

Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 8 Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1. Basis of Presentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. Revenue from Contracts with Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6. Regulatory Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. Goodwill and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. Fair Value Measurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11. Asset Retirement Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12. Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13. Stock-Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

14. Accumulated Other Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15. Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16. Cash Flow Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100

101

102

2 MDU Resources Group, Inc. Form 10-K

Part II (continued)

17. Business Segment Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19. Jointly Owned Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20. Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21. Commitments and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22. Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9

Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9A

Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9B Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9C

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . .

Part III

Item 10

Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 11

Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 12

Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 13

Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . .

Item 14

Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IV

Item 15

Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 16

Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contents

Page

103

106

115

117

119

122

123

124

128

130

131

MDU Resources Group, Inc. Form 10-K 3

Definitions

The following abbreviations and acronyms used in this Form 10-K are defined below:
Abbreviation or Acronym

AFUDC

Army Corps

ASC

ASU

Audit Committee

Bcf

Big Stone Station

BSSE

Btu

CARES Act

Cascade

Centennial

Allowance for funds used during construction

U.S. Army Corps of Engineers

FASB Accounting Standards Codification

FASB Accounting Standards Update

Audit Committee of the board of directors of the Company

Billion cubic feet

475-MW coal-fired electric generating facility near Big Stone City, South Dakota (22.7 percent
ownership)

345-kilovolt transmission line from Ellendale, North Dakota, to Big Stone City, South Dakota
(50 percent ownership)

British thermal unit

United States Coronavirus Aid, Relief, and Economic Security Act

Cascade Natural Gas Corporation, an indirect wholly owned subsidiary of MDU Energy Capital

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

CERCLA
Code

Coincident Load Factor

Comprehensive Environmental Response, Compensation and Liability Act

The U.S. Internal Revenue Code, the highest form of tax law in the United States

The discount from peak requirements when the Company's peak is at a time different from the
MISO system peak for the winter season.

Company

COVID-19

Coyote Creek

Coyote Station

CyROC

Dodd-Frank Act

EBITDA

EIN

EPA

ERISA

ESA

MDU Resources Group, Inc.

Coronavirus disease 2019

Coyote Creek Mining Company, LLC, a subsidiary of The North American Coal Corporation

427-MW coal-fired electric generating facility near Beulah, North Dakota (25 percent ownership)

Cyber Risk Oversight Committee

Decatherm

Dodd-Frank Wall Street Reform and Consumer Protection Act

Earnings before interest, taxes, depreciation, depletion and amortization

Employer Identification Number

United States Environmental Protection Agency

Employee Retirement Income Security Act of 1974

Endangered Species Act

Exchange Act

Securities Exchange Act of 1934, as amended

FASB

FERC

Fidelity

FIP

GAAP

GHG

Financial Accounting Standards Board

Federal Energy Regulatory Commission

Fidelity Exploration & Production Company, a direct wholly owned subsidiary of WBI Holdings
(previously referred to as the Company's exploration and production segment)

Funding improvement plan

Accounting principles generally accepted in the United States of America

Greenhouse gas

Grasslands Subsystem

A portion of WBI Energy Transmission's natural gas pipeline that runs from western North Dakota
to north central Wyoming

Great Plains

GVTC

Holding Company Reorganization

IBEW

ICWU

Intermountain

IPUC

IRA
IRS

4 MDU Resources Group, Inc. Form 10-K

Great Plains Natural Gas Co., a public utility division of Montana-Dakota

Generation Verification Test Capacity

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.

International Brotherhood of Electrical Workers

International Chemical Workers Union

Intermountain Gas Company, an indirect wholly owned subsidiary of MDU Energy Capital

Idaho Public Utilities Commission

Inflation Reduction Act

Internal Revenue Service

Definitions

Item 8

Knife River

Financial Statements and Supplementary Data

Knife River Corporation, a direct wholly owned subsidiary of Centennial

Knife River Holding Company

The holding company established in conjunction with the proposed spinoff of Knife River

Knife River - Northwest

Knife River Corporation - Northwest, an indirect wholly owned subsidiary of Knife River

K-Plan

kWh

LIBOR

MD&A

Company's 401(k) Retirement Plan

Kilowatts

Kilowatt-hour

Kilovolts
London Inter-bank Offered Rate

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

MDU Energy Capital

MDUR Newco

MDUR Newco Sub

MEPP

MISO

MMBtu

MMcf

MMdk

MNPUC

MDU Energy Capital, LLC, a direct wholly owned subsidiary of the Company
MDUR Newco, Inc., a public holding company created by implementing the Holding Company
Reorganization, now known as the Company

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

Multiemployer pension plan

Midcontinent Independent System Operator, Inc., the organization that provides open-access
transmission services and monitors the high-voltage transmission system in the Midwest United
States and Manitoba, Canada and a southern United States region which includes much of
Arkansas, Mississippi and Louisiana

Million Btu

Million cubic feet

Million dk

Minnesota Public Utilities Commission

Montana-Dakota

Montana-Dakota Utilities Co. a direct wholly owned subsidiary of MDU Energy Capital

MPPAA

MTDEQ

MTPSC

NDDEQ

NDPSC

NERC

Oil

OPUC

PCAOB

PCBs

PHMSA

Proxy Statement

PRP

Qualified Person

RCRA

RNG

SDPUC

SEC

Securities Act

Sheridan System

SOFR

SPP

Multiemployer Pension Plan Amendments Act of 1980

Montana Department of Environmental Quality

Montana Public Service Commission

Megawatt

North Dakota Department of Environmental Quality

North Dakota Public Service Commission

North American Electric Reliability Corporation

Includes crude oil and condensate

Oregon Public Utility Commission

Public Company Accounting Oversight Board

Polychlorinated biphenyls

Pipeline and Hazardous Material Safety Administration
Company's 2023 Proxy Statement to be filed no later than April 28, 2023

Potentially Responsible Party

As defined by the SEC, a mineral industry professional with at least five years of relevant
experience in the type of mineralization and type of deposit under consideration and in the
specific type of activity that person is undertaking. The qualified person must also be an eligible
member or licensee in good standing of a recognized professional organization.

Resource Conservation and Recovery Act

Renewable Natural Gas

Rehabilitation plan

South Dakota Public Utilities Commission

United States Securities and Exchange Commission

Securities Act of 1933, as amended

A separate electric system owned by Montana-Dakota

Secured Overnight Financing Rate

Southwest Power Pool, the organization that manages the electric grid and wholesale power
market for the central United States.

United Association of Journeyman and Apprentices of the Plumbing and Pipefitting Industry of
the United States and Canada

MDU Resources Group, Inc. Form 10-K 5

Definitions

TSA

VIE

Washington DOE

WBI Energy

Transportation Security Administration

Variable interest entity

Washington State Department of Ecology

WBI Energy, Inc., an indirect wholly owned subsidiary of Centennial

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

Wygen III

WYDEQ

WYPSC

ZRCs

Washington Utilities and Transportation Commission

100-MW coal-fired electric generating facility near Gillette, Wyoming (25 percent ownership)

Wyoming Department of Environmental Quality

Wyoming Public Service Commission

Zonal resource credits - a MW of demand equivalent assigned to generators by MISO for meeting
system reliability requirements

6 MDU Resources Group, Inc. Form 10-K

Part I

Forward-Looking Statements

This Form 10-K 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, trends, objectives, goals,
strategies, including the anticipated separation of Knife River or the proposed future structure of two pure-play publicly traded companies, future
events, or performance, and underlying assumptions (many of which are based, in turn, upon further assumptions) and other statements that are
other than 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 Item 7 - 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 and changes in
such assumptions and factors could cause actual future results to differ materially.

Any forward-looking statement contained in this document speaks only as of the date on which the statement is made and, except as required by law,
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, except as required by law. New factors emerge from time
to time, and it is not possible for management to predict all of 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 in this Form 10-K, including statements contained within Item 1A - Risk Factors.

Items 1 and 2. Business and Properties

General
The Company is a regulated energy delivery and construction materials and services business. Its principal executive offices are located at
1200 West Century Avenue, P.O. Box 5650, Bismarck, North Dakota 58506-5650, telephone (701) 530-1000.

Montana-Dakota was incorporated under the state laws of Delaware in 1924. The Company was incorporated under the state laws of Delaware in
2018. Upon the completion of the Holding Company Reorganization, Montana-Dakota became a subsidiary of the Company. The Company's mission
is to deliver superior value to stakeholders by providing essential infrastructure and services to America.

As part of the Company's continual review of its business, the Company announced strategic initiatives that are expected to enhance its value. On
August 4, 2022, the Company announced its plan to separate Knife River, the construction materials and contracting business, from the Company,
resulting in two independent, publicly traded companies. The separation of Knife River is planned as a tax-free spinoff transaction to the Company’s
stockholders for U.S. federal income tax purposes. Completion of the separation will be subject to, among other things, the effectiveness of a
registration statement on Form 10 with the SEC, final approval from the Company’s board of directors, receipt of one or more tax opinions and a
private letter ruling from the IRS, and other customary conditions. The Company may, at any time and for any reason until the proposed transaction
is complete, abandon the separation or modify or change its terms. The separation is expected to be complete in the second quarter of 2023, but
there can be no assurance regarding the ultimate timing of the separation or that the separation will ultimately occur. On November 3, 2022, the
Company announced its intention to create two pure-play publicly traded companies, one focused on regulated energy delivery and the other on
construction materials, and that, to achieve this future structure, the board has authorized management to commence a strategic review process of
MDU Construction Services. The strategic review is well underway and the Company anticipates completing it during the second quarter of 2023.

The Company's strategy is to deliver superior value and achieve industry-leading performance with two pure-play companies of regulated energy
delivery and construction materials, while pursuing organic growth opportunities and strategic acquisitions of well-managed companies and
properties. Through its regulated energy delivery businesses, the Company generates, transmits and distributes electricity and provides natural gas
distribution, transportation and storage services. These businesses are regulated by state public service commissions and/or the FERC. The
construction materials business provides construction materials through aggregate mining and marketing of related products, such as ready-mix
concrete, asphalt and asphalt oil, and associated contracting services. The construction services business provides construction services through its
electrical and mechanical and transmission and distribution specialty contracting services.

As of December 31, 2022, the Company was organized into five reportable business segments. These business segments include: electric, natural
gas distribution, pipeline, 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.

MDU Resources Group, Inc. Form 10-K 7

Part I

MDU Energy
Capital

Centennial

Montana-Dakota
• Natural gas
• Electric

Cascade
• Natural gas

Intermountain
• Natural gas

WBI Energy
• Pipeline

Knife River
• Construction materials
& contracting

MDU Construction
Services
• Construction services

Centennial Capital
• Other

*Depicts the segment structure of the corporation; not the legal organization.

The Company, through its wholly owned subsidiary, MDU Energy Capital, owns Montana-Dakota, Cascade and Intermountain. The electric segment is
comprised of Montana-Dakota while the natural gas distribution segment is comprised of Montana-Dakota, Cascade and Intermountain.

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

The financial results and data applicable to each of the Company's business segments, as well as their financing requirements, are set forth in
Item 7 - MD&A and Item 8 - Note 17.

The Company's material properties, which are of varying ages and are of different construction types, are generally in good condition, are well
maintained and are generally suitable and adequate for the purposes for which they are used.

Human Capital Management At the core of Building a Strong America® is building a strong workforce. This means building a strong team of
employees with a focus on safety and a commitment to diversity, equity and inclusion. The Company's team was located in 44 states plus
Washington D.C. as of December 31, 2022. The number of employees fluctuates during the year due to the seasonality and the number and size of
construction projects. During 2022, the number of employees peaked in the third quarter at just over 16,800. Employees as of December 31, 2022,
were as follows:

MDU Resources Group, Inc.

MDU Energy Capital

WBI Energy

Knife River

MDU Construction Services

Total

Male

Female

283

170

113

1,596

1,155

441

321

260

3,797

3,294

503

8,932

8,238

694

2,000

4,000

6,000

8,000

MDU Resources Group, Inc.

Total

14,929

13,117

1,812

Many of the Company's employees are represented by collective-bargaining agreements and the Company is committed to establishing constructive
dialogue with this representation and bargain in good faith. The majority of the collective-bargaining agreements contain provisions that prohibit work
stoppages or strikes and provide dispute resolution through binding arbitration in the event of an extended disagreement.

8 MDU Resources Group, Inc. Form 10-K

Part I

The following information is as of December 31, 2022.

Company

Montana-Dakota

Intermountain

Cascade

WBI Energy Transmission

Collective-bargaining
agreement

Number of
employees

represented Agreement status

IBEW

ICWU

IBEW

313 Effective through April 30, 2024

139 Effective through March 31, 2023

195 Effective through March 31, 2024

68 Effective through April 30, 2023

Knife River

40 various agreements

502 2 agreements in negotiations

MDU Construction Services

106 various agreements

7,588 No agreements in negotiations

Total

8,805

Diversity, Equity and Inclusion The Company is committed to an inclusive environment that respects the differences and embraces the strengths of its
diverse employees. Essential to the Company's success is its ability to attract, retain and engage the best people from a broad range of backgrounds
and build an inclusive culture where all employees feel valued and contribute their best. To aid in the Company's commitment to an inclusive
environment, each business segment has a diversity officer who serves as a conduit for diversity-related issues and provides a voice to all employees.
The Company requires employees to participate in its Leading with Integrity training which provides training on the Company's code of conduct and
additional courses focusing on diversity, effective leadership, equal employment opportunity, workplace harassment, respect and unconscious bias.

The Company has three strategic goals related to diversity:

• Enhance collaboration efforts through cooperation and sharing of best practices to create new ways of meeting employee, customer and

stockholder needs.

• Maintain a culture of integrity, respect and safety by ensuring employees understand these essential values which are part of the Company's

vision statement.

• Increase productivity and profitability through the creation of a work environment which values all perspectives and methods of accomplishing

work.

The Company also promotes its strategic diversity goals through the following special recognition awards:

The Einstein Award
recognizes the best
process improvement
ideas that contribute in a
measurable way to
improving the Company's
bottom line and are vital to
the Company's success.

The Community Spirit
Award recognizes
employees who are
actively involved in their
community.

The Summit Award
recognizes employees
who make the Company
a better place to work.

The Environmental
Sustainability Award
recognizes an employee
program, project or
activity that reﬂects the
Company's environmental
policy and philosophy.

The Hero Award
recognizes employees who
go above and beyond the
call of duty to save
another's life.

In March 2022, the chief executive officer of the Company joined more than 2,000 chief executive officers in signing the CEO Action for Diversity
and Inclusion Pledge. Through this collaboration with other companies, the Company furthers its commitment to a diverse and inclusive environment
that respects the differences and embraces the strengths of its employees to further its corporate vision.

Building People Building a strong workforce begins with employee recruitment. The Company hires and trains employees to have the skills, abilities
and motivation to achieve the results needed for their jobs. Each job is important and part of a coordinated team effort to accomplish the
organization's objectives. The Company uses a variety of means to recruit new employees for open positions including posting on the Company's
website at www.jobs.mdu.com, which is not incorporated by reference herein. Other sources for employee recruitment include employee referrals,
union workforce, direct recruitment, advertising, social media, career fairs, partnerships with colleges and technical schools, job service organizations
and associations connected with a variety of professions. The Company also uses internship programs to introduce individuals to the Company's
business operations and provide a possible source of future employees.

MDU Resources Group, Inc. Form 10-K 9

Part I

Building a strong workforce also requires developing employees in their current positions and for future advancement. The Company provides
opportunities for advancement through job mobility, succession planning and promotions both within and between business segments. The Company
provides employees the opportunity to further develop and grow through various forms of training, mentorship programs and internship programs,
among other things.

To attract and retain employees, the Company offers:

Compensation
Competitive salaries and
wages based on the labor
markets in which it operates.

Growth & Development
Employee growth through
training in the form of
technical, professional and
leadership programs, as well
as formal and informal
mentoring and job shadowing
programs to assist employees
in their job and career goals.

Incentives
Incentive compensation
based on the Company’s
performance.

Beneﬁts
Comprehensive beneﬁts
including vacation, sick leave,
health and wellness programs,
retirement plans and discount
programs.

The Company conducts employee surveys to hear and gauge employee opinions on issues such as fairness, camaraderie and pride in the workplace.
Survey responses are compiled and evaluated at various levels throughout the Company to develop action plans to address areas of concern raised by
employees.

Safety Safety is a corporate value and top priority of the Company. The Company is committed to safety and health in the workplace. To ensure safe
work environments, the Company provides training, adequate resources and appropriate follow-up on any unsafe conditions or actions. To facilitate a
strong safety culture, the Company established its Safety Leadership Council. In addition to the Safety Leadership Council, the Company has policies
and training that support safety in the workplace including training on safety matters through classroom and toolbox meetings on job sites. The
Company utilizes safety compliance in the evaluation of employees, which includes management, and recognizes employee safety through safety
award programs. Accident and safety statistical information is gathered for each of the business segments and regularly reported to management and
the board of directors.

Environmental Matters The Company believes it has a
responsibility to use natural resources efficiently and attempt to
minimize the environmental impact of its activities. The Company
produces GHG emissions primarily from its fossil fuel electric-
generating facilities, as well as from natural gas pipeline and
storage systems, and operations of equipment and fleet vehicles.
The Company has developed renewable generation with lower or
no GHG emissions. Governmental legislation and regulatory
initiatives regarding environmental and energy policy are
continuously evolving and could negatively impact the Company's
operations and financial results. As legislation and regulation are
finalized, the impact of these measures can be assessed. The
Company will continue to monitor legislative and regulatory
activity related to environmental and energy policy initiatives. In
addition, for a discussion of the Company's risks related to
environmental laws and regulations, see Item 1A - Risk Factors.

The Company operates with three primary environmental objectives:

Minimize waste and
maximize resources.

Be a good steward of
the environment, while
providing high-quality
and reasonably priced
products and services.

Comply with or surpass
all applicable
environmental laws,
regulations and permit
requirements.

The Company maintains an executive management Sustainability Committee that supports the execution of, and makes recommendations to
advance, the Company's environmental and sustainability strategy. For more information on the Company's sustainability goals, programs and
performance, see the Company's Sustainability Report on its website, which is not incorporated by reference herein.

10 MDU Resources Group, Inc. Form 10-K

Laws & Regulations

Air, water and
solid waste
pollution
control

Zoning and
planning
regulations -
state and local
authorities

Federal and
state health
and safety
regulations

State
facility-siting
regulations

Part I

Governmental Matters The operations of the Company and certain of
its subsidiaries are subject to laws and regulations relating to air,
water and solid waste pollution control; state facility-siting regulations;
zoning and planning regulations of certain state and local authorities;
federal and state health and safety regulations; and state hazard
communication standards.

The Company strives to be in substantial compliance with applicable
regulations, except as to what may be ultimately determined with
regard to items discussed in Environmental matters in Item 8 -
Note 21. There are no pending CERCLA actions for any of the
Company's material properties. However, the Company is involved in
certain claims relating to the Portland, Oregon, Harbor Superfund Site
and the Bremerton Gasworks Superfund Site. For more information on
the Company's environmental matters, see Item 8 - Note 21 and Item
7 - MD&A - Business Section Financial and Operating Data.

Technology The Company uses technology in substantially all aspects of its business operations and requires uninterrupted operation of information
technology systems and network infrastructure. These systems may be vulnerable to failures or unauthorized access. The Company has policies,
procedures and processes designed to strengthen and protect these systems, which include the Company’s enterprise information technology and
operation technology groups continually evaluating new tools and techniques to reduce the risk and potential impacts of a cyber breach.

The Company created CyROC to oversee its approach to cybersecurity. CyROC is responsible for supplying management and the Audit Committee
with analyses, appraisals, recommendations and pertinent information concerning cyber defense of the Company’s electronic information and
information technology systems. A quarterly cybersecurity report is provided to the Audit Committee. For a discussion of the Company's risks related
to cybersecurity, see Item 1A - Risk Factors.

Available Information This annual report on Form 10-K, the Company's quarterly reports on Form 10-Q and current reports on Form 8-K, and any
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge through the
Company's website as soon as reasonably practicable after the Company has electronically filed such reports with, or furnished such reports to, the
SEC. The Company's website address is www.mdu.com. The information available on the Company's website is not part of this annual report on
Form 10-K. The SEC also maintains a website where the Company's filings can be obtained free of charge at www.SEC.gov.

Electric

General The Company's electric segment is operated through its wholly
owned subsidiary, Montana-Dakota. Montana-Dakota provides electric
service at retail, serving residential, commercial, industrial and
municipal customers in 185 communities and adjacent rural areas.

The material properties owned by Montana-Dakota for use in its
electric operations include interests in 13 electric generating units at
11 facilities and two small portable diesel generators, as further
described under System Supply, System Demand and Competition,
approximately 3,400 and 4,800 miles of transmission and distribution
lines, respectively, and 84 transmission and 294 distribution
substations. Montana-Dakota has obtained and holds, or is in the
process of renewing, valid and existing franchises authorizing it to
conduct its electric operations in all of the municipalities it serves
where such franchises are required. Montana-Dakota intends to
protect its service area and seek renewal of all expiring franchises. At
December 31, 2022, Montana-Dakota's net electric plant investment
was $1.7 billion and its rate base was $1.4 billion.

Electric utility areas

States of operations

Electric generating stations

Retail electric rates, service, accounting and certain securities issuances are subject to regulation by the MTPSC, NDPSC, SDPUC and WYPSC. The
interstate transmission and wholesale electric power operations of Montana-Dakota are also subject to regulation by the FERC under provisions of the
Federal Power Act, as are interconnections with other utilities and power generators, the issuance of certain securities, accounting, cybersecurity and
other matters.

MDU Resources Group, Inc. Form 10-K 11

Part I

Through MISO, Montana-Dakota has access to wholesale energy, ancillary services and capacity markets for its interconnected system. MISO is a
regional transmission organization responsible for operational control of the transmission systems of its members. MISO provides security center
operations, tariff administration and operates day-ahead and real-time energy markets, ancillary services and capacity markets. As a member of
MISO, Montana-Dakota's generation is sold into the MISO energy market and its energy needs are purchased from that market.

The retail customers served and respective revenues by class for the electric business were as follows:

2022

2021

2020

Customers
Served

Revenues

Customers
Served

Revenues

Customers
Served

Revenues

(Dollars in thousands)

119,398 $

135,412

119,113 $

123,043

118,893 $

122,545

23,327

142,722

23,149

133,336

23,050

131,207

230

42,937

231

40,477

230

36,736

1,606

7,335

1,610

6,754

1,609

6,601

144,561 $

328,406

144,103 $

303,610

143,782 $

297,089

Residential

Commercial

Industrial

Other

Other electric revenues, which are largely transmission-related revenues, for Montana-Dakota were $48.7 million, $46.0 million and $34.9 million
for the years ended December 31, 2022, 2021 and 2020, respectively.

The percentage of electric retail revenues by jurisdiction was as follows:

North Dakota

Montana

Wyoming

South Dakota

2022

65 %

21 %

9 %

5 %

2021

64 %

22 %

9 %

5 %

2020

64 %

22 %

9 %

5 %

System Supply, System Demand and Competition Through an interconnected electric system, Montana-Dakota serves markets in portions of North
Dakota, Montana and South Dakota. These markets are highly seasonal and sales volumes depend largely on the weather. Additionally, the average
customer consumption has tended to decline due to increases in energy efficient lighting and appliances being installed. As of December 31, 2022,
the interconnected system consisted of 12 electric generating units at 10 facilities and two small portable diesel generators. Additional details are
included in the table that follows. For 2022, Montana-Dakota's total ZRCs, including its firm purchase power contracts, were 520.8. Montana-
Dakota's planning reserve margin requirement within MISO was 520.2 ZRCs for 2022. The maximum electric peak demand experienced to date
attributable to Montana-Dakota's sales to retail customers on the interconnected system was 611,542 kW in August 2015. Montana-Dakota's latest
forecast for its interconnected system indicates that its annual peak will continue to occur during the summer. Additional energy is purchased as
needed, or in lieu of generation if more economical, from the MISO market. In 2022, Montana-Dakota purchased approximately 45 percent of its net
kWh needs for its interconnected system through the MISO market.

Through the Sheridan System, Montana-Dakota serves Sheridan, Wyoming, and neighboring communities. The maximum peak demand experienced
to date attributable to Montana-Dakota sales to retail customers on that system was approximately 69,688 kW in August 2022. Montana-Dakota has
a power supply contract with Black Hills Power, Inc. to purchase up to 49,000 kW of capacity annually through December 31, 2028. Wygen III also
serves a portion of the needs of Montana-Dakota's Sheridan-area customers.

Approximately 37 percent of the electricity delivered to customers from Montana-Dakota's owned generation in 2022 was from renewable resources.
Although Montana-Dakota's generation resource capacity has increased to serve the needs of its customers, the carbon dioxide emission intensity of
its electric generation resource fleet has been reduced by approximately 40 percent since 2005 through the addition of renewable generation and
with the retirement of aging coal-fired electric generating units, as further discussed below.

The Company ceased operations of Lewis & Clark Station in Sidney, Montana, in March 2021 and decommissioning was completed in October 2022.
In February 2022, the Company ceased operations of Units 1 and 2 at Heskett Station near Mandan, North Dakota, and decommissioning
commenced in July 2022. In addition, in May 2022 Montana-Dakota began construction of Heskett Unit 4, an 88-MW simple-cycle natural gas-fired
combustion turbine peaking unit at the existing Heskett Station near Mandan, North Dakota, with an expected in service date in the summer of
2023.

12 MDU Resources Group, Inc. Form 10-K

The following table sets forth details applicable to the Company's electric generating stations:

Part I

Generating Station

Type

Interconnected System:

North Dakota:

Coyote (b)

Heskett (c)

Heskett

Glen Ullin

Cedar Hills

Thunder Spirit

South Dakota:

Big Stone (b)

Montana:

Steam

Combustion turbine

Renewable

Steam

Fuel

Coal

Natural gas

Heat recovery

Wind

Coal

Nameplate
Rating (kW) at
December 31,
2022

2022 ZRCs (a)

2022 Net
Generation (kWh
in thousands)

103,647

—

89,038

7,500

19,500

155,500

94.0

—

73.5

3.3

3.8

24.6

571,389

47,046

3,551

13,884

64,546

577,567

94,111

106.8

430,748

Lewis & Clark

Reciprocating internal combustion engine

Natural gas

Glendive

Miles City

Combustion turbine

Diamond Willow

Renewable

Natural gas / diesel

Wind

Portable Units (2)

Reciprocating internal combustion engine

Diesel

18,700

75,522

23,150

30,000

3,650

18.0

63.1

18.6

5.3

3.9

1,539

2,260

583

91,105

620,318

414.9

1,804,226

Sheridan System:

Wyoming:

Wygen III (b)

Steam

Coal

28,000

N/A

202,487

648,318

414.9

2,006,713

(a) Interconnected system only. MISO requires generators to obtain their summer capability through the GVTC. The GVTC is then converted to ZRCs

by applying each generator's forced outage factor against its GVTC. Wind generator's ZRCs are calculated based on a wind capacity study
performed annually by MISO. ZRCs are used to meet supply obligations within MISO.

(b) Reflects Montana-Dakota's ownership interest.
(c) Nameplate rating of 86,000 kW. Retired February 2022.

The owners of Coyote Station, including Montana-Dakota, have a contract with Coyote Creek for coal supply to the Coyote Station that expires
December 2040. Montana-Dakota estimates the Coyote Station coal supply agreement to be approximately 1.5 million tons per contract year. For
more information, see Item 8 - Note 21.

The owners of Big Stone Station, including Montana-Dakota, have a coal supply agreement with Peabody COALSALES, LLC to meet all of the Big
Stone Station's fuel requirements through 2024. Montana-Dakota estimates the Big Stone Station coal supply agreement to be approximately
1.5 million tons per contract year.

Montana-Dakota has a coal supply agreement with Wyodak Resources Development Corp., to supply the coal requirements of Wygen III at contracted
pricing through June 1, 2060. Montana-Dakota estimates the maximum annual coal consumption of the facility to be approximately 585,000 tons.

Montana-Dakota has entered into two purchase power agreements to purchase capacity and energy between the retirement of the Lewis & Clark
Station and Heskett Station Units 1 and 2 and the completion of the new Heskett Unit 4. Montana-Dakota also purchased additional capacity and
energy to cover forecasted capacity deficits through May 2026.

Montana-Dakota expects that it has secured adequate capacity available through existing baseload generating stations, renewable generation, turbine
peaking stations, demand reduction programs and firm contracts to meet the peak customer demand requirements of its customers through 2030.
Future capacity needs are expected to be met by constructing new generation resources or acquiring additional capacity through power purchase
contracts or the MISO capacity auction.

Montana-Dakota has major interconnections with its neighboring utilities and considers these interconnections adequate for coordinated planning,
emergency assistance, exchange of capacity and energy and power supply reliability.

Montana-Dakota is subject to competition resulting from customer demands, technological advances and other factors in certain areas, from rural
electric cooperatives, on-site generators, co-generators and municipally owned systems. In addition, competition in varying degrees exists between
electricity and alternative forms of energy such as natural gas.

MDU Resources Group, Inc. Form 10-K 13

Part I

Montana-Dakota is not dependent on any single customer or group of customers for sales of its products and services, where the loss of which would
have a material adverse effect on its business.

Regulatory Matters and Revenues Subject to Refund In North Dakota, Montana, South Dakota and Wyoming, there are various recurring regulatory
mechanisms with annual true-ups that can impact Montana-Dakota's results of operations, which also reflect monthly increases or decreases in
electric fuel and purchased power costs (including demand charges). Montana-Dakota is deferring those electric fuel and purchased power costs that
are greater or less than amounts presently being recovered through its existing rate schedules. Examples of these recurring mechanisms include:
monthly Fuel and Purchased Power Tracking Adjustments, a fuel adjustment clause and an annual Electric Power Supply Cost Adjustment. Such
mechanisms generally provide that these deferred fuel and purchased power costs are recoverable or refundable through rate adjustments which are
filed annually. Montana-Dakota's results of operations reflect 95 percent of the increases or decreases from the base purchased power costs and also
reflect 85 percent of the increases or decreases from the base coal price, which is also recovered through the Electric Power Supply Cost Adjustment
in Wyoming. For more information on regulatory assets and liabilities, see Item 8 - Note 6.

All of Montana-Dakota's wind resources pertaining to electric operations in North Dakota are included in a renewable resource cost adjustment rider,
including the North Dakota investment in Thunder Spirit. Montana-Dakota also has a transmission tracker in North Dakota to recover transmission
costs associated with MISO and SPP, along with certain of the transmission investments not recovered through retail rates. The tracking mechanism
has an annual true-up.

In South Dakota, Montana-Dakota recovers the South Dakota investment in Thunder Spirit through an Infrastructure Rider tracking mechanism that
is subject to an annual true-up. Montana-Dakota also has in place in South Dakota a transmission tracker to recover transmission costs associated
with MISO and SPP, along with certain of the transmission investments not recovered through retail rates. This tracking mechanism also has an
annual true-up.

In Montana, Montana-Dakota recovers in rates, through a tracking mechanism, its allocated share of Montana property-related taxes assessed to
electric operations on an after-tax basis.

For more information on regulatory matters, see Item 8 - Note 20.

Environmental Matters Montana-Dakota's electric operations are subject to federal, state and local laws and regulations providing for air, water and
solid waste pollution control; state facility-siting regulations; zoning and planning regulations of certain state and local authorities; federal and state
health and safety regulations; and state hazard communication standards. The electric operations strive to be in compliance with these regulations.

Montana-Dakota's electric generating facilities have Title V Operating Permits, under the federal Clean Air Act, issued by the states in which they
operate. Each of these permits has a five-year life. Near the expiration of these permits, renewal applications are submitted. Permits continue in
force beyond the expiration date, provided the application for renewal is submitted by the required date, usually six months prior to expiration. The
WYDEQ determined all units at the Neil Simpson Complex, where Wygen III is situated, are to be included within a combined Title V Operating
Permit which was submitted in June 2022. Wygen III is currently allowed to operate under the facility's construction permit until the Title V
Operating Permit is issued. The Title V Operating Permit renewal application for Big Stone Station was submitted timely in October 2021 to the
South Dakota Department of Agriculture & Natural Resources with the permit issuance date not specified at this time.

State water discharge permits issued under the requirements of the federal Clean Water Act are maintained for power production facilities on the
Yellowstone and Missouri rivers. These permits also have five-year lives. Montana-Dakota renews these permits as necessary prior to expiration. Other
permits held by these facilities may include an initial siting permit, which is typically a one-time, preconstruction permit issued by the state; state
permits to dispose of combustion by-products; state authorizations to withdraw water for operations; and Army Corps permits to construct water
intake structures. Montana-Dakota's Army Corps permits grant one-time permission to construct and do not require renewal. Other permit terms vary
and the permits are renewed as necessary.

Montana-Dakota's electric operations are very small-quantity generators of hazardous waste and subject only to minimum regulation under the RCRA
and when required notifies federal and state agencies of episodic generation events. Montana-Dakota routinely handles PCBs from its electric
operations in accordance with federal requirements. PCB storage areas are registered with the EPA as required.

Montana-Dakota did not incur any material capital expenditures in 2022 related to compliance with current environmental laws and regulations.
Environmental capital expenditures are estimated to be $3.1 million, $1.2 million and $1.0 million in 2023, 2024 and 2025, respectively, for the
closure of coal ash management units at Lewis & Clark Station and Heskett Station and to maintain air emissions compliance at its co-owned electric
generating facilities and does not expect to incur any material capital expenditures in 2023, 2024 or 2025 for compliance with current
environmental laws and regulations. Montana-Dakota's capital and operational expenditures could also be affected by future environmental
requirements, such as regional haze emission reductions. For more information, see Item 1A - Risk Factors and Item 7 - MD&A - Business Section
Financial and Operating Data.

14 MDU Resources Group, Inc. Form 10-K

Part I

Natural gas utility areas

States of operations

Natural Gas Distribution

General The Company's natural gas distribution segment is operated
through its wholly owned subsidiaries, consisting of operations from
Montana-Dakota, Cascade and Intermountain. These companies sell
natural gas at retail, serving residential, commercial and industrial
customers in 338 communities and adjacent rural areas across eight
states. They also provide natural gas transportation services to certain
customers on the Company's systems.

These services are provided through distribution and transmission
systems aggregating approximately 21,300 miles and 600 miles,
respectively. The natural gas distribution operations have obtained and
hold, or are in the process of renewing, valid and existing franchises
authorizing them to conduct their natural gas operations in all of the
municipalities they serve where such franchises are required. These
operations intend to seek renewal of all expiring franchises. At
December 31, 2022, the natural gas distribution operations' net
natural gas distribution plant investment was $2.2 billion and its rate
base was $1.6 billion.

The natural gas distribution operations are subject to regulation by the IPUC, MNPUC, MTPSC, NDPSC, OPUC, SDPUC, WUTC and WYPSC regarding
retail rates, service, accounting and certain securities issuances.

The retail customers served and respective revenues by class for the natural gas distribution operations were as follows:

2022

2021

2020

Customers
Served

Revenues

Customers
Served

Revenues

Customers
Served

Revenues

(Dollars in thousands)

Residential

Commercial

Industrial

922,266 $

715,494

905,535 $

548,091

887,429 $

480,466

111,478

450,932

110,196

330,468

108,788

281,175

1,077

41,466

939

31,103

929

26,217

1,034,821 $ 1,207,892 1,016,670 $

909,662

997,146 $

787,858

Transportation and other revenues for the natural gas distribution operations were $65.9 million, $62.3 million and $60.3 million for the years
ended December 31, 2022, 2021 and 2020, respectively.

The percentage of the natural gas distribution operations' retail sales revenues by jurisdiction was as follows:

Idaho

Washington

North Dakota

Montana

Oregon

South Dakota

Minnesota

Wyoming

2022

28 %

26 %

16 %

10 %

8 %

6 %

4 %

2 %

2021

27 %

29 %

15 %

10 %

8 %

6 %

3 %

2 %

2020

30 %

13 %

8 %

6 %

3 %

2 %

System Supply, System Demand and Competition The natural gas distribution operations serve retail natural gas markets, consisting principally of
residential and commercial space and water heating users, in portions of Idaho, Minnesota, Montana, North Dakota, Oregon, South Dakota,
Washington and Wyoming. These markets are highly seasonal and sales volumes depend largely on the weather, the effects of which are mitigated in
certain jurisdictions by weather normalization mechanisms discussed later in Regulatory Matters. Additionally, the average customer consumption
has tended to decline as more efficient appliances and furnaces are installed and as the Company has implemented conservation programs. In
addition to the residential and commercial sales, the utilities transport natural gas for larger commercial and industrial customers who purchase their
own supply of natural gas.

MDU Resources Group, Inc. Form 10-K 15

Part I

Competition resulting from customer demands, technological advances and other factors exists between natural gas and other fuels and forms of
energy. The natural gas distribution operations have established various natural gas transportation service rates for their distribution businesses to
retain interruptible commercial and industrial loads. These rates have enhanced the natural gas distribution operations' competitive posture with
alternative fuels, although certain customers have bypassed the distribution systems by directly accessing transmission pipelines within close
proximity. These bypasses do not have a material effect on results of operations.

The natural gas distribution operations and various distribution transportation customers obtain natural gas for their system requirements directly
from producers, processors and marketers. The Company's purchased natural gas is supplied by a portfolio of contracts specifying market-based
pricing and is transported under transportation agreements with WBI Energy Transmission, Northern Border Pipeline Company, Northwest Pipeline
LLC, South Dakota Intrastate Pipeline, Northern Natural Gas, Gas Transmission Northwest LLC, Northwestern Energy, Viking Gas Transmission
Company, Enbridge Westcoast Pipeline, Inc., Ruby Pipeline LLC, Foothills Pipe Lines Ltd., NOVA Gas Transmission Ltd, TC Energy Corporation and
Northwest Natural. The natural gas distribution operations have contracts for storage services to provide gas supply during the winter heating season
and to meet peak day demand with various storage providers, including WBI Energy Transmission, Dominion Energy Questar Pipeline, LLC, Northwest
Pipeline LLC and Northern Natural Gas. In addition, certain of the operations have entered into natural gas supply management agreements with
various parties. Demand for natural gas, which is a widely traded commodity, has historically been sensitive to seasonal heating and industrial load
requirements, as well as changes in market price. The Company believes supplies are adequate for the natural gas distribution operations to meet its
system natural gas requirements for the next decade. This belief is based on current and projected domestic and regional supplies of natural gas and
the pipeline transmission network currently available through its suppliers and pipeline service providers.

Regulatory Matters The natural gas distribution operations' retail natural gas rate schedules contain clauses permitting adjustments in rates based
upon changes in natural gas commodity, transportation and storage costs. Current tariffs allow for recovery or refunds of under- or over-recovered gas
costs through rate adjustments which are filed annually.

In North Dakota and South Dakota, Montana-Dakota's natural gas tariffs contain weather normalization mechanisms applicable to certain firm
customers that adjust the distribution delivery charges to reflect weather fluctuations during the November 1 through May 1 billing periods.

In Montana, Montana-Dakota recovers in rates, through a tracking mechanism, its allocated share of Montana property-related taxes assessed to
natural gas operations on an after-tax basis.

In Minnesota and Washington, Great Plains and Cascade recover qualifying capital investments related to the safety and integrity of the pipeline
systems through cost recovery tracking mechanisms.

In Oregon, Cascade has a decoupling mechanism in place approved by the OPUC until January 1, 2025, with a review to be completed by
September 30, 2024. Cascade also has an earnings sharing mechanism with respect to its Oregon jurisdictional operations as required by the OPUC.

On July 7, 2016, the WUTC approved a full decoupling mechanism where Cascade is allowed recovery of an average revenue per customer regardless
of actual consumption. The mechanism also includes an earnings sharing component if Cascade earns in excess of its authorized return. On
September 15, 2021, the WUTC extended the effectiveness of the decoupling mechanism until the earlier of the rate effective date resulting from
Cascade's next full general rate case or August 31, 2025.

On December 22, 2016, the MNPUC approved a request by Great Plains to implement a full revenue decoupling mechanism pilot project for three
years. The decoupling mechanism reflects the period January 1 through December 31. The MNPUC adopted the administrative law judge's
recommendation to extend the initial pilot period through the end of 2021. On May 13, 2022, Great Plains requested the continuation of the
revenue decoupling mechanism. A final determination has not yet been made.

In Idaho, Intermountain has the authority to facilitate access for RNG producers to the Company's distribution system for the purpose of moving RNG
to the producer's end-use customers.

For more information on regulatory matters, see Item 8 - Note 20.

Environmental Matters The natural gas distribution operations are subject to federal, state and local environmental, facility-siting, zoning and
planning laws and regulations. The natural gas distribution operations strive to be in compliance with these regulations.

The Company's natural gas distribution operations are very small-quantity generators of hazardous waste, and subject only to minimum regulation
under the RCRA. A Washington state rule defines Cascade as a small-quantity generator, but regulation under the rule is similar to RCRA. Certain
locations of the natural gas distribution operations routinely handle PCBs from their natural gas operations in accordance with federal requirements.
PCB storage areas are registered with the EPA as required. Capital and operational expenditures for natural gas distribution operations could be
affected in a variety of ways by potential new GHG legislation or regulation. In particular, such legislation or regulation would likely increase capital
expenditures for energy efficiency and conservation programs and operational and gas supply costs associated with GHG emissions compliance.
Natural gas distribution operations expect to recover the operational and capital expenditures for GHG regulatory compliance in rates consistent with

16 MDU Resources Group, Inc. Form 10-K

Part I

the recovery of other reasonable costs of complying with environmental laws and regulations. For more information, see Item 7 - MD&A - Business
Section Financial and Operating Data.

The natural gas distribution operations did not incur any material capital expenditures in 2022 related to compliance with current environmental
laws and regulations. However, Cascade does expect to incur capital expenditures for compliance with the Oregon Climate Protection Program and
Washington Climate Commitment Act, which are estimated to be $4.3 million, $19.1 million and $2.6 million, respectively, in 2023, 2024 and
2025. The capital expenditures are for the development and construction of a renewable natural gas facility at the Deschutes County Landfill near
Bend, Oregon. Except as to what may be ultimately determined with regard to the issues described in the following paragraph and the items noted for
Cascade, the natural gas distribution operations do not expect to incur any material capital expenditures related to compliance with current
environmental laws and regulations through 2025.

Montana-Dakota has ties to six historic manufactured gas plants as a successor corporation or through direct ownership of the plant. Montana-Dakota
is investigating possible soil and groundwater impacts due to the operation of two of these former manufactured gas plant sites. To the extent not
covered by insurance, Montana-Dakota may seek recovery in its natural gas rates charged to customers for certain investigation and remediation costs
incurred for these sites. Cascade has ties to nine historic manufactured gas plants as a successor corporation or through direct ownership of the
plant. Cascade is involved in the investigation and remediation of one of these manufactured gas plants in Washington. To the extent not covered by
insurance, Cascade will seek recovery of investigation and remediation costs through its natural gas rates charged to customers.

See Item 8 - Note 21 for further discussion of certain manufactured gas plant sites.

Pipeline

General WBI Energy owns and operates both regulated and non-
regulated businesses. The regulated business of this segment, WBI
Energy Transmission, owns and operates approximately 3,800 miles of
natural gas transmission and storage lines.

WBI Energy Transmission's underground storage fields provide storage
services to local distribution companies, industrial customers, natural
gas marketers and others, and serve to enhance system reliability. Its
system is strategically located near four natural gas producing basins,
making natural gas supplies available to its transportation and storage
customers. The system has 14 interconnecting points with other
pipeline facilities allowing for the receipt and/or delivery of natural gas
to and from other regions of the country and from Canada. Under the
Natural Gas Act, as amended, WBI Energy Transmission is subject to
the jurisdiction of the FERC regarding certificate, rate, service and
accounting matters, and at December 31, 2022, its net plant
investment was $798.1 million.

The non-regulated business of this segment provides a variety of
energy-related services, including cathodic protection and energy
efficiency product sales and installation services to large end-users.

Company storage ﬁelds

Pipeline systems

States of operations

Interconnecting pipelines

A majority of the pipeline business is transacted in the Rocky Mountain and northern Great Plains regions of the United States.

System Supply, System Demand and Competition Natural gas supplies emanate from traditional and nontraditional production activities in the region
from both on-system and off-system supply sources. Incremental supply from nontraditional sources, such as the Bakken area in Montana and North
Dakota, have helped offset declines in traditional regional supply sources and supports WBI Energy Transmission's transportation and storage
services. In addition, off-system supply sources are available through the Company's interconnections with other pipeline systems. WBI Energy
Transmission continues to look for opportunities, such as the identified growth projects discussed in Item 7 - MD&A - Pipeline Outlook, to increase
transportation and storage services through system expansion and/or other pipeline interconnections or enhancements that could provide future
benefits.

WBI Energy Transmission's underground natural gas storage facilities have a certificated storage capacity of approximately 350 Bcf, including
193 Bcf of working gas capacity, 83 Bcf of cushion gas and 74 Bcf of native gas. These storage facilities enable customers to purchase natural gas
throughout the year and meet winter peak requirements.

WBI Energy Transmission competes with several pipelines for its customers' transportation business and at times may discount rates in an effort to
retain market share; however, the strategic location of its system near four natural gas producing basins and the availability of underground storage
services, along with interconnections with other pipelines, enhances its competitive position.

MDU Resources Group, Inc. Form 10-K 17

Part I

Although certain of WBI Energy Transmission's firm customers, including its largest firm customer Montana-Dakota, serve relatively secure
residential, commercial and industrial end-users, they generally all have some price-sensitive end-users that could switch to alternate fuels.

WBI Energy Transmission transports substantially all of Montana-Dakota's natural gas, primarily utilizing firm transportation agreements, which for
2022 represented 22 percent of WBI Energy Transmission's subscribed firm transportation contract demand. The majority of the firm transportation
agreements with Montana-Dakota expire in June 2027. In addition, Montana-Dakota has a contract, expiring in July 2035, with WBI Energy
Transmission to provide firm storage services to facilitate meeting Montana-Dakota's winter peak requirements.

The non-regulated business of this segment competes for existing customers in the areas in which it operates. Its focus on customer service and the
variety of services it offers serve to enhance its competitive position.

WBI Energy is not dependent on any single customer or group of customers for sales of its products and services, where the loss of which would have
a material adverse effect on its business. WBI Energy had one third-party customer that accounted for approximately 11% of its 2022 revenue.

Environmental Matters The pipeline operations are subject to federal, state and local environmental, facility-siting, zoning and planning laws and
regulations.

Administration of certain provisions of federal environmental laws is delegated to the states where WBI Energy and its subsidiaries operate.
Administering agencies may issue permits with varying terms and operational compliance conditions. Permits are renewed and modified, as
necessary, based on defined permit expiration dates, operational demand, facility upgrades or modifications, and/or regulatory changes. The pipeline
operations strive to be in compliance with these regulations.

Detailed environmental assessments and/or environmental impact statements as required by the National Environmental Policy Act are included in
the FERC's environmental review process for both the construction and abandonment of WBI Energy Transmission's natural gas transmission
pipelines, compressor stations and storage facilities.

The EPA recently proposed additional rules to update, strengthen and expand standards intended to significantly reduce GHG emissions and other air
pollutants from the oil and natural gas industries. The standards will apply to natural gas compressors, pneumatic controllers and pumps, fugitive
emissions components and super-emitter events. The EPA projects the final rules will be issued in August 2023. Additionally, the EPA anticipates
revising the current GHG reporting rules to incorporate provisions in the IRA. These revisions are anticipated to be issued in April 2023. The
Company continues to monitor and assess the proposed rules and the potential impacts they may have on its business processes, current and future
projects, results of operations and disclosures.

The pipeline operations did not incur any material capital expenditures related to compliance with current environmental laws and regulations in
2022 and do not expect to incur any material capital expenditures related to compliance with current environmental laws and regulations through
2025. Expected or anticipated rules are not included in the capital expenditures for 2023 to 2025. For more information on the capital expenditures
for this segment, see Item 7 - MD&A - Capital Expenditures.

18 MDU Resources Group, Inc. Form 10-K

Construction Materials and Contracting

States of operation

Market areas

Part I

General Knife River mines, processes and sells construction aggregates
(crushed stone and sand and gravel); produces and sells asphalt; and
supplies ready-mix concrete. These products are used in most types of
construction, performed by Knife River and other companies,
including roads, freeways and bridges, as well as homes, schools,
shopping centers, office buildings and industrial parks. Knife River's
aggregate reserves provide the foundation for the vertical integration of
its contracting services with its construction materials to support its
aggregate-based product lines including heavy-civil construction,
asphalt paving, concrete construction and site development and
grading. Although not common to all locations, the segment also
includes the sale of cement, liquid asphalt modification and
distribution, various finished concrete products, merchandise and
other building materials and related contracting services.

Through its network of aggregate sites, ready-mix plants and asphalt
plants, the Company supplies construction materials and contracting
services to public and private customers in 14 states.

Competition Knife River's construction materials products and contracting services are marketed under competitive conditions. Price is the principal
competitive force to which these products and services are subject, with service, quality, delivery time and proximity to the customer as well as
technical expertise, safety ratings, financial and operational resources and industry reputation around dependability also being significant factors.
Knife River focuses on markets located near aggregate sites to reduce transportation costs which allows Knife River to remain competitive with the
pricing of aggregate products. The number and size of competitors varies in each of Knife River's principal market areas and product lines.

The demand for construction materials products and contracting services is significantly influenced by the cyclical nature of the construction
industry. In addition, activity in certain locations may be seasonal in nature due to the effects of weather. The key economic factors affecting product
demand are changes in the level of local, state and federal governmental spending on roads and infrastructure projects, general economic conditions
within the market area that influence the commercial and residential sectors, and prevailing interest rates.

Knife River's customers are a diverse group which includes federal, state and municipal governmental agencies, industrial, commercial and
residential developers, and other private parties. The mix of sales by customer class varies each year depending on the fluctuation of work. Knife
River is not dependent on any single customer or group of customers for sales of its products and services, the loss of which would have a material
adverse effect on its construction materials businesses. No individual customer accounted for more than 10% of its 2022 revenue.

Reserve Information Knife River mines crushed stone and sand and gravel at its 188 active aggregate sites. The aggregates produced by Knife River
are utilized in general construction and are a major component in the production of ready-mix concrete and asphalt.

Aggregate reserve and resource estimates are calculated based on available data. Supporting data includes, but is not limited to, drill holes, geologic
testing and other subsurface investigations; and surface feature investigations, such as, mine high walls, aerial photography, topography, and other
data. Using available data, a final topography map is created with computer software and is used to calculate the volume variance between existing
and final topographies. Volumes are then converted to tons using appropriate conversion factors. Property setbacks and other regulatory restrictions
and limitations are identified to determine the total area available for mining. Knife River also considers mine plans, economic viability and
production history in the aggregate reserve and resource estimates. Mineral reserves are defined as an estimate of tonnage that, in the opinion of the
qualified person, can be economically mined or extracted, which includes diluting materials and allowances for losses that may occur throughout the
process. Mineral resources are defined as a concentration or occurrence of material of economic interest in such form, grade or quality, and quantity
that has a reasonable prospect to be economically extracted. Knife River’s reserve estimates include only salable tonnage and thus exclude waste
materials that are generated in the crushing and processing phases of the operation. The reserves are based on estimates of volumes that can be
economically extracted and sold to meet current market and product applications.

Knife River’s reserves and resources are on properties that are permitted, or are expected to be permitted, for mining under current regulatory
requirements. The data used to calculate reserves and resource estimates may require revisions in the future to account for changes in customer
requirements and unknown geological occurrences.

Knife River classifies the applicable quantity of a particular deposit as a reserve or resource by reviewing and analyzing, independently, each
geological formation, testing results and production processes, along with other modifying factors, to determine an expected yield of recoverable
tonnage an area will produce. These results may have an effect on mine plans and the selection of processing equipment. The results are reviewed by
the qualified person and presented to the management team.

MDU Resources Group, Inc. Form 10-K 19

Part I

Management assesses the risks associated with aggregate reserve and resource estimates. These estimates may be affected by variability in the
properties of the material, limits of the accuracy of the geotechnical data and operational difficulties in extraction of the computed material.
Additionally, management assesses the risks associated in obtaining and maintaining the various land use, mining and environmental permits
necessary for the properties to operate as mines. Annual reviews of mining reserves are conducted by the qualified person and include procedures
such as ensuring financial assumptions related to life of mine expenses are based on the most accurate estimates available.

States of operation

Aggregate pit (188 active pits)

Knife River has reviewed its properties and has determined it does not have any individual sites that are material. The following table sets forth
details applicable to Knife River's aggregate production and aggregate sites as of December 31, 2022.

Total Annual Aggregate Production

Aggregate Sites

Production Area

Crushed Stone

Sand & Gravel

Crushed Stone

Sand & Gravel

(Tons in thousands)

Owned

Leased

Owned

Leased

Alaska

California

Hawaii

Idaho

Minnesota

Montana

North Dakota

Oregon

South Dakota

Texas

Wyoming

—

377

1,470

375

—

6,882

1,878

1,181

1,166

1,041

1,665

—

2,339

2,410

3,043

897

4,017

2,226

167

1,043

13,334

18,848

—

20 MDU Resources Group, Inc. Form 10-K

Part I

The following table sets forth details applicable to Knife River's aggregate reserves as of December 31, 2022.

Crushed Stone

Sand & Gravel

Production
Area

Aggregate
Sites

Proven
Mineral
Reserves

Probable
Mineral
Reserves

Total
Mineral
Reserves

Proven
Mineral
Reserves

Probable
Mineral
Reserves

Total
Mineral
Reserves

Total Mineral
Reserves

Alaska

California

Hawaii

Idaho

Minnesota

Montana

North Dakota

Oregon

(Tons in thousands)

—

— 12,542

12,542

10 89,913

— 89,913 19,070

— 19,070

108,983

5 42,964

662 43,626

—

43,626

230

—

230 22,689 10,914 33,603

60 15,853

— 15,853 45,883 13,301 59,184

—

— 60,980

9,950 70,930

— 20,379

1,999 22,378

33,833

75,037

70,930

22,378

49 361,217 14,046 375,263 118,209 13,477 131,686

506,949

South Dakota

6 29,706

3,000 32,706

3,284

6 65,451

4,691 70,142

8,368

—

3,284

35,990

8,368

78,510

13 76,895 11,582 88,477 14,513 14,197 28,710

117,187

188 682,229 33,981 716,210 325,917 63,838 389,755 1,105,965

Texas

Wyoming

* The average selling price per ton for crushed stone and sand and gravel was $16.12 and $10.53,

respectively, in 2022.

** The aggregates mined are of suitable grade and quality to be used as construction materials and no further

grade or quality disclosure is applicable.

The following table sets forth details applicable to Knife River's aggregate resources as of December 31, 2022.

Sand & Gravel

Production
Area

Aggregate
Sites

Measured
Mineral
Resources

Indicated
Mineral
Resources

Measured
+
Indicated
Mineral
Resources

Inferred
Mineral
Resources

California

Minnesota

Montana

Oregon

(Tons in thousands)

1 14,673

— 14,673

—

— 11,500

2 41,727

— 41,727

3 67,900

— 67,900

—

373

—

373

* Minnesota and Montana each have a site that includes both reserves and

resources, which are included in the aggregate sites for reserves.

Of Knife River’s 191 properties, 139 are in a production stage, 49 in a development stage and three are classified as exploration stage properties. As
of December 31, 2022, Knife River had 1.1 billion tons of estimated proven and probable reserves of which 939 million tons are located on
production stage properties and 167 million tons on developmental stage properties. The Company classifies aggregates located on exploration stage
properties as resources. Knife River’s aggregate annual production in tons for all its mining properties was 32.2 million, 31.1 million and
28.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The average selling price per ton for crushed stone and sand and gravel was $16.12 and $10.53, respectively, in 2022. Actual pricing varies by
location and market. The price for each commodity was calculated by dividing 2022 revenues by tons sold. The average pricing is based on salable
product, or materials that are ready for sale. Pricing for aggregates tends to remain similar for long periods of time and resources generally realize
similar pricing to reserves when extracted and sold; therefore, Knife River uses current pricing as an estimate of future pricing. Pricing is assessed
frequently to verify there have been no material changes. Knife River expects future sales prices to exceed future production costs, resulting in
minimal change to the economic viability of the disclosed reserves and resources. Knife River believes the current sales price is reasonable and
justifiable to estimate the aggregates' current fair value, while the balance sheet reflects the historical costs.

Knife River owns 121 properties, of which 118 are active sites, and leases another 70 to conduct its mining operations. Its reserves are comprised of
566 million tons on properties that are owned and 540 million tons that are leased. The remaining reserve life in years was calculated by dividing
remaining reserves by the three-year average production from 2020 through 2022. Knife River estimates the useful life of its owned reserves are
approximately 36 years based on the most recent three-year average production. Approximately 47 percent of the reserves under lease have lease
expiration dates of 20 years or more and the weighted average years remaining on all leases containing estimated proven aggregate reserves is
approximately 21 years, including options for renewal that are at Knife River’s discretion. The average time necessary to produce remaining aggregate
reserves from its leased sites is approximately 42 years. Some sites have leases that expire prior to the exhaustion of the estimated reserves. The

MDU Resources Group, Inc. Form 10-K 21

Part I

estimated reserve life assumes, based on Knife River’s experience, that leases will be renewed to allow sufficient time to fully recover these reserves.
Actual useful lives of these reserves will be subject to, among other things, fluctuations in customer demand, customer specifications, geological
conditions and changes in mining plans.

Internal Controls Over Aggregate Reserves
Reserve and resource estimates are based on the analyses of available data by qualified internal mining engineers, operating personnel and third-
party geologists. Senior management reviews and approves reserve and resource quantity estimates and reserve classifications, including the major
assumptions used in determining the estimates, such as life, pricing, cost and volume, among other things, to ensure they are materially accurate.
For aggregate reserve and resource additions, management, which includes the qualified person, performs its due diligence and reviews the study of
technical, economic and operating factors, as well as applicable supplemental information, including a summary of the site's geotechnical report.
Knife River maintains a database of all aggregate reserves, which is reconciled at least annually and reviewed and approved by the qualified person.

The evaluation, classification and estimation of reserves has inherent risks, including changing geotechnical, market and permitting conditions. The
qualified person and management work together to assess these risks regularly and amend the reserve and resource assessments as new information
becomes available.

Environmental Matters Knife River's construction materials and contracting operations are subject to regulation customary for such operations,
including federal, state and local environmental compliance and reclamation regulations. Knife River strives to be in compliance with these
regulations. Individual permits applicable to Knife River's various operations are managed and tracked as they relate to the statuses of the
application, modification, renewal, compliance and reporting procedures.

Knife River's asphalt and ready-mix concrete manufacturing plants and aggregate processing plants are subject to the federal Clean Air Act and the
federal Clean Water Act requirements for controlling air emissions and water discharges. Some mining and construction activities are also subject to
these laws. In most of the states where Knife River operates, these regulatory programs are delegated to state and local regulatory authorities. Knife
River's facilities are also subject to the RCRA as it applies to the management of hazardous wastes and underground storage tank systems. These
programs are generally delegated to the state and local authorities in the states where Knife River operates. Knife River's facilities must comply with
requirements for managing wastes and underground storage tank systems.

Certain activities of Knife River are directly regulated by federal agencies. For example, certain in-water mining operations are subject to provisions of
the federal Clean Water Act that are administered by the Army Corps. Knife River has several such operations, including gravel bar skimming and
dredging operations, and Knife River has the associated required permits. The expiration dates of these permits vary, with five years generally being
the longest term.

Knife River's operations are also occasionally subject to the ESA. For example, land use regulations often require environmental studies, including
wildlife studies, before a permit may be granted for a new or expanded mining facility or an asphalt or concrete plant. If endangered species or their
habitats are identified, ESA requirements for protection, mitigation or avoidance apply. Endangered species protection requirements are usually
included as part of land use permit conditions. Typical conditions include avoidance, setbacks, restrictions on operations during certain times of the
breeding or rearing season, and construction or purchase of mitigation habitat. Knife River's operations are also subject to state and federal cultural
resource protection laws when new areas are disturbed for mining operations or processing plants. Land use permit applications generally require that
areas proposed for mining or other surface disturbances be surveyed for cultural resources. If any are identified, they must be protected or managed
in accordance with regulatory agency requirements.

The most comprehensive environmental permit requirements are usually associated with new mining operations, although requirements vary widely
from state to state and even within states. In some areas, land use regulations and associated permitting requirements are minimal. However, some
states and local jurisdictions have very demanding requirements for permitting new mines. Environmental impact reports are sometimes required
before a mining permit application can be considered for approval. These reports can take up to several years to complete. The report can include
projected impacts of the proposed project on air and water quality, wildlife, noise levels, traffic, scenic vistas and other environmental factors. The
reports generally include suggested actions to mitigate the projected adverse impacts.

Provisions for public hearings and public comments are usually included in land use permit application review procedures in the counties where
Knife River operates. After considering environmental, mine plan and reclamation information provided by the permittee, as well as comments from
the public and other regulatory agencies, the local authority approves or denies the permit application. Denial is rare, but land use permits often
include conditions that must be addressed by the permittee. Conditions may include property line setbacks, reclamation requirements, environmental
monitoring and reporting, operating hour restrictions, financial guarantees for reclamation, and other requirements intended to protect the
environment or address concerns submitted by the public or other regulatory agencies.

Knife River has been successful in obtaining mining and other land use permits so sufficient permitted reserves are available to support its
operations. For mining operations, this often requires considerable advanced planning to ensure sufficient time is available to complete the
permitting process before the newly permitted aggregate reserve is needed to support Knife River's operations.

22 MDU Resources Group, Inc. Form 10-K

Part I

Knife River's Gascoyne surface coal mine last produced coal in 1995 but continues to be subject to reclamation requirements of the Surface Mining
Control and Reclamation Act, as well as the North Dakota Surface Mining Act. Portions of the Gascoyne Mine remain under reclamation bond until
the 10-year revegetation liability period has expired. A portion of the original permit has been released from bond and additional areas are currently
in the process of having the bond released. Knife River intends to request bond release as soon as it is deemed possible.

Knife River did not incur any material capital expenditures in 2022 related to compliance with current environmental laws and regulations and,
except as to what may be ultimately determined with regard to the issues described in the following paragraph, Knife River does not expect to incur
any material capital expenditures related to compliance with current environmental laws and regulations through 2025.

In December 2000, Knife River - Northwest was named by the EPA as a PRP in connection with the cleanup of a commercial property site, acquired
by Knife River - Northwest in 1999, and part of the Portland, Oregon, Harbor Superfund Site. For more information, see Item 8 - Note 21.

Mine Safety The Dodd-Frank Act requires disclosure of certain mine safety information. For more information, see Item 4 - Mine Safety Disclosures.

Construction Services

Transmission & Distribution
Electrical & Mechanical

States of Operation
Corporate Ofﬁce

AL GA

General MDU Construction Services operates in nearly every state
across the country and provides a full spectrum of construction
services through its electrical and mechanical and transmission and
distribution specialty contracting services across the United States.
These specialty contracting services are provided to utilities,
manufacturing, transportation, commercial, industrial, institutional,
renewable and governmental customers. Its electrical and mechanical
contracting services include construction and maintenance of
electrical and communication wiring and infrastructure, fire
suppression systems, and mechanical piping and services. Its
transmission and distribution contracting services include construction
and maintenance of overhead and underground electrical, gas and
communication infrastructure, as well as manufacturing and
distribution of transmission line construction equipment and tools.

Construction and maintenance crews are active year round. However,
activity in certain locations may be seasonal in nature due to the
effects of weather. MDU Construction Services works with the National
Electrical Contractors Association, the IBEW and other trade
associations on hiring and recruiting a qualified workforce.

MDU Construction Services operates a fleet of owned and leased trucks and trailers, support vehicles and specialty construction equipment, such as
backhoes, excavators, trenchers, generators, boring machines and cranes. In addition, as of December 31, 2022, MDU Construction Services owned
or leased facilities in 19 states. This space is used for offices, equipment yards, manufacturing, warehousing, storage and vehicle shops.

Competition MDU Construction Services operates in a highly competitive business environment. Most of MDU Construction Services' work is obtained
on the basis of competitive bids or by negotiation of either cost-plus or fixed-price contracts. Its workforce and equipment are highly mobile,
providing greater flexibility in the size and location of MDU Construction Services' market area. Competition is based primarily on price and
reputation for quality, safety and reliability. The size and location of the services provided, as well as the state of the economy, are factors in the
number of competitors that MDU Construction Services will encounter on any particular project. MDU Construction Services believes the
diversification of the services it provides, the markets it serves in the United States and the quality and management of its workforce enable it to
effectively operate in this competitive environment.

Utilities and independent contractors represent the largest customer base for this segment. Accordingly, utility and subcontract work accounts for a
significant portion of the work performed by MDU Construction Services and the amount of construction contracts is dependent on the level and
timing of maintenance and construction programs undertaken by customers. MDU Construction Services benefits from repeat customers and strives
to maintain successful long-term relationships with its customers. The mix of sales by customer class varies each year depending on available work.
MDU Construction Services is not dependent on any single customer or group of customers for sales of its products and services, the loss of which
would have a material adverse effect on its business. MDU Construction Services had one customer that accounted for approximately 15% of its
revenue for 2022.

Environmental Matters MDU Construction Services' operations are subject to regulation customary for the industry, including federal, state and local
environmental compliance. MDU Construction Services strives to be in compliance with these regulations.

MDU Resources Group, Inc. Form 10-K 23

Part I

The nature of MDU Construction Services' operations is such that few, if any, environmental permits are required. Operational convenience supports
the use of petroleum storage tanks in several locations, which are permitted under state programs authorized by the EPA. MDU Construction Services
has no ongoing remediation related to releases from petroleum storage tanks. MDU Construction Services' operations are conditionally exempt small-
quantity waste generators, subject to minimal regulation under the RCRA. Federal permits for specific construction and maintenance jobs that may
require these permits are typically obtained by the hiring entity, and not by MDU Construction Services.

MDU Construction Services did not incur any material capital expenditures in 2022 related to compliance with current environmental laws and
regulations and does not expect to incur any material capital expenditures related to compliance with current environmental laws and regulations
through 2025.

Item 1A. Risk Factors

The Company's business and financial results are subject to a number of risks and uncertainties, including those set forth below and in other
documents filed with the SEC. The factors and other matters discussed herein are important factors that could cause actual results or outcomes for
the Company to differ materially from those discussed in the forward-looking statements included elsewhere in this document. If any of the risks
described below actually occur, the Company's business, prospects, financial condition or financial results could be materially harmed. The following
are the most material risk factors applicable to the Company and are not necessarily listed in order of importance or probability of occurrence.

Separation Risks
The proposed separation of Knife River Holding Company into an independent, publicly traded company is subject to various risks and uncertainties, and may
not be completed on the terms or timeline currently contemplated, if at all.
On August 4, 2022, the Company announced its plan to separate Knife River Holding Company, the construction materials and contracting business,
from the Company, which would result in two independent, publicly traded companies. The execution of the proposed separation has required and
will continue to require significant time and attention from the Company’s senior management and employees, which could disrupt the Company’s
ongoing business and adversely affect financial results and results of operations. Further, the Company's employees may be distracted due to the
uncertainty regarding their future roles with the Company or Knife River Holding Company pending the consummation of the proposed separation.
Additionally, foreseen and unforeseen costs may be incurred in connection with the proposed separation, including fees such as advisory, accounting,
tax, legal, reorganization, debt breakage, restructuring, severance/employee benefit-related, regulatory, SEC filing and other professional services,
some of which may be incurred regardless if the separation occurs. The proposed separation is also complex, and completion of the proposed
separation and the timing of its completion will be subject to a number of factors and conditions, including the readiness of the new company to
operate as an independent public company and finalization of the capital structure of the new company. Unanticipated developments could delay,
prevent or otherwise adversely affect the proposed separation, including, but not limited to, changes in general economic and financial market
conditions, material adverse changes in business or industry conditions, unanticipated costs and potential problems or delays in obtaining various
regulatory and tax approvals or clearances. In particular, changes in interest or exchange rates and the effects of inflation could delay or adversely
affect the proposed separation, including in connection with any debt financing transactions undertaken in connection with the separation or the
terms of any indebtedness incurred in connection therewith. There can be no assurances that the Company will be able to complete the proposed
separation on the terms or on the timeline that was announced, if at all.

If the distribution, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes,
the Company and its stockholders could be subject to significant tax liabilities.
The Company is seeking a private letter ruling from the IRS and opinion(s) of its tax advisors, regarding certain U.S. federal income tax matters
relating to the separation and the distribution, including, with respect to the opinion(s), to the effect that the distribution will be a transaction
described in Section 355(a) of the Code. The IRS private letter ruling and the opinion(s) of tax advisors will be based upon and rely on, among other
things, various facts and assumptions, as well as certain representations, statements and undertakings of the Company, including those relating to
the past and future conduct of the Company. If any of these representations, statements or undertakings is, or becomes, inaccurate or incomplete, or
if the Company should breach any of the representations or covenants contained in any of the separation-related agreements and documents or in
any documents relating to the IRS private letter ruling and/or the opinion(s) of tax advisors, the IRS private letter ruling and/or the opinion(s) of tax
advisors may be invalid and the conclusions reached therein could be jeopardized.

Notwithstanding receipt of the IRS private letter ruling and the opinion(s) of tax advisors, the IRS could determine that the distribution and/or certain
related transactions should be treated as taxable transactions for U.S. federal income tax purposes if it determines that any of the representations,
assumptions, or undertakings upon which the IRS private letter ruling or the opinion(s) of tax advisors were based are false or have been violated. In
addition, neither the IRS private letter ruling nor the opinion(s) of tax advisors will address all of the issues that are relevant to determining whether
the distribution, together with certain related transactions, qualifies as a transaction that is generally tax-free for U.S. federal income tax purposes.
Further, the opinion(s) of tax advisors represent the judgment of such tax advisors and are not binding on the IRS or any court, and the IRS or a court
may disagree with the conclusions in the opinion(s) of tax advisors. Accordingly, notwithstanding receipt by the Company of the IRS private letter
ruling and the opinion(s) of tax advisors, there can be no assurance that the IRS will not assert that the distribution and/or certain related
transactions do not qualify for tax-free treatment for U.S. federal income tax purposes or that a court would not sustain such a challenge. In the
event the IRS were to prevail in such challenge, the Company and its stockholders could be subject to significant U.S. federal income tax liability.

24 MDU Resources Group, Inc. Form 10-K

Part I

If the distribution, together with related transactions, fails to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes
under Sections 355 and 368(a)(1)(D) of the Code, in general, for U.S. federal income tax purposes, the Company would recognize taxable gain as if
it had sold Knife River Holding Company common stock in a taxable sale for its fair market value (unless the Company and Knife River Holding
Company jointly make an election under Section 336(e) of the Code with respect to the distribution, in which case, in general, (a) the Company
would recognize a taxable gain as if Knife River Holding Company had sold all of its assets in a taxable sale in exchange for an amount equal to the
fair market value of Knife River Holding Company common stock and the assumption of all of its liabilities and (b) Knife River Holding Company
would obtain a related step-up in the basis of its assets) and, if the distribution fails to qualify as a transaction that is generally tax-free for U.S.
federal income tax purposes under Section 355, the Company's stockholders who receive Knife River Holding Company shares in the distribution
would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.

The Company may not achieve some or all of the expected benefits of the separation, and the separation may materially and adversely affect its financial
position, results of operations and cash flows.
The Company may be unable to achieve the full strategic and financial benefits expected to result from the separation, or such benefits may be
delayed or not occur at all. The separation and distribution are expected to provide the following benefits, among others:

• A distinct investment identity allowing investors to evaluate the merits, strategy, performance and future prospects of the Company's regulated

energy delivery business and Knife River Holding Company's aggregates-based construction materials and contracting services business.

• Enhanced strategic focus to more effectively pursue individualized strategies specific to the industries in which each operates and use equity

tailored to its own business to enhance acquisition and capital programs.

• More efficient allocation of capital for both the Company and Knife River Holding Company based on each company’s profitability, cash flow

and growth opportunities.

• Creating an independent equity structure that will facilitate the Company's and Knife River Holding Company's ability to deploy capital toward

its specific growth opportunities.

• Enhanced employee hiring and retention by, among other things, improving the alignment of management and employee incentives with

industry specific performance and growth objectives.

The Company may not achieve these and/or other anticipated benefits for a variety of reasons, including, among others, that: (a) the separation will
require significant time and effort from management, which may divert management’s attention from operating and growing the business;
(b) following the separation and distribution, the Company may be more susceptible to stock market fluctuations and other adverse events;
(c) following the separation and distribution, the Company may not be able to maintain its historical practices with respect to dividends; (d) following
the separation and distribution, the Company's business will be less diversified than prior to the separation and distribution; and (e) the other actions
required to separate the Company and Knife River Holding Company’s respective businesses could disrupt their operations. If the Company fails to
achieve some or all of the benefits expected to result from the separation, or if such benefits are delayed, it could have a material adverse effect on
its financial position, results of operations and cash flows.

The Company may fail to perform under various transaction agreements that are expected be executed as part of the separation. The Company's inability to
favorably resolve any disputes that arise with Knife River Holding Company with respect to their various past and ongoing relationships may adversely affect
the Company's operating results.
In connection with the separation and prior to the distribution, it is anticipated that the Company will enter into a separation agreement and will also
enter into various other agreements, including a transition services agreement, a tax matters agreement and an employee matters agreement with
Knife River Holding Company. The separation agreement, the tax matters agreement and the employee matters agreement will determine the
allocation of assets and liabilities between the companies following the separation for those respective areas and will include any necessary
indemnifications related to liabilities and obligations. The transition services agreement will provide for the performance of certain services by the
Company for the benefit of Knife River Holding Company, or in some cases certain services provided by Knife River Holding Company for the benefit
of the Company, for a limited period of time after the separation. Knife River Holding Company will rely on the Company to satisfy its obligations
under these agreements. If the Company is unable to satisfy its obligations under these agreements, including its indemnification obligations, the
Company could be subject to disputes.

The Company may not be able to resolve potential conflicts, and even if it does, the resolution may be less favorable than if it were dealing with an
unaffiliated party. Disputes may arise between the Company and Knife River Holding Company in a number of areas relating to the various
transaction agreements, including, among other things:

• Labor, tax, employee benefit, indemnification and other matters arising from Knife River Holding Company's separation from the Company.

• Employee retention and recruiting.

• Business combinations involving Knife River Holding Company.

• And the nature, quality and pricing of services that the Company has agreed to provide.

MDU Resources Group, Inc. Form 10-K 25

Part I

If the expected separation and distribution occurs, certain members of management, directors and stockholders will hold stock in both the Company and Knife
River Holding Company, and as a result may face actual or potential conflicts of interest.
If the separation and distribution occurs, the management and directors of each of the Company and Knife River Holding Company may own both the
Company common stock and Knife River Holding Company common stock. This ownership overlap could create, or appear to create, potential
conflicts of interest when the Company's management and directors and Knife River Holding Company's management and directors face decisions
that could have different implications for the Company and Knife River Holding Company. For example, potential conflicts of interest could arise in
connection with the resolution of any dispute between the Company and Knife River Holding Company regarding the terms of the agreements
governing the distribution and the relationship between the Company thereafter and Knife River Holding Company. These agreements include the
separation and distribution agreement, the tax matters agreement, the employee matters agreement, the transition services agreement, the
stockholder and registration rights agreement and any commercial agreements between the parties or their affiliates. Potential conflicts of interest
may also arise out of any commercial arrangements that the Company or Knife River Holding Company may enter into in the future.

Following the separation, there may be a substantial change in the Company's stockholder base and its stock price may fluctuate significantly.
Until the market has fully evaluated the Company's remaining businesses without Knife River Holding Company, the price at which shares of the
Company common stock trade may fluctuate more significantly than might otherwise be typical, even with other market conditions, including general
volatility, held constant. There can be no assurance that the combined value of the common stock of the two companies will be equal to or greater
than what the value of the Company’s common stock would have been had the proposed separation not occurred. It is possible that the Company's
stockholders will sell shares of common stock for a variety of reasons. For example, such stockholders may not believe that the Company's remaining
business profile or its level of market capitalization fits their investment objectives. The sale of significant amounts of the Company's common stock
or the perception in the market that this will occur may lower the market price of the Company's common stock. The increased volatility of the
Company's common stock price following the distribution may have a material adverse effect on its business, financial condition and results of
operations.

The Company could experience temporary interruptions in business operations and incur additional costs as it separates information technology infrastructure
and systems.
The Company is in the process of preparing information technology infrastructure and systems to support critical business functions at both the
Company and Knife River Holding Company. If the Company cannot effectively transition both the Company and Knife River Holding Company to
stand-alone systems and functions, they may experience disruptions to business operations, which could have a material adverse effect on
profitability. In addition, the Company's costs for the operation of these systems may be higher than the amounts historically reflected in the
consolidated financial statements.

The Company's review of options to optimize the value of its construction services business is subject to various risks and uncertainties and may not achieve
its intended goals.
On November 3, 2022, the Company announced its intention to create two pure-play publicly traded companies, one focused on regulated energy
delivery and the other on construction materials, and to achieve this future structure, the board authorized management to commence a strategic
review process of MDU Construction Services. This process is active and ongoing. The uncertainties associated with this process, foreseen and
unforeseen costs incurred, and efforts involved, may negatively affect the Company's operating results, business and the Company's relationships
with employees, customers, suppliers and vendors. If the Company does not enter into or consummate a strategic transaction with respect to MDU
Construction Services, the Company's business and results of operations could be adversely affected. Furthermore, if the Company does not
consummate a transaction, the price of the Company's common stock may decline from the current market price, as the current market price might
incorporate a market assumption that a transaction will be consummated. A failed transaction may also result in reduced employee morale and
productivity, negative publicity and a negative impression of the Company in the investment community. Further, any disruptions to the Company's
business resulting from any announcement and the uncertainty around the timing of a transaction, including any adverse changes in the Company's
relationships with its customers, suppliers, vendors, and employees or recruiting and retention efforts, could continue or accelerate in the event of a
failed transaction. Matters relating to any failed transaction may require significant costs and expenses and substantial management time and
resources, which could otherwise have been devoted to operating and growing the Company's business.

Economic Risks
The Company is subject to government regulations that may have a negative impact on its business and its results of operations and cash flows. Statutory and
regulatory requirements also may limit another party's ability to acquire the Company or impose conditions on an acquisition of or by the Company.
The Company's electric and natural gas transmission and distribution businesses are subject to comprehensive regulation by federal, state and local
regulatory agencies with respect to, among other things, allowed rates of return and recovery of investments and costs; financing; rate structures;
customer service; health care coverage and costs; taxes; franchises; recovery of fuel, purchased power and purchased natural gas costs; and
construction and siting of generation and transmission facilities. These governmental regulations significantly influence the Company's operating
environment and may affect its ability to recover costs from its customers. The Company is unable to predict the impact on operating results from
future regulatory activities of any of these agencies. Changes in regulations or the imposition of additional regulations could have an adverse impact
on the Company's results of operations and cash flows.

There can be no assurance that applicable regulatory commissions will determine that the Company's electric and natural gas transmission and
distribution businesses' costs have been prudent, which could result in the disallowance of costs in setting rates for customers. Also, the regulatory

26 MDU Resources Group, Inc. Form 10-K

Part I

process of approving rates for these businesses may not allow for timely and full recovery of the costs of providing services or a return on the
Company's invested capital. Changes in regulatory requirements or operating conditions may require early retirement of certain assets. While
regulation typically provides rate recovery for these retirements, there is no assurance regulators will allow full recovery of all remaining costs, which
could leave stranded asset costs. Rising fuel costs could increase the risk that the utility businesses will not be able to fully recover those fuel costs
from customers.

Approval from federal and state regulatory agencies would be needed for acquisition of the Company, as well as for certain acquisitions by the
Company. The approval process could be lengthy and the outcome uncertain, which may deter potential acquirers from approaching the Company or
impact the Company's ability to pursue acquisitions.

Economic volatility affects the Company's operations, as well as the demand for its products and services.
Unfavorable economic conditions can negatively affect the level of public and private expenditures on projects and the timing of these projects
which, in turn, can negatively affect demand for the Company's products and services, primarily at the Company's construction businesses. The level
of demand for construction products and services could be adversely impacted by the economic conditions in the industries the Company serves, as
well as in the general economy. State and federal budget issues affect the funding available for infrastructure spending.

Economic conditions and population growth affect the electric and natural gas distribution businesses' growth in service territory, customer base and
usage demand. Economic volatility in the markets served, along with economic conditions such as increased unemployment which could impact the
ability of the Company's customers to make payments, could adversely affect the Company's results of operations, cash flows and asset values.
Further, any material decreases in customers' energy demand, for economic or other reasons, could have an adverse impact on the Company's
earnings and results of operations.

The Company's operations involve risks that may result from catastrophic events.
The Company's operations, particularly those related to electric and natural gas transmission and distribution, include a variety of inherent hazards
and operating risks, such as product leaks; explosions; mechanical failures; vandalism; fires; pandemics; social or civil unrest; protests and riots;
natural disasters; cyberattacks; acts of terrorism; and acts of war. These hazards and operating risks have occurred and may recur in the future,
which could result in loss of human life; personal injury; property damage; environmental impacts; impairment of operations; and substantial
financial losses. The Company maintains insurance against some, but not all, of these risks and losses. A significant incident could also increase
regulatory scrutiny and result in penalties and higher amounts of capital expenditures and operational costs. Losses not fully covered by insurance
could have an adverse effect on the Company’s financial position, results of operations and cash flows.

A disruption of the regional electric transmission grid, local distribution infrastructure or interstate natural gas infrastructure could negatively impact
the Company's business and reputation. There have been cyber and physical attacks within the energy industry on energy infrastructure, such as
substations, and such attacks may occur in the future. Because the Company's electric and natural gas utility and pipeline systems are part of larger
interconnecting systems, any attacks on the Company's infrastructure causing a disruption could result in a significant decrease in revenues and an
increase in system repair costs negatively impacting the Company's financial position, results of operations and cash flows.

The Company is subject to capital market and interest rate risks.
The Company's operations, particularly its electric and natural gas transmission and distribution businesses, require significant capital investment.
Consequently, the Company relies on financing sources and capital markets as sources of liquidity for capital requirements not satisfied by cash
flows from operations. If the Company is not able to access capital at competitive rates, the ability to implement business plans, make capital
expenditures or pursue acquisitions the Company would otherwise rely on for future growth may be adversely affected. Market disruptions may
increase the cost of borrowing or adversely affect the Company's ability to access one or more financial markets. Such disruptions could include:

• A significant economic downturn.

• The financial distress of unrelated industry leaders in the same line of business.

• Deterioration in capital market conditions.

• Turmoil in the financial services industry.

• Volatility in commodity prices.

• Pandemics, including COVID-19.

• War.

• Terrorist attacks.

• Cyberattacks.

The issuance of a substantial amount of the Company's common stock, whether issued in connection with an acquisition or otherwise, or the
perception that such an issuance could occur, could have a dilutive effect on stockholders and/or may adversely affect the market price of the
Company's common stock. Higher interest rates on borrowings have impacted and could further impact the Company's future operating results.

MDU Resources Group, Inc. Form 10-K 27

Part I

Financial market changes could impact the Company’s pension and postretirement benefit plans and obligations.
The Company has pension and postretirement defined benefit plans for some of its current and former employees. Assumptions regarding future
costs, returns on investments, interest rates and other actuarial assumptions have a significant impact on the funding requirements and expense
recorded relating to these plans. Adverse changes in economic indicators, such as consumer spending, inflation data, interest rate changes, political
developments and threats of terrorism, among other things, can create volatility in the financial markets. These changes could impact the
assumptions and negatively affect the value of assets held in the Company's pension and other postretirement benefit plans and may increase the
amount and accelerate the timing of required funding contributions for those plans.

Significant changes in prices for commodities, labor or other production and delivery inputs could negatively affect the Company's businesses.
The Company's operations are exposed to fluctuations in prices for labor, oil, cement, raw materials and utilities. Prices are generally subject to
change in response to fluctuations in supply and demand and other general economic and market conditions beyond the Company's control.

Fluctuations in oil and natural gas production, supplies and prices; fluctuations in commodity price basis differentials; political and economic
conditions in oil-producing countries; actions of the Organization of Petroleum Exporting Countries; demand for oil due to economic conditions; war
and other external factors impact the development of oil and natural gas supplies and the expansion and operation of natural gas pipeline systems.
The Company has benefited from associated natural gas production in the Bakken, which has provided opportunities for organic growth projects.
Depressed oil and natural gas prices, however, place pressure on the ability of oil exploration and production companies to meet credit requirements
and can be a challenge if prices remain depressed long-term. Prolonged depressed prices for oil and natural gas could negatively affect the growth,
results of operations, cash flows and asset values of the Company's electric, natural gas and pipeline businesses.

If oil and natural gas prices increase significantly, which has occurred and may reoccur, customer demand could decline for utility, pipeline and
construction products and services, which could impact the Company's results of operations and cash flows. While the Company has fuel clause
recovery mechanisms for its utility operations in all of the states where it operates, higher utility fuel costs could also significantly impact results of
operations if such costs are not recovered. Delays in the collection of utility fuel cost recoveries, as compared to expenditures for fuel purchases,
could also negatively impact the Company's cash flows. High oil and fuel prices also affect the margins realized and demand for construction
materials and related contracting services.

High energy prices, specifically for diesel fuel, natural gas and liquid asphalt have impacted and could further affect the margins realized, as well as
demand for construction materials and related contracting services. Increased labor costs, due to labor shortages, competition from other industries,
or other factors, could negatively affect the Company's results of operations. Due to their size and weight, aggregates are costly and difficult to
transport efficiently. The Company's construction materials products and services are generally localized around its aggregate sites and served by
truck or in certain markets by rail or barge. The Company could be negatively impacted by freight costs due to rising fuel costs; rate increases for
third party freight; truck, railcar or barge shortages, including shortages of truck drivers and rail crews; rail service interruptions; and minimum
tonnage requirements, among other things.

In 2022 and 2021, the Company experienced elevated commodity and supply chain costs including the costs of labor, raw materials, energy-related
products and other inputs used in the production and distribution of its products and services. At the construction materials and contracting
business, recent inflationary pressures have significantly increased the cost of raw materials above 10% in comparison to average historical increases
of 3%. The Company' construction businesses try to mitigate some or all cost increases through increases in selling prices, maintaining positive
relationships with numerous raw material suppliers, and escalation clauses in contracting services contracts and fuel surcharges. To the extent price
increases or other mitigating factors are not sufficient to offset these increased costs adequately or timely, and/or if the price increases result in a
significant decrease in sales volumes, the Company's results of operations, financial position and cash flows could be negatively impacted.

Reductions in the Company's credit ratings could increase financing costs.
There is no assurance the Company's current credit ratings, or those of its subsidiaries, will remain in effect or that a rating will not be lowered or
withdrawn by a rating agency. Events affecting the Company's financial results may impact its cash flows and credit metrics, potentially resulting in a
change in the Company's credit ratings. The Company's credit ratings may also change as a result of the differing methodologies or changes in the
methodologies used by the rating agencies.

Increasing costs associated with health care plans may adversely affect the Company's results of operations.
The Company's self-insured costs of health care benefits for eligible employees continues to increase. Increasing quantities of large individual health
care claims and an overall increase in total health care claims could have an adverse impact on operating results, financial position and liquidity.
Legislation related to health care could also change the Company's benefit program and costs.

The Company is exposed to risk of loss resulting from the nonpayment and/or nonperformance by the Company's customers and counterparties.
If the Company's customers or counterparties experience financial difficulties, which has occurred and may recur in the future, the Company could
experience difficulty in collecting receivables. Nonpayment and/or nonperformance by the Company's customers and counterparties, particularly
customers and counterparties of the Company’s pipeline, construction materials and contracting and construction services businesses for large
construction projects, could have a negative impact on the Company's results of operations and cash flows. The Company could also have indirect
credit risk from participating in energy markets such as MISO in which credit losses are socialized to all participants.

28 MDU Resources Group, Inc. Form 10-K

Part I

Changes in tax law may negatively affect the Company's business.
Changes to federal, state and local tax laws have the ability to benefit or adversely affect the Company's earnings and customer costs. Significant
changes to corporate tax rates could result in the impairment of deferred tax assets that are established based on existing law at the time of deferral.
Changes to the value of various tax credits could change the economics of resources and the resource selection for the electric generation business.
Regulation incorporates changes in tax law into the rate-setting process for the regulated energy delivery businesses, which could create timing
delays before the impact of changes are realized.

The Company's operations could be negatively impacted by import tariffs and/or other government mandates.
The Company operates in or provides services to capital intensive industries in which federal trade policies could significantly impact the availability
and cost of materials. Imposed and proposed tariffs could significantly increase the prices and delivery lead times on raw materials and finished
products that are critical to the Company and its customers, such as aluminum and steel. Prolonged lead times on the delivery of raw materials and
further tariff increases on raw materials and finished products could adversely affect the Company's business, financial condition and results of
operations.

Pandemics, including COVID-19, may have a negative impact on the Company's business operations, revenues, results of operations, liquidity and cash flows.
Pandemics have disrupted national, state and local economies. To the extent pandemics adversely impact the Company's businesses, operations,
revenues, liquidity or cash flows, they could also have a heightened effect on other risks described in this section. The degree to which pandemics
impact the Company depends on, among other things, federal and state mandates, actions taken by governmental authorities, availability, timing and
effectiveness of vaccines being administered, and the pace and extent to which the economy recovers and operates under normal market conditions.

Operational Risks
Significant portions of the Company’s natural gas pipelines and power generation and transmission facilities are aging. The aging infrastructure may require
significant additional maintenance or replacement that could adversely affect the Company’s results of operations.
Certain risks increase as the Company's energy delivery infrastructure ages, including breakdown or failure of equipment, pipeline leaks and fires
developing from power lines, all of which have occurred and may recur in the future resulting in material costs. Aging infrastructure is more prone to
failure, which increases maintenance costs, unplanned outages and the need to replace facilities. Even if properly maintained, reliability may
ultimately deteriorate and negatively affect the Company’s ability to serve its customers, which could result in increased costs associated with
regulatory oversight. The costs associated with maintaining the aging infrastructure and capital expenditures for new or replacement infrastructure
could cause rate volatility and/or regulatory lag in some jurisdictions. If, at the end of its life, the investment costs of a facility have not been fully
recovered, the Company may be adversely affected if commissions do not allow such costs to be recovered in rates. Such impacts of aging
infrastructure could adversely affect the Company’s results of operations and cash flows.

Additionally, hazards from aging infrastructure could result in serious injury, loss of human life, significant damage to property, environmental
impacts and impairment of operations, which in turn could lead to substantial financial losses. The location of facilities near populated areas,
including residential areas, business centers, industrial sites and other public gathering places, could increase the damages resulting from these
risks. A major incident involving another natural gas system could lead to additional capital expenditures, increased regulation, and fines and
penalties on natural gas utilities and pipelines. The occurrence of any of these events could adversely affect the Company’s results of operations,
financial position and cash flows.

The Company's utility and pipeline operations are subject to planning risks.
Most electric and natural gas utility investments, including natural gas transmission pipeline investments, are made with the intent of being used for
decades. In particular, electric transmission and generation resources are planned well in advance of when they are placed into service based upon
resource plans using assumptions over the planning horizon, including sales growth, commodity prices, equipment and construction costs, regulatory
treatment, available technology and public policy. Public policy changes and technology advancements related to areas such as energy efficient
appliances and buildings, renewable and distributive electric generation and storage, carbon dioxide emissions, electric vehicle penetration,
restrictions on or disallowance of new or existing services, and natural gas availability and cost may significantly impact the planning assumptions.
Changes in critical planning assumptions may result in excess generation, transmission and distribution resources creating increased per customer
costs and downward pressure on load growth. These changes could also result in a stranded investment if the Company is unable to fully recover the
costs of its investments.

The regulatory approval, permitting, construction, startup and/or operation of pipelines, power generation and transmission facilities, and aggregate reserves
may involve unanticipated events, delays and unrecoverable costs.
The construction, startup and operation of natural gas pipelines and electric power generation and transmission facilities involve many risks, which
may include delays; breakdown or failure of equipment; inability to obtain required governmental permits and approvals; inability to obtain or renew
easements; public opposition; inability to complete financing; inability to negotiate acceptable equipment acquisition, construction, fuel supply, off-
take, transmission, transportation or other material agreements; changes in markets and market prices for power; cost increases and overruns; the
risk of performance below expected levels of output or efficiency; and the inability to obtain full cost recovery in regulated rates. Additionally, in a
number of states in which the Company operates, it can be difficult to permit new aggregate sites or expand existing aggregate sites due to
community resistance and regulatory requirements, among other things. Such unanticipated events could negatively impact the Company's business,
its results of operations and cash flows.

MDU Resources Group, Inc. Form 10-K 29

Part I

Operating or other costs required to comply with current or potential pipeline safety regulations and potential new regulations under various agencies
could be significant. The regulations require verification of pipeline infrastructure records by pipeline owners and operators to confirm the maximum
allowable operating pressure of certain lines. Increased emphasis on pipeline safety and increased regulatory scrutiny may result in penalties and
higher costs of operations. If these costs are not fully recoverable from customers, they could have an adverse effect on the Company’s results of
operations and cash flows.

The backlogs at the Company's construction materials and contracting and construction services businesses may not accurately represent future revenue.
Backlog consists of the uncompleted portion of services to be performed under job-specific contracts. Contracts are subject to delay, default or
cancellation, and contracts in the Company's backlog are subject to changes in the scope of services to be provided, as well as adjustments to the
costs relating to the applicable contracts. Backlog may also be affected by project delays or cancellations resulting from weather conditions, external
market factors and economic factors beyond the Company's control, among other things. Accordingly, there is no assurance that backlog will be
realized. The timing of contract awards, duration of large new contracts and the mix of services can significantly affect backlog. Backlog at any given
point in time may not accurately represent the revenue or net income that is realized in any period. Also, the backlog as of the end of the year may
not be indicative of the revenue and net income expected to be earned in the following year and should not be relied upon as a stand-alone indicator
of future revenues or net income.

The Company's participation in joint venture contracts may have a negative impact on its reputation, business operations, revenues, results of operations,
liquidity and cash flows.
The Company enters into certain joint venture arrangements typically to bid and execute particular projects. Generally, these agreements are directly
with a third-party client; however, services may be performed by the venture, the joint venture partners or a combination thereof. Engaging in joint
venture contracts exposes the Company to risks and uncertainties, some of which are outside the Company's control.

The Company is reliant on joint venture partners to satisfy their contractual obligations, including obligations to commit working capital and equity,
and to perform the work as outlined in the agreement. Failure to do so could result in the Company providing additional investments or services to
address such performance issues. If the Company is unable to satisfactorily resolve any partner performance issues, the customer could terminate
the contract, opening the Company to legal liability which could negatively impact the Company's reputation, revenues, results of operations, liquidity
and cash flows.

Supply chain disruptions may adversely affect Company operations.
The Company relies on third-party vendors and manufacturers to supply many of the materials necessary for its operations. Global logistic disruptions
have impacted the flow of materials and restricted global trade flows. Manufacturers are competing for a limited supply of key commodities and
logistical capacity which has impacted lead times, pricing, supply and demand. National and regional demand for cement and liquid asphalt may at
times outpace the supply in the market. This imbalance creates a temporary shortage which may cause prices to increase faster than downstream
products. Disruptions or delays in receiving materials; price increases from suppliers or manufacturers; or inability to source needed materials, which
has occurred and could reoccur, could adversely affect the Company’s results of operations, financial condition and cash flows.

Environmental and Regulatory Risks
The Company's operations could be adversely impacted by climate change.
Severe weather events, such as tornadoes, hurricanes, rain, drought, ice and snowstorms, and high and low temperature extremes, occur in regions in
which the Company operates and maintains infrastructure. Climate change could change the frequency and severity of these weather events, which
may create physical and financial risks to the Company. Such risks could have an adverse effect on the Company's financial condition, results of
operations and cash flows. To date, the Company has not experienced any material impacts to its financial condition, results of operations or cash
flows due to the physical effects of climate change.

Severe weather events may damage or disrupt the Company's electric and natural gas transmission and distribution facilities, which could result in
disruption of service and ability to meet customer demand and increase maintenance or capital costs to repair facilities and restore customer service.
The cost of providing service could increase if the frequency of severe weather events increases because of climate change or otherwise. The
Company may not recover all costs related to mitigating these physical risks.

Increases in severe weather conditions or extreme temperatures may cause infrastructure construction projects to be delayed or canceled and limit
resources available for such projects resulting in decreased revenue or increased project costs at the construction materials and contracting and
construction services businesses. In addition, drought conditions could restrict the availability of water supplies, inhibiting the ability of the
construction businesses to conduct operations.

Utility customers’ energy needs vary with weather conditions, primarily temperature and humidity. For residential customers, heating and cooling
represent the largest energy use. To the extent weather conditions are affected by climate change, customers’ energy use could increase or decrease.
Increased energy use by its utility customers due to weather may require the Company to invest in additional generating assets, transmission and
other infrastructure to serve increased load. Decreased energy use due to weather may result in decreased revenues. Extreme weather conditions,
such as uncommonly long periods of high or low ambient temperature in general require more system backup, adding to costs, and can contribute to
increased system stress, including service interruptions. Weather conditions outside of the Company's service territory could also have an impact on
revenues. The Company buys and sells electricity that might be generated outside its service territory, depending upon system needs and market

30 MDU Resources Group, Inc. Form 10-K

Part I

opportunities. Extreme temperatures may create high energy demand and raise electricity prices, which could increase the cost of energy provided to
customers.

Climate change may impact a region’s economic health, which could impact revenues at all of the Company's businesses. The Company's financial
performance is tied to the health of the regional economies served. The Company provides natural gas and electric utility service, as well as
construction materials and services, for some states and communities that are economically affected by the agriculture industry. Increases in severe
weather events or significant changes in temperature and precipitation patterns could adversely affect the agriculture industry and, correspondingly,
the economies of the states and communities affected by that industry.

The insurance industry may be adversely affected by severe weather events, which may impact availability of insurance coverage, insurance
premiums and insurance policy terms.

The Company may be subject to litigation related to climate change. Costs of such litigation could be significant, and an adverse outcome could
require substantial capital expenditures, changes in operations and possible payment of penalties or damages, which could affect the Company's
results of operations and cash flows if the costs are not recoverable in rates.

The price of energy also has an impact on the economic health of communities. The cost of additional regulatory requirements related to climate
change, such as regulation of carbon dioxide emissions under the federal Clean Air Act, requirements to replace fossil fuels with renewable energy or
credits, or other environmental regulation or taxes, could impact the availability of goods and the prices charged by suppliers, which would normally
be borne by consumers through higher prices for energy and purchased goods, and could adversely impact economic conditions of areas served by
the Company. To the extent financial markets view climate change and emissions of GHGs as a financial risk, this could negatively affect the
Company's ability to access capital markets or result in less competitive terms and conditions.

The Company's operations are subject to environmental laws and regulations that may increase costs of operations, impact or limit business plans, or expose
the Company to environmental liabilities.
The Company is subject to environmental laws and regulations affecting many aspects of its operations, including air and water quality, wastewater
discharge, the generation, transmission and disposal of solid waste and hazardous substances, aggregate permitting and other environmental
considerations. These laws and regulations can increase capital, operating and other costs; cause delays as a result of litigation and administrative
proceedings; and create compliance, remediation, containment, monitoring and reporting obligations, particularly relating to electric generation,
permitting and environmental compliance for construction material facilities, and natural gas transmission and storage operations. Environmental
laws and regulations can also require the Company to install pollution control equipment at its facilities, clean up spills and other contamination and
correct environmental hazards, including payment of all or part of the cost to remediate sites where the Company's past activities, or the activities of
other parties, caused environmental contamination. These laws and regulations generally require the Company to obtain and comply with a variety of
environmental licenses, permits, inspections and other approvals and may cause the Company to shut down existing facilities due to difficulties in
assuring compliance or where the cost of compliance makes operation of the facilities uneconomical. Although the Company strives to comply with
all applicable environmental laws and regulations, public and private entities and private individuals may interpret the Company's legal or regulatory
requirements differently and seek injunctive relief or other remedies against the Company. The Company cannot predict the outcome, financial or
operational, of any such litigation or administrative proceedings.

Existing environmental laws and regulations may be revised and new laws and regulations seeking to protect the environment may be adopted or
become applicable to the Company. These laws and regulations could require the Company to limit the use or output of certain facilities; restrict the
use of certain fuels; prohibit or restrict new or existing services; replace certain fuels with renewable fuels; retire and replace certain facilities; install
pollution controls; remediate environmental impacts; remove or reduce environmental hazards; or forego or limit the development of resources.
Revised or new laws and regulations that increase compliance and disclosure costs and/or restrict operations, particularly if costs are not fully
recoverable from customers, could adversely affect the Company's results of operations and cash flows.

Stakeholder actions and increased regulatory activity related to environmental, social and governance matters, particularly climate change and reducing GHG
emissions, could adversely impact the Company's operation, costs of or access to capital and impact or limit business plans.
The Company, primarily at its electric, natural gas distribution and pipeline businesses, is facing increasing stakeholder scrutiny related to
environmental, social and governance matters. Recently, the Company has seen a rise in certain stakeholders, such as investors, customers,
employees and lenders, placing increasing importance on the impacts and social cost associated with climate change. Concern that GHG emissions
contribute to global climate change has led to international, federal, state and local legislative and regulatory proposals to reduce or mitigate the
effects of GHG emissions. The Company’s primary GHG emission is carbon dioxide from fossil fuels combustion at Montana-Dakota's electric
generating facilities, particularly its coal-fired facilities.

Treaties, legislation or regulations to reduce GHG emissions in response to climate change may be adopted that affect the Company's utility and
pipeline operations by requiring additional energy conservation efforts or renewable energy sources, limiting emissions, imposing carbon taxes or
other compliance costs; as well as other mandates that could significantly increase capital expenditures and operating costs or reduce demand for
the Company's utility services. If the Company’s utility and pipeline operations do not receive timely and full recovery of GHG emission compliance
costs from customers, then such costs could adversely impact the results of operations and cash flows. Significant reductions in demand for the

MDU Resources Group, Inc. Form 10-K 31

Part I

Company's utility and pipeline services as a result of increased costs or emissions limitations could also adversely impact the results of operations
and cash flows.

The Company monitors, analyzes and reports GHG emissions from its other operations as required by applicable laws and regulations. The Company
will continue to monitor GHG regulations and their potential impact on operations.

Due to the uncertain availability of technologies to control GHG emissions and the unknown obligations that potential GHG emission legislation or
regulations may create, the Company cannot determine the potential financial impact on its operations.

In addition, the increasing focus on climate change and stricter regulatory requirements may result in the Company facing adverse reputational risks
associated with certain of its operations producing GHG emissions. There have also been efforts to discourage the investment community from
investing in equity and debt securities of companies engaged in fossil fuel related business and pressuring lenders to limit funding to such
companies. Additionally, some insurance carriers have indicated an unwillingness to insure assets and operations related to certain fossil fuels.
Although the Company has not experienced difficulties in these areas, if the Company is unable to satisfy the increasing climate-related expectations
of certain stakeholders, the Company may suffer reputational harm, which may cause its stock price to decrease or difficulty in accessing the capital
or insurance markets. Such efforts, if successfully directed at the Company, could increase the costs of or access to capital or insurance and
interfere with business operations and ability to make capital expenditures.

Other Risks
The Company's various businesses are seasonal and subject to weather conditions that could adversely affect the Company's operations, revenues and cash
flows.
The Company's results of operations could be affected by changes in the weather. Weather conditions influence the demand for electricity and
natural gas and affect the price of energy commodities. Utility operations have historically generated lower revenues when weather conditions are
cooler than normal in the summer and warmer than normal in the winter, particularly in jurisdictions that do not have weather normalization
mechanisms in place. Where weather normalization mechanisms are in place, there is no assurance the Company will continue to receive such
regulatory protection from adverse weather in future rates.

Adverse weather conditions, which have occurred and may recur, such as heavy or sustained rainfall or snowfall, storms, wind and colder weather
may affect the demand for products and the ability to perform services at the construction businesses and affect ongoing operation and maintenance
and construction activities for the electric and natural gas transmission and distribution businesses. In addition, severe weather can be destructive,
causing outages and property damage, which could require additional remediation costs. The Company could also be impacted by drought
conditions, which may restrict the availability of water supplies and inhibit the ability of the construction businesses to conduct operations. As a
result, unusual or adverse weather conditions could negatively affect the Company's results of operations, financial position and cash flows.

Competition exists in all of the Company's businesses.
The Company's businesses are subject to competition. Construction services' competition is based primarily on price and reputation for quality, safety
and reliability. Construction materials products are marketed under highly competitive conditions and are subject to competitive forces such as price,
service, delivery time and proximity to the customer. The electric utility and natural gas businesses also experience competitive pressures as a result
of consumer demands, technological advances and other factors. The pipeline business competes with several pipelines for access to natural gas
supplies and for transportation and storage business. New acquisition opportunities are subject to competitive bidding environments which impact
prices the Company must pay to successfully acquire new properties and acquisition opportunities to grow its business. The Company's failure to
effectively compete could negatively affect the Company's results of operations, financial position and cash flows.

The Company's operations may be negatively affected if it is unable to obtain, develop and retain key personnel and skilled labor forces.
The Company must attract, develop and retain executive officers and other professional, technical and skilled labor forces with the skills and
experience necessary to successfully manage, operate and grow the Company's businesses. Due to the changing workforce demographics and a lack
of younger employees who are qualified to replace employees as they retire and remote work opportunities, among other things, competition for these
employees is high. In some cases competition for these employees is on a regional or national basis. At times of low unemployment, it can be
difficult for the Company to attract and retain qualified and affordable personnel. A shortage in the supply of skilled personnel creates competitive
hiring markets, increased labor expenses, decreased productivity and potentially lost business opportunities to support the Company's operating and
growth strategies. Additionally, if the Company is unable to hire employees with the requisite skills, the Company may be forced to incur significant
training expenses. As a result, the Company's ability to maintain productivity, relationships with customers, competitive costs, and quality services is
limited by the ability to employ, retain and train the necessary skilled personnel and could negatively affect the Company's results of operations,
financial position and cash flows.

The Company's construction materials and contracting and construction services businesses may be exposed to warranty claims.
The Company, particularly its construction businesses, may provide warranties guaranteeing the work performed against defects in workmanship and
material. If warranty claims occur, they may require the Company to re-perform the services or to repair or replace the warranted item at a cost to the
Company and could also result in other damages if the Company is not able to adequately satisfy warranty obligations. In addition, the Company may
be required under contractual arrangements with customers to warrant any defects from subcontractors or failures in materials the Company
purchased from third parties. While the Company generally requires suppliers to provide warranties that are consistent with those the Company

32 MDU Resources Group, Inc. Form 10-K

Part I

provides to customers, if any of the suppliers default on their warranty obligations to the Company, the Company may nonetheless incur costs to
repair or replace the defective materials. Costs incurred as a result of warranty claims could adversely affect the Company's results of operations,
financial condition and cash flows.

The Company is a holding company and relies on cash from its subsidiaries to pay dividends.
The Company's investments in its subsidiaries comprise the Company's primary assets. The Company depends on earnings, cash flows and dividends
from its subsidiaries to pay dividends on its common stock. Regulatory, contractual and legal limitations, as well as their capital requirements, affect
the ability of the subsidiaries to pay dividends to the Company and thereby could restrict or influence the Company's ability or decision to pay
dividends on its common stock, which could adversely affect the Company's stock price.

Costs related to obligations under MEPPs could have a material negative effect on the Company's results of operations and cash flows.
Various operating subsidiaries of the Company participate in MEPPs for employees represented by certain unions. The Company is required to make
contributions to these plans in amounts established under numerous collective bargaining agreements between the operating subsidiaries and those
unions.

The Company may be obligated to increase its contributions to underfunded plans that are classified as being in endangered, seriously endangered or
critical status as defined by the Pension Protection Act of 2006. Plans classified as being in one of these statuses are required to adopt RPs or FIPs
to improve their funded status through increased contributions, reduced benefits or a combination of the two.

The Company may also be required to increase its contributions to MEPPs if the other participating employers in such plans withdraw from the plans
and are not able to contribute amounts sufficient to fund the unfunded liabilities associated with their participation in the plans. The amount and
timing of any increase in the Company's required contributions to MEPPs may depend upon one or more factors, including the outcome of collective
bargaining; actions taken by trustees who manage the plans; actions taken by the plans' other participating employers; the industry for which
contributions are made; future determinations that additional plans reach endangered, seriously endangered or critical status; newly-enacted
government laws or regulations and the actual return on assets held in the plans; among others. The Company could experience increased operating
expenses as a result of required contributions to MEPPs, which could have an adverse effect on the Company's results of operations, financial
position or cash flows.

In addition, pursuant to ERISA, as amended by MPPAA, the Company could incur a partial or complete withdrawal liability upon withdrawing from a
plan, exiting a market in which it does business with a union workforce or upon termination of a plan. The Company could also incur additional
withdrawal liability if its withdrawal from a plan is determined by that plan to be part of a mass withdrawal.

Technology disruptions or cyberattacks could adversely impact the Company's operations.
The Company uses technology in substantially all aspects of its business operations and requires uninterrupted operation of information technology
and operation technology systems, including disaster recovery and backup systems and network infrastructure. While the Company has policies,
procedures and processes in place designed to strengthen and protect these systems, they may be vulnerable to physical and cybersecurity failures or
unauthorized access, due to:

• hacking,

• human error,

• theft,

• sabotage,

• malicious software,

• ransomware,

• third-party compromise,

• acts of terrorism,

• acts of war,

• acts of nature or

• other causes.

Although there are manual processes in place, should a compromise or system failure occur, interdependencies to technology may disrupt the
Company's ability to fulfill critical business functions. This may include interruption of electric generation, transmission and distribution facilities,
natural gas storage and pipeline facilities and facilities for delivery of construction materials or other products and services, any of which could
adversely affect the Company's reputation, business, cash flows and results of operations or subject the Company to legal or regulatory liabilities and
increased costs. Additionally, the Company's electric generation and transmission systems and natural gas pipelines are part of interconnected
systems with other operators’ facilities; therefore, a cyber-related disruption in another operator’s system could negatively impact the Company's
business.

MDU Resources Group, Inc. Form 10-K 33

Part I

The Company’s accounting systems and its ability to collect information and invoice customers for products and services could be disrupted. If the
Company’s operations are disrupted, it could result in decreased revenues and remediation costs that could adversely affect the Company's results of
operations and cash flows.

The Company is subject to cybersecurity and privacy laws, regulations and security directives of many government agencies, including TSA, FERC
and NERC. NERC issues comprehensive regulations and standards surrounding the security of bulk power systems and continually updates these
requirements, as well as establishing new requirements with which the utility industry must comply. As these regulations evolve, the Company may
experience increased compliance costs and may be at higher risk for violating these standards. Experiencing a cybersecurity incident could cause the
Company to be non-compliant with applicable laws and regulations, causing the Company to incur costs related to legal claims, proceedings and
regulatory fines or penalties.

The Company, through the ordinary course of business, requires access to sensitive customer, supplier, employee and Company data. While the
Company has implemented extensive security measures, including limiting the amount of sensitive information retained, a breach of its systems
could compromise sensitive data and could go unnoticed for some time. Such an event could result in negative publicity and reputational harm,
remediation costs, legal claims and fines that could have an adverse effect on the Company's financial results. Third-party service providers that
perform critical business functions for the Company or have access to sensitive information within the Company also may be vulnerable to security
breaches and information technology risks that could adversely affect the Company.

The Company’s information systems experience ongoing and often sophisticated cyberattacks by a variety of sources with the apparent aim to breach
the Company's cyber-defenses. The Company may face increased cyber risk due to the increased use of employee owned devices, work from home
arrangements, and the proposed separation of Knife River Holding Company. Although the incidents the Company has experienced to date have not
had a material effect on its business, financial condition or results of operations, such incidents could have a material adverse effect in the future as
cyberattacks continue to increase in frequency and sophistication. The Company is continuously reevaluating the need to upgrade and/or replace
systems and network infrastructure. These upgrades and/or replacements could adversely impact operations by imposing substantial capital
expenditures, creating delays or outages, or experiencing difficulties transitioning to new systems. System disruptions, if not anticipated and
appropriately mitigated, could adversely affect the Company.

General risk factors that could impact the Company's businesses.
The following are additional factors that should be considered for a better understanding of the risks to the Company. These factors may negatively
impact the Company's financial results in future periods.

• Acquisition, disposal and impairments of assets or facilities.

• Changes in present or prospective electric generation.

• Population decline and demographic patterns in the Company's areas of service.

• The cyclical nature of large construction projects at certain operations.

• Labor negotiations or disputes.

• Succession planning.

• Attracting and retaining employees.

• Stockholder and environmental activism.

• Inability of contract counterparties to meet their contractual obligations.

• The inability to effectively integrate the operations and the internal controls of acquired companies.

Item 1B. Unresolved Staff Comments

The Company has no unresolved comments with the SEC.

Item 3. Legal Proceedings

SEC regulations require the Company to disclose certain information about proceedings arising under federal, state or local environmental provisions
if the Company reasonably believes that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to SEC regulations,
the Company has adopted a threshold of $1.0 million for purposes of determining whether disclosure of any such proceedings is required.

For information regarding legal proceedings required by this item, see Item 8 - Note 21, which is incorporated herein by reference.

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-K, which is incorporated herein by reference.

34 MDU Resources Group, Inc. Form 10-K

Part II

Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

The Company's common stock is listed on the New York Stock Exchange under the symbol "MDU."

As of December 31, 2022, the Company's common stock was held by approximately 9,600 stockholders of record.

The Company depends on earnings and dividends from its subsidiaries to pay dividends on common stock. The Company has paid uninterrupted
dividends to stockholders for 85 consecutive years with an increase in the payout amount for the last 32 consecutive years. The declaration and
payment of dividends is at the sole discretion of the board of directors, subject to limitations imposed by agreements governing the Company's
indebtedness, federal and state laws, and applicable regulatory limitations. For more information on factors that may limit the Company's ability to
pay dividends, see Item 8 - Note 12.

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

ISSUER PURCHASES OF EQUITY SECURITIES

Period

October 1 through October 31, 2022

November 1 through November 30, 2022

December 1 through December 31, 2022

Total

(a)
Total Number
of Shares
(or Units)
Purchased (1)

(b)
Average Price Paid
per Share
(or Unit)

—

40,800

—

40,800

—

$30.64

—

$30.64

(d)
Maximum Number (or
Approximate Dollar
Value) of Shares (or
Units) that May Yet Be
Purchased Under the
Plans or Programs (2)

—

(1) Represents shares of common stock purchased on the open market in connection with annual stock grants made to the Company's non-employee directors and for

those directors who elected to receive additional shares of common stock in lieu of a portion of their cash retainer.

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

Item 6.

Reserved.

MDU Resources Group, Inc. Form 10-K 35

Part II

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation

The Company is Building a Strong America® by providing essential infrastructure and services. The Company and its employees work hard to keep
the economy of America moving with the products and services provided, which include powering, heating and connecting homes, factories, offices
and stores; and building roads, highways, data infrastructure and airports. The Company is authorized to conduct business in nearly every state in the
United States and during peak construction season has employed over 16,800 employees. The Company’s organic investments are strong drivers of
high-quality earnings and continue to be an important part of the Company’s growth. Management believes the Company is well positioned in the
industries and markets in which it operates.

As part of the Company's strategic planning to optimize stockholder value, the Company announced its board of directors unanimously approved a
plan to pursue a separation of Knife River from the Company on August 4, 2022, and, as a next step in its strategic planning, on November 3, 2022,
the Company announced the board of directors' plan to create two pure-play companies: a leading construction materials company and a regulated
energy delivery company. The separation of Knife River is planned as a tax-free spinoff transaction to the Company’s stockholders for U.S. federal
income tax purposes. The transaction is expected to result in two independent, publicly traded companies. Completion of the separation will be
subject to, among other things, the effectiveness of a registration statement on Form 10 with the SEC, final approval from the Company’s board of
directors, receipt of one or more tax opinions and a private letter ruling from the IRS, and other customary conditions. The Company may, at any time
and for any reason until the proposed transaction is complete, abandon the separation or modify or change its terms. The separation is expected to
be complete in the second quarter of 2023, but there can be no assurance regarding the ultimate timing of the separation or that the separation will
ultimately occur. In addition, the board has authorized management to commence a strategic review process for MDU Construction Services with the
objective of achieving the board’s goal of creating two pure-play public companies. The strategic review is well underway, and the Company
anticipates completing it during the second quarter of 2023. See Item 1A - Risk Factors for a description of the risks and uncertainties with the
proposed future structure. The Company incurred costs in connection with the announced strategic initiatives in 2022, as noted in the Business
Segment Financial and Operating Data section, and expects to continue to incur these costs until the initiatives are completed.

The Company continues to manage the inflationary pressures experienced throughout the United States, including the impact that inflation, rising
interest rates, commodity price volatility and supply chain disruptions may have on its business and customers and proactively looks for ways to
lessen the impact to its business. Inflation rates in the Unites States increased significantly during 2022, relative to historical precedent, and may
continue to rise. The Company has continued to evaluate its businesses and has increased pricing for its products and services where necessary as
evidenced by the increase in revenues recognized in 2022. The ability to raise selling prices to cover higher costs due to inflation are subject to
customer demand, industry competition and the availability of materials, among other things. Rising interest rates have resulted in, and will likely
continue to result in, higher borrowing costs on new debt, resulting in impacts to the Company's asset valuations and negatively impacting the
purchasing power of its customers. For more information on possible impacts to the Company's businesses, see the Outlook for each segment below
and Item 1A - Risk Factors.

36 MDU Resources Group, Inc. Form 10-K

Consolidated Earnings Overview
The following table summarizes the contribution to the consolidated income by each of the Company's business segments.

Part II

Years ended December 31,

Electric

Natural gas distribution

Pipeline

Construction materials and contracting

Construction services

Other

Income from continuing operations

Discontinued operations, net of tax

Net income

Earnings per share - basic:

Income from continuing operations

Discontinued operations, net of tax

Earnings per share - basic

Earnings per share - diluted:

Income from continuing operations

Discontinued operations, net of tax

Earnings per share - diluted

2022

2021

2020

(In millions, except per share amounts)

57.1 $

51.9 $

45.2

35.3

116.2

124.8

(11.3)

367.3

51.6

40.9

129.8

109.4

(5.9)

55.6

44.0

37.0

147.3

109.7

(3.1)

377.7

390.5

(.3)

367.5 $

378.1 $

390.2

1.81 $

1.87 $

—

1.81 $

1.87 $

1.81 $

1.87 $

—

1.81 $

1.87 $

1.95

—

1.95

—

1.95

2022 compared to 2021 The Company's consolidated earnings decreased $10.6 million.

The Company experienced decreased earnings at the construction materials and contracting, natural gas distribution and pipeline businesses. While
the construction materials and contracting business experienced higher average pricing on materials and increased contracting revenues, results were
negatively impacted by ongoing inflationary pressures, including energy and other operating costs. The natural gas distribution business experienced
higher operating expenses, including subcontractor costs, as well as higher interest and depreciation expenses, partially offset by increased sales
volumes and approved rate recovery in certain jurisdictions. The pipeline business experienced higher interest expense and lower non-regulated
project margins, partially offset by the net benefit of the North Bakken Expansion project. The Company's earnings were further impacted by $21.0
million in lower returns on the Company's nonqualified benefit plan investments, as discussed in Note 8, and the costs incurred in connection with
the announced strategic initiatives of $12.7 million, after tax. Partially offsetting the decreases were increased earnings at the construction services
business resulting from higher electrical and mechanical project margins and earnings from the segment's joint ventures, partially offset by higher
overall operating expenses related to increased payroll-related costs and expected credit losses. The electric business benefited from interim rate
relief in North Dakota, higher net transmission revenues and higher retail sales volumes as a result of colder weather, as well as lower operation and
maintenance expenses, largely related to plant closures.

2021 compared to 2020 The Company's consolidated earnings decreased $12.1 million.

Negatively impacting the Company's earnings was a decrease in gross margin across most product lines at the construction materials and contracting
business resulting from labor constraints; increased material costs, including asphalt oil and diesel fuel; higher equipment, repair and maintenance
costs; and less available paving work in certain regions. The decrease was partially offset by higher AFUDC for the construction of the North Bakken
Expansion project and higher earnings due to increased natural gas transportation volumes at the pipeline business. Also positively impacting
earnings was higher operating income at the electric and natural gas businesses, largely a result of approved rate relief in certain jurisdictions,
partially offset by higher operations and maintenance expenses.

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 Part I - 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 Item 1A - Risk Factors. Changes in such assumptions and factors could cause actual
future results to differ materially from the Company's growth and earnings projections.

MDU Resources Group, Inc. Form 10-K 37

Part II

For information pertinent to various commitments and contingencies, see Item 8 - Notes to Consolidated Financial Statements. For a summary of the
Company's business segments, see Item 8 - Note 17.

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 Items 1 and 2 - Business Properties. Both segments strive to be top performing utility companies measured by integrity, employee
safety and satisfaction, customer service and stockholder return. The segments provide safe, reliable, competitively priced and environmentally
responsible energy service to customers while focusing on growth and expansion opportunities within and beyond its existing territories. The Company
is focused on cultivating organic growth while managing operating costs and monitoring 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 with similar operating and growth objectives 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, the cost of natural gas, cost of electric fuel and purchased power, weather,
climate change initiatives, 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. The Company is focused on modernizing utility infrastructure to meet
the varied energy needs of both its customers and communities while ensuring the delivery of safe, reliable, affordable and environmentally
responsible energy. The segments continue to invest in facility upgrades to be in compliance with existing and known future regulations. To assist in
the reduction of regulatory lag in obtaining revenue increases to align with increased investments, tracking mechanisms have been implemented in
certain jurisdictions. The Company also seeks rate adjustments for operating costs and capital investments, as well as reasonable returns on
investments not covered by tracking mechanisms. For more information on the Company's tracking mechanisms and recent cases, see Items 1 and 2
- Business Properties and Item 8 - Note 20.

These segments are also subject to extensive regulation related to certain operational and environmental compliance, cybersecurity, permit terms and
system integrity. Both segments are faced with the ongoing need to actively evaluate cybersecurity processes and procedures related to its
transmission and distribution systems for opportunities to further strengthen its cybersecurity protections. Within the past year, there have been
cyber and physical attacks within the energy industry on energy infrastructure, such as substations, and the Company continues to evaluate the
safeguards implemented to protect its electric and natural gas utility systems. Implementation of enhancements and additional requirements to
protect the Company's infrastructure is ongoing.

To date, many states have enacted, and others are considering, mandatory clean energy standards requiring utilities to meet certain thresholds of
renewable and/or carbon-free energy supply. The current presidential administration has made climate change a focus, as further discussed in the
Outlook section. Over the long-term, the Company expects overall electric demand to be positively impacted by increased electrification trends,
including electric vehicle adoption, as a means to address economy-wide carbon emission concerns and changing customer conservation patterns.
MISO and NERC have recently announced concerns with reliability of the electric grid due to capacity shortages, which has resulted from rapid
expansion of renewables and rapid reduction of baseload resources such as coal, while load growth has increased faster than expected. MISO
received FERC approval of a seasonal resource adequacy construct, or accreditation process, versus the previous annual summer peak capacity
requirement process. The new construct will include a higher planning reserve margin in winter, spring and fall and a higher Coincident Load Factor
for Montana-Dakota in the winter season. This is a change from the current summer requirement only process. These changes have not required
Montana-Dakota to obtain additional accredited seasonal capacity but additional future accreditation process changes could impact the Company
and result in increased costs to produce electricity. The Company will continue to monitor the progress of these changes and assess the potential
impacts they may have on its stakeholders, business processes, results of operations, cash flows and disclosures.

Revenues are impacted by both customer growth and usage, the latter of which is primarily impacted by weather, as well as impacts associated with
commercial and industrial slow-downs, including economic recessions, and energy efficiencies. Very cold winters increase demand for natural gas
and to a lesser extent, electricity, while warmer than normal summers increase demand for electricity, especially among residential and commercial
customers. Average consumption among both electric and 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 weather normalization and 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, as further discussed in Items 1 and 2 - Business
Properties.

In December 2022 and January 2023, natural gas prices significantly increased across the Pacific Northwest from multiple price-pressuring events
including wide-spread below-normal temperatures; higher natural gas consumption; reduced natural gas flows due to pipeline constraints, including
maintenance in West Texas; and historically low regional natural gas storage levels. These higher natural gas prices impacted both Intermountain and
Cascade, both of which initiated $125.0 million and $150.0 million in early 2023, respectively, of short-term debt to finance the increased natural
gas costs. Intermountain filed an out of cycle purchased gas adjustment effective February 1, 2023, to start recovering the higher prices. For a
discussion of the Company's most recent cases by jurisdiction, see Item 8 - Note 20.

38 MDU Resources Group, Inc. Form 10-K

Part II

The Company continues to proactively monitor and work with its manufacturers to reduce the effects of increased pricing and lead times on delivery
of certain raw materials and equipment used in electric generation, transmission and distribution system and natural gas pipeline projects. Long lead
times are attributable to increased demand for steel products from pipeline companies as they continue pipeline system safety and integrity
replacement projects driven by PHMSA regulations, as well as delays in the manufacturing and shipping of electrical equipment as a result of the
lingering effects of the COVID-19 pandemic, staffing shortages across multiple industries and global conflicts. While not material, these segments
have experienced delays and inflationary pressures, including increased costs related to purchased natural gas and capital expenditures. The
Company has been able to minimize the effects by working closely with suppliers or obtaining additional suppliers, as well as modifying project plans
to accommodate extended lead times and increased costs. The Company expects these delays and inflationary pressures to continue.

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 regulatory constraints, the economic environment of the markets served and competition
from other energy providers and fuels. As the industry continues to expand the use of renewable energy sources, the need for additional transmission
infrastructure is growing. On July 25, 2022, as part of its long range transmission plan, MISO announced approval of 18 transmission projects
totaling $10.3 billion of investments in MISO's midwest subregion, of which Montana-Dakota is a part. As part of MISO's long range transmission
plan, in August 2022, the Company announced its intent to develop, construct and co-own an approximately 95 mile 345 kV transmission line with
Otter Tail Power Company in central North Dakota. The construction of new electric generating facilities, transmission lines and other service
facilities is subject to increasing costs and lead times, extensive permitting procedures, and federal and state legislative and regulatory initiatives,
which may necessitate increases in electric energy prices.

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

Years ended December 31,

2022

2021

2020

Variance

2022 vs. 2021 2021 vs. 2020

Operating revenues

Operating expenses:

Electric fuel and purchased power

Operation and maintenance

Depreciation, depletion and amortization

Taxes, other than income

Total operating expenses

Operating income

Other income

Interest expense

Income before income taxes

Income tax benefit

Net income

Operating statistics

Revenues (millions)

Retail sales:

Residential

Commercial

Industrial

Other

Transportation and other

Volumes (million kWh)

Retail sales:

Residential

Commercial

Industrial

Other

(In millions)

$ 377.1 $ 349.6 $ 332.0

8 %

5 %

24 %

(3) %

1 %

(3) %

5 %

20 %

(89) %

7 %

17 %

(30) %

10 %

11 %

3 %

6 %

1 %

5 %

(36) %

— %

1 %

(34) %

(7) %

92.0

74.1

66.9

120.7

124.9

121.3

67.8

16.9

66.8

17.5

63.0

17.4

297.4

283.3

268.6

79.7

66.3

28.5

51.7

(5.4)

4.6

26.7

44.2

63.4

7.2

26.7

43.9

(7.7)

(11.7)

57.1 $

51.9 $

55.6

2022

2021

2020

$ 135.4 $ 123.0 $ 122.6

142.7

133.3

131.2

43.0

40.5

7.3

6.8

36.7

6.6

328.4

303.6

297.1

48.7

46.0

34.9

$ 377.1 $ 349.6 $ 332.0

1,226.4 1,164.8 1,170.9

1,437.7 1,433.0 1,419.4

596.1

589.4

532.1

83.7

84.4

82.1

3,343.9 3,271.6 3,204.5

Average cost of electric fuel and purchased power per kWh

.026 $

.021 $

.019

MDU Resources Group, Inc. Form 10-K 39

Part II

2022 compared to 2021 Electric earnings increased $5.2 million as a result of:
• Revenue increased $27.5 million.

◦ Largely attributable to:

▪ Higher fuel and purchased power costs of $17.9 million recovered in customer rates and offset in expense, as described below.
▪
▪ Higher net transmission revenues of $3.9 million, largely from increased investment, and higher transmission interconnect upgrades of

Interim rate relief in North Dakota of $5.0 million.

$800,000.

▪ Higher retail sales volumes of 2.2 percent, primarily to residential customers, largely due to colder weather in the first and fourth quarters

of the year.

◦ Partially offset by:

▪ Lower renewable tracker revenues associated with higher production tax credits offset in expense, as described below.
▪ Lower per unit average rates of $1.0 million related to block rates in certain jurisdictions.

• Electric fuel and purchased power increased $17.9 million.

◦ Primarily the result of $17.4 million higher commodity price, including higher recovery of fuel clause adjustments, and increased retail sales

volumes.

• Operation and maintenance decreased $4.2 million.

◦ Primarily due to:

▪ Decreased payroll-related costs, largely $2.8 million related to the Heskett Station and Lewis & Clark Station plant closures and lower

incentive accruals of $1.9 million.

▪ Reduced materials costs and contract services from the Heskett Station and Lewis & Clark Station plant closures.
▪ Reduced costs due to the absence of the Big Stone Station outage in 2021.

◦ Partially offset by increased contract services associated with a planned outage at Coyote Station of $2.6 million.

• Depreciation, depletion and amortization increased $1.0 million, largely resulting from increased property, plant and equipment balances placed

in service, mostly related to growth and replacement projects.

• Taxes, other than income decreased $600,000, largely as a result of lower coal conversion taxes in certain jurisdictions.

• Other income decreased $4.1 million, primarily due to lower returns on the Company's nonqualified benefit plan investments of $4.6 million, as

discussed in Note 8, partially offset by higher AFUDC equity largely due to higher rates.

• Interest expense increased $1.8 million, largely resulting from $3.2 million due to higher long-term debt balances, partially offset by higher

AFUDC debt largely due to higher rates.

• Income tax benefit decreased $2.3 million.

◦ Largely due to:

▪ Higher income taxes of $1.8 million related to higher taxable income.
▪ Higher permanent tax adjustments and decreased excess deferred amortization.

◦ Partially offset by higher production tax credits of $1.4 million driven by higher wind production.

2021 compared to 2020 Electric earnings decreased $3.7 million as a result of:
• Revenue increased $17.6 million

◦ Higher fuel and purchased power costs of $7.2 million recovered in customer rates and offset in expense, as described below.
◦ Higher transmission revenues of $3.3 million.
◦ Higher transmission interconnect upgrades of $2.4 million.
◦ Higher MISO revenue of $2.0 million.
◦ Higher demand revenues of $1.5 million.
◦

Increased retail sales volumes of 2.1 percent, largely as a result of increased industrial and commercial sales volumes, offset in part by lower
residential sales volumes, as the impacts of the COVID-19 pandemic began to reverse and businesses reopened.

• Electric fuel and purchased power increased $7.2 million attributable to higher MISO costs as a result of increased energy costs, partially offset by

decreased fuel costs associated with the Lewis & Clark Station plant closure.

• Operation and maintenance expense increased $3.6 million.

◦ Primarily the result of:

▪ Higher planned maintenance outage costs of $2.1 million at Big Stone Station and $800,000 higher maintenance fees at Thunder Spirit.
▪ Higher other miscellaneous expenses.

◦ Partially offset by lower payroll-related costs of $700,000, which includes lower employee incentive accruals, offset in part by higher health

care costs.

• Depreciation, depletion and amortization increased $3.8 million largely resulting from:

◦
◦

Increased property, plant and equipment balances, primarily related to transmission projects placed in service.
Increased amortization of plant retirement and closure costs of $1.7 million recovered in operating revenues, as discussed in Item 8 - Note 6.

• Taxes, other than income was comparable to the same period in the prior year.

40 MDU Resources Group, Inc. Form 10-K

Part II

• Other income decreased $2.6 million.

◦ Primarily due to:

▪ The absence of an out-of-period adjustment of $2.5 million in 2020 as a result of previously overstated benefit plan expenses.
▪ Lower returns on the Company's nonqualified benefit plan investments of $1.3 million.

◦ Partially offset by increased interest income associated with higher contributions in aid of construction.

• Interest expense was comparable to the same period in the prior year.

• Income tax benefit decreased $4.0 million largely resulting from:

◦ Lower production tax credits of $2.1 million related to the expiration of the 10-year credit-qualifying period on certain facilities and less wind

generation.

◦ Lower excess deferred tax amortization.

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

Years ended December 31,

2022

2021

2020

Variance

2022 vs. 2021 2021 vs. 2020

Operating revenues

Operating expenses:

Purchased natural gas sold

Operation and maintenance

Depreciation, depletion and amortization

Taxes, other than income

Total operating expenses

Operating income

Other income

Interest expense

Income before income taxes

Income tax expense

Net income

Operating statistics

Revenues (millions)

Retail sales:

Residential

Commercial

Industrial

Transportation and other

Volumes (MMdk)

Retail sales:

Residential

Commercial

Industrial

Transportation sales:

Commercial

Industrial

Total throughput

(In millions)

$ 1,273.8 $ 971.9 $ 848.2

31 %

15 %

51 %

6 %

4 %

17 %

34 %

3 %

(59) %

13 %

(12) %

(7) %

(12) %

21 %

5 %

2 %

6 %

14 %

22 %

(40) %

1 %

20 %

45 %

17 %

816.1

542.0

448.1

205.3

194.1

185.4

89.4

71.1

86.0

60.6

84.6

57.0

1,181.9

882.7

775.1

91.9

89.2

3.3

42.2

53.0

7.8

8.1

37.3

60.0

8.4

73.1

13.5

36.8

49.8

5.8

45.2 $

51.6 $

44.0

2022

2021

2020

$ 715.5 $ 548.1 $ 480.5

450.9

330.4

281.2

41.5

31.1

26.2

1,207.9

909.6

787.9

65.9

62.3

60.3

$ 1,273.8 $ 971.9 $ 848.2

74.8

51.0

5.4

65.6

44.7

5.0

65.5

44.2

4.8

131.2

115.3

114.5

2.0

1.9

2.0

165.7

172.5

158.0

167.7

174.4

160.0

298.9

289.7

274.5

Average cost of natural gas per dk

6.22 $

4.70 $

3.91

MDU Resources Group, Inc. Form 10-K 41

Part II

2022 compared to 2021: Natural gas distribution earnings decreased $6.4 million as a result of:
• Revenue increased $301.9 million, largely from:

◦ Higher purchased natural gas sold of $273.3 million recovered in customer rates that was offset in expense, as described below.
◦ Higher retail sales volumes of 13.7 percent across all customer classes due to colder weather, partially offset by weather normalization and

decoupling mechanisms in certain jurisdictions.

◦ Higher revenue-based taxes recovered in rates of $10.1 million that were offset in expense, as described below.
◦ Approved rate relief of $3.6 million in certain jurisdictions and higher pipeline replacement mechanisms of $1.8 million.

• Purchased natural gas sold increased $274.1 million, primarily due to:

◦ Higher natural gas costs as a result of higher market prices of $198.1 million, including the higher recovery of purchase gas adjustments

related to the February 2021 cold weather event and the 2018 Enbridge pipeline rupture.

◦ Higher volumes of natural gas purchased due to increased retail sales volumes.
◦ Purchased natural gas sold includes the disallowance of $845,000 ordered by the MNPUC, as discussed in Note 20.

• Operation and maintenance increased $11.2 million, primarily due to:

◦ Higher contract services of $6.4 million, primarily higher subcontractor costs.
◦ Higher payroll-related costs, including higher straight-time payroll of $4.7 million, partially offset by lower incentive accruals of $3.3 million.
◦ Higher other costs, partially resulting from inflation, including higher expected credit losses of $1.8 million from higher receivables balances

associated with colder weather and higher gas costs; higher software costs of $1.6 million; higher vehicle fuel cost of $1.3 million; and higher
office, travel, materials and other miscellaneous employee costs.

• Depreciation, depletion and amortization increased $3.4 million.

◦ Largely from increased property, plant and equipment balances from growth and replacement projects placed in service.
◦ Partially offset by decreased depreciation rates in certain jurisdictions of $1.0 million.

• Taxes, other than income increased $10.5 million, largely resulting from higher revenue-based taxes which are recovered in rates.

• Other income decreased $4.8 million primarily related to lower returns on the Company's nonqualified benefit plan investments of $7.0 million, as

discussed in Note 8, partially offset by increased interest income.

• Interest expense increased $4.9 million, primarily from higher long-term debt balances and interest rates, partially offset by higher AFUDC debt

largely due to higher rates.

• Income tax expense decreased $600,000 due to lower income taxes of $1.5 million related to lower taxable income, partially offset by higher

permanent tax adjustments.

2021 compared to 2020 Natural gas distribution earnings increased $7.6 million as a result of:
• Revenue increased $123.7 million.

◦ Largely as a result of:

▪ Higher purchased natural gas sold of $93.9 million recovered in customer rates and was offset in expense, as described below.
▪ Approved rate relief in certain jurisdictions of $15.9 million.
▪

Increased retail sales volumes of 0.7 percent across all customer classes, including the benefit of weather normalization and decoupling
mechanisms in certain jurisdictions.
Increased transportation volumes of 9 percent, primarily to electric generation customers.

▪
▪ Higher revenue-based taxes recovered in rates of $2.3 million that were offset in expense, as described below.
▪ Higher non-regulated project revenues of $1.7 million.
▪

Increased basic service charges due to customer growth and increased per unit average rates of $1.5 million each.

• Purchased natural gas sold increased $93.9 million, primarily due to higher natural gas costs as a result of higher market prices.

• Operation and maintenance increased $8.7 million.

◦ Primarily due to:

▪ Higher payroll-related costs of $4.3 million, largely related to health care costs and straight-time payroll.
▪ Decreased credits of $2.4 million for costs associated with the installation of meters partially from delaying meter replacements for safety

measures implemented as a result of the COVID-19 pandemic.

▪ Higher expenses for materials, new software, insurance and vehicle fuel.

◦ Partially offset by:

▪ The absence of the write-off of an abandoned project in the third quarter of 2020 for $1.2 million.
▪ Decreased bad debt expense of $1.0 million as the impacts of the COVID-19 pandemic began to subside.

• Depreciation, depletion and amortization increased $1.4 million.

42 MDU Resources Group, Inc. Form 10-K

Part II

• Taxes, other than income increased $3.6 million resulting from:

◦ Higher revenue-based taxes of $2.3 million, which are recovered in rates.
◦ Higher property taxes in certain jurisdictions of $700,000.
◦ Higher payroll taxes driven by increased payroll-related costs.

• Other income decreased $5.4 million primarily related to:

◦ The absence of an out-of-period adjustment of $4.4 million in 2020 as a result of previously overstated benefit plan expenses.
◦ Decreased interest income related to the recovery of purchased gas cost adjustment balances in certain jurisdictions.

• Interest expense increased $500,000, primarily from lower AFUDC borrowed.

• Income tax expense increased $2.6 million due to higher income before income taxes.

Outlook In 2022, the Company experienced rate base growth of 7.8 percent and expects these segments will grow rate base by approximately
6 percent to 7 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. In 2022 and 2021, these segments experienced retail customer growth of approximately
1.6 percent and 1.7 percent, respectively, and the Company expects customer growth to continue to average 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 and natural gas systems.

These segments are exposed to energy price volatility and may be impacted by changes in oil and natural gas exploration and production activity.
Rate schedules in the jurisdictions in which the Company's natural gas distribution segment operates contain clauses that permit the Company to file
for rate adjustments for changes in the cost of purchased natural gas. Although changes in the price of natural gas are passed through to customers
and have minimal impact on the Company's earnings, the natural gas distribution segment's customers benefit from lower natural gas prices through
the Company's utilization of storage and fixed price contracts. In 2022, the Company experienced increased natural gas prices across its service
areas and more recently has seen higher natural gas prices in the Pacific Northwest, as previously discussed in Strategy and Challenges. As a result,
the Company has filed an out-of-cycle cost of gas adjustment in Idaho to assist in the timely recovery of these costs. See Note 20 for additional
details. The Company will continue to monitor natural gas prices, as well as oil and natural gas production levels.

In February 2019, the Company announced the retirement of three aging coal-fired electric generating units. The Company ceased operations of Unit
1 at Lewis & Clark Station in Sidney, Montana, in March 2021 and Units 1 and 2 at Heskett Station near Mandan, North Dakota, in February 2022.
In addition, in May 2022, the Company began construction of Heskett Unit 4, an 88-MW simple-cycle natural gas-fired combustion turbine peaking
unit at the existing Heskett Station near Mandan, North Dakota, with an expected in service date in the summer of 2023.

The Company is one of four owners of Coyote Station and cannot make a unilateral decision on the plant's future; therefore, the Company could be
negatively impacted by decisions of the other owners. In September 2021, Otter Tail Power Company filed its 2022 Integrated Resource Plan in
Minnesota and North Dakota, which included its intent to start the process of withdrawal from its 35 percent ownership interest in Coyote Station
with an anticipated exit from the plant by December 21, 2028. In October 2022, Otter Tail Power Company requested permission from the MNPUC
to extend the deadline for its Integrated Resource Plan with the intent to update its modeling in light of recent developments in the industry,
including increased capacity requirements in MISO. Otter Tail Power Company's extension was granted by the MNPUC on November 1, 2022, with
revised modeling due March 31, 2023. The joint owners continue to collaborate in analyzing data and weighing decisions that impact the plant and
its employees as well as each company's customers and communities served. Further state implementation of pollution control plans to improve
visibility at Class I areas, such as national parks, under the EPA's Regional Haze Rule could require the owners of Coyote Station to incur significant
new costs. If the owners decide to incur such costs, the costs could, dependent on determination by state regulatory commissions on approval to
recover such costs from customers, negatively impact the Company's results of operations, financial position and cash flows. The NDDEQ submitted
its state implementation plan to the EPA in August 2022 and expects a decision on the plan sometime in 2023. The plan, as submitted by the
NDDEQ, does not require additional controls for any units in North Dakota, including Coyote Station.

Legislation and rulemaking The Company continues to monitor legislation and rulemaking related to clean energy standards that may impact its
segments. Below are some of the specific legislative actions the Company is monitoring.

• The current presidential administration is considering changes to the federal Clean Air Act, some of which were amended by the previous

presidential administration. The content and impacts of the changes under consideration are uncertain and the Company continues to monitor
for potential actions by the EPA.

• In Oregon, the Climate Protection Program Rule was approved in December 2021, which requires natural gas companies to reduce GHG

emissions 50 percent below the baseline by 2035 and 90 percent below the baseline by 2050, which may be achieved through surrendering
emissions allowances, investing in additional customer conservation and energy efficiency programs, purchasing community climate
investment credits, and purchasing low carbon fuels such as renewable natural gas. The Company expects the compliance costs for these
regulations to be recovered through customer rates. For more information about the anticipated compliance costs, Items 1 and 2 - Business
Properties. Cascade's draft 2023 Oregon integrated resource plan projects customer bills could increase by about 100 percent by 2035
compared with costs included in bills today and by about 300 percent by 2050 as a result of the legislation. On September 30, 2022, the
Company filed a request for the use of deferred accounting for costs related to the rule and began deferring those costs. The Company, along
with the other two local natural gas distribution companies in Oregon, filed a lawsuit on March 18, 2022, challenging the Climate Protection

MDU Resources Group, Inc. Form 10-K 43

Part II

Program Rule. The lawsuit was filed on behalf of customers as the Company does not believe the rule accomplishes environmental stewardship
in the most effective and affordable way possible.

• In Washington, the Climate Commitment Act signed into law in May 2021 requires natural gas distribution companies to reduce overall GHG

emissions 45 percent below 1990 levels by 2030, 70 percent below 1990 levels by 2040 and 95 percent below 1990 levels by 2050, which
may be achieved through increased energy efficiency and conservation measures, purchased emission allowances and offsets, and purchases
of low carbon fuels. As directed by the Climate Commitment Act, in September 2022, the Washington DOE published its final rule on the
Climate Commitment Program. The rule was effective on October 30, 2022 and emissions compliance began on January 1, 2023. The
Company has begun reviewing compliance options and expects the compliance costs for these regulations will be recovered through customer
rates. For more information about the anticipated compliance costs, see Items 1 and 2 - Business Properties. Cascade's draft 2023
Washington integrated resource plan projects customer bills could increase by about 23 percent by 2035 compared with costs included in
bills today and by about 78 percent by 2050 as a result of the legislation. On October 14, 2022, the Company filed a request for the use of
deferred accounting for costs related to the rule and began deferring those costs.

• On April 22, 2022, the Washington State Building Code Council approved revisions to the state's commercial energy code that will

significantly limit the use of natural gas for space and water heating in new and retrofitted commercial and multifamily buildings and proposed
the review of similar restrictions in the future for residential buildings. On November 4, 2022, the Washington State Building Code Council
adopted new residential codes requiring gas or electric heat pumps for most new space and water heating installations. The Company
continues to assess the impact of these revisions.

• The Company has reviewed the income tax provisions of the IRA signed into law in August 2022, and the Company will continue to evaluate

whether any of the new or renewed energy tax credits will provide a benefit.

Pipeline
Strategy and challenges The pipeline segment provides natural gas transportation, underground storage and non-regulated cathodic protection
services, as discussed in Items 1 and 2 - Business Properties. 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 natural gas facilities; incremental pipeline projects; and expansion of energy-
related services leveraging on its core competencies. In support of this strategy, the North Bakken Expansion project in western North Dakota was
placed in service in February of 2022. The project has capacity to transport 250 MMcf of natural gas per day and can be increased to 625 MMcf per
day with additional compression. In addition, the Line Section 7 Expansion project was placed in service in August of 2022 and increased system
capacity by 6.7 MMcf per day.

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 on increased pipeline safety regulations and environmental matters such as the reduction
of methane emissions could also impact the price and demand for natural gas.

The pipeline segment is subject to extensive regulation related to certain operational and environmental compliance, cybersecurity, permit terms and
system integrity. The Company continues to actively evaluate cybersecurity processes and procedures, including changes in the industry's
cybersecurity regulations, for opportunities to further strengthen its cybersecurity protections. Implementation of enhancements and additional
requirements is ongoing. The segment reviews and secures existing permits and easements, as well as new permits and easements as necessary, to
meet current demand and future growth opportunities on an ongoing basis.

The Company has continued to actively manage the national supply chain challenges being faced by working with its manufacturers and suppliers to
help mitigate some of these risks on its business. The segment regularly experiences extended lead times on raw materials that are critical to the
segment's construction and maintenance work which could delay maintenance work and construction projects potentially causing lost revenues and/
or increased costs. The Company is partially mitigating these challenges by planning for extended lead times further in advance. The segment is also
currently experiencing inflationary pressures with increased raw material costs. The Company expects supply chain challenges and inflationary
pressures to continue in 2023.

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 companies can also have a negative impact on the segment.

44 MDU Resources Group, Inc. Form 10-K

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

Years ended December 31,

2022

2021

2020

Variance

2022 vs. 2021 2021 vs. 2020

Part II

Operating revenues

Operating expenses:

Operation and maintenance

Depreciation, depletion and amortization

Taxes, other than income

Total operating expenses

Operating income

Other income

Interest expense

Income before income taxes

Income tax expense

Net income

Operating statistics

Transportation volumes (MMdk)

Natural gas gathering volumes (MMdk)

Customer natural gas storage balance (MMdk):

Beginning of period

Net injection (withdrawal)

End of period

(In millions)

$ 155.6 $ 142.6 $ 143.9

9 %

(1) %

31 %

(3) %

6 %

15 %

(86) %

61 %

(10) %

6 %

(14) %

2 %

(6) %

(2) %

— %

(3) %

224 %

(8) %

13 %

25 %

11 %

60.9

26.9

12.3

61.3

20.5

12.7

100.1

94.5

55.5

48.1

1.3

11.3

45.5

10.2

9.4

7.0

50.5

9.6

59.9

21.7

12.9

94.5

49.4

2.9

7.6

44.7

7.7

35.3 $

40.9 $

37.0

2022

2021

2020

482.9

471.1

438.6

—

8.6

23.0

25.5

(1.8)

(2.5)

21.2

23.0

16.2

9.3

25.5

2022 compared to 2021 Pipeline earnings decreased $5.6 million as a result of:
• Revenues increased $13.0 million.

◦ Driven by increased transportation volume revenues of $16.4 million, largely due to the North Bakken Expansion project placed in service in

February 2022.
◦ Partially offset by:

▪ Lower non-regulated project revenues of $2.3 million.
▪ Lower transmission rates due to expired negotiated contracts converted to tariff rates.

• Operation and maintenance decreased $400,000.

◦ Primarily due to:

▪ Lower payroll-related costs of $2.2 million, largely related to lower incentive accruals and benefit-related costs.
▪ Lower non-regulated project costs of $1.3 million directly associated with lower non-regulated project revenues, as previously discussed.

◦ Partially offset by higher legal, maintenance materials and contract services.

• Depreciation, depletion and amortization increased $6.4 million due to increased property, plant and equipment balances, largely related to the

North Bakken Expansion project.

• Taxes, other than income decreased $400,000 resulting from lower property taxes of $700,000 in Montana, partially offset by higher property

taxes in North Dakota.

• Other income decreased $8.1 million, primarily due to:

◦ Lower AFUDC of $7.8 million as a result of the completion of the North Bakken Expansion project placed in service in February 2022.
◦ Lower returns on the Company's nonqualified benefit plan investments, as discussed in Note 8.

• Interest expense increased $4.3 million, resulting from interest associated with higher debt balances to fund capital expenditures and lower

AFUDC as a result of the North Bakken Expansion project placed in service in February 2022.

• Income tax expense increased $600,000, largely a result of a reduction in tax credits, partially offset by lower income before income taxes.

MDU Resources Group, Inc. Form 10-K 45

Part II

2021 compared to 2020 Pipeline earnings increased $3.9 million as a result of:
• Revenues decreased $1.3 million.

◦ Primarily decreased gathering revenues of $4.9 million due to the sale of the Company's natural gas gathering assets in 2020.
◦ Partially offset by:

▪

Increased transportation volumes and demand revenue of $1.8 million largely from organic growth projects, as previously discussed, and
short-term discounted contracts.
Increased non-regulated project revenues of $1.4 million.

• Operation and maintenance increased $1.4 million due to:

◦ The absence of the gain on sale of the Company's natural gas gathering assets of $1.5 million in 2020, offset partially by lower operating

expenses related to the natural gas gathering assets.

◦ Partially offset by lower payroll-related costs.

• Depreciation, depletion and amortization decreased $1.2 million.

◦ Primarily related to lower expense of $1.6 million due to the sale of the Company's natural gas gathering assets in 2020, as previously

discussed.

◦ Slightly offset by increased property, plant and equipment balances related to organic growth projects.

• Taxes, other than income was comparable to the same period in the prior year.

• Other income increased $6.5 million.

◦ Primarily due to:

▪ Higher AFUDC of $7.3 million for the construction of the North Bakken Expansion project.
▪ The absence of the write-off of unrecovered gas costs and project expenses of $1.2 million in 2020.

◦ Partially offset by:

▪ The absence of a positive impact of $700,000 related to the sale of the Company's regulated gathering assets in 2020.
▪ The absence of an out-of-period adjustment of $500,000 in 2020 as a result of previously overstated benefit plan expenses.
▪ Lower returns on the Company's nonqualified benefit plan investments.

• Interest expense decreased $600,000.

◦ Primarily due to:

▪ Higher AFUDC of $1.5 million for the construction of the North Bakken Expansion project.
▪ Lower average interest rates.

◦ Partially offset by higher debt balances.

• Income tax expense increased $1.9 million.

◦ Largely a result of:

▪ Higher income before income taxes.
▪ The absence of the reversal of excess deferred taxes of $1.5 million associated with the sale of the Company's gas gathering assets in

2020.

◦ Partially offset by permanent tax adjustments and an energy efficiency tax benefit.

Outlook The Company continues to monitor and assess the potential impacts of two FERC draft policy statements issued in the first quarter of 2022.
One is the Updated Certificate of Policy Statement, which describes how the FERC will determine whether a new interstate natural gas transportation
project is required by public convenience and necessity. It includes increased focus on a project's purpose and need and the environmental impacts;
as well as impacts on landowners and environmental justice communities. The second draft policy statement, the Interim GHG Policy Statement,
explains how the FERC will assess the impacts of natural gas infrastructure projects on climate change in its reviews under the National
Environmental Policy Act and Natural Gas Act.

The Company has reviewed the income tax provisions of the IRA signed into law in August 2022 and does not expect any material income tax
benefits as a result. The Company has also evaluated the impacts of the methane emissions charge imposed under the IRA legislation and does not
expect any material fees given the current GHG reporting thresholds. The Company continues to monitor, evaluate and implement additional GHG
emissions reduction strategies, including increased monitoring frequency and emission source control technologies to minimize potential risk.

The Company has continued to experience the effect of associated natural gas production in the Bakken, which has provided opportunities for
organic growth projects and increased demand. The completion of organic growth projects has contributed to higher volumes of natural gas the
Company transports through its system. Associated natural gas production in the Bakken fell during the COVID-19 pandemic delaying previously

46 MDU Resources Group, Inc. Form 10-K

Part II

forecasted production growth. Natural gas production has rebounded to pre-pandemic levels and drilling rig activities have increased, and the
Company expects continued gradual increases over the next 2 years. The production delay, along with long-term contractual commitments on the
North Bakken Expansion project placed in service in February 2022, has negatively impacted customer renewals of certain contracts. Bakken natural
gas production outlook remains positive with continued growth expected due to new oil wells and increasing gas to oil ratios.

Increases in national and global natural gas supply has moderated pressure on natural gas prices and price volatility. While the Company believes
there will continue to be varying pressures on natural gas production levels and prices, the long-term outlook for natural gas prices continues to
provide growth opportunity for industrial supply-related projects and seasonal pricing differentials provide opportunities for storage services.

The Company continues to focus on improving existing operations and growth opportunities through organic projects in all areas in which it operates,
which includes additional projects with local distribution companies, Bakken area producers and industrial customers in various stages of
development.

In July 2021, the Company announced plans for a natural gas pipeline expansion project in eastern North Dakota. The Wahpeton Expansion project
consists of approximately 60 miles of pipe and ancillary facilities and is designed to increase capacity by 20 MMcf per day, which is supported by
long-term customer agreements with Montana-Dakota and its utility customers. Construction is expected to begin in early 2024, depending on
regulatory approvals, with an anticipated completion date later in 2024. On May 27, 2022, the Company filed with FERC its application for the
project and received FERC's draft environmental impact statement for the project on November 3, 2022. In accordance with the FERC schedule for
environmental review on the project, the final environmental impact statement is planned to be available in April 2023.

On September 19, 2022, the Company filed with the FERC its prior notice application for its 2023 Line Section 27 Expansion project. This project
consists of a new compressor station and ancillary facilities and is designed to increase capacity by 175 MMcf per day, which is supported by a long-
term customer agreement. Construction is expected to begin in early 2023, pending regulatory approvals, with an anticipated completion date in late
2023.

On December 22, 2022, the Company filed with the FERC its prior notice application for its Grasslands South Expansion project. This project
consists of approximately 15 miles of pipe in western North Dakota, utilizing existing capacity on its Grasslands Subsystem to a new connection with
Big Horn Gas Gathering, LLC in northeastern Wyoming and ancillary facilities in North Dakota and Wyoming. A long-term customer agreement
supports a design for incremental capacity of 94 MMcf per day. Construction is expected to begin in the second quarter of 2023, pending regulatory
approvals, with an anticipated completion date in late 2023.

In addition, the Company has entered into long-term customer agreements for the construction of a fourth growth project with incremental natural
gas design capacity anticipated to be 25 MMcf per day. The project is dependent on regulatory approvals and anticipated to be completed in 2023.
See Capital Expenditures within this section for additional information on the expenditures related to these projects.

Construction Materials and Contracting
Strategy and challenges The segment is a leading aggregates-based construction materials and contracting services provider in the United States,
as discussed in Items 1 and 2 - Business Properties. The segment focuses on continued growth and maximizing its vertical integration, leveraging its
core values to be a supplier of choice in all its markets. The segment is also focused on its commitment to its employees, customers and
communities by operating with integrity and always striving for excellence; development and recruitment of talented employees; sustainable practices
to create value for the communities it serves; being the provider of choice in midsize, high-growth markets; strengthening the long-term, strategic
aggregate reserve position through available purchase and/or lease opportunities in existing and new geographies; and enhancing its supply chain to
provide reliable, timely and efficient services to its end customers. As previously discussed, the Company is pursuing a tax-free spinoff of the
construction materials and contracting segment, and the separation is expected to be complete in the second quarter of 2023.

The segment is one of the leading producers of crushed stone and sand and gravel, and the segment continues to strategically manage its aggregate
reserves, as well as take further advantage of being vertically integrated. The segment's vertical integration allows it 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 permit expansion and acquisition opportunities to replace
the reserves.

The segment's management continually monitors its margins and has been proactive in applying strategies to address the inflationary impacts seen
across the United States. The Company has increased its product pricing where necessary and continues to implement cost savings initiatives to
mitigate these effects on the segment's gross margin. Due to existing contractual provisions, there can be a lag between the announced price
increases and the time when they can be fully recognized. The Company will continue to evaluate further price increases on a regular cadence to stay
ahead of inflationary pressures and enhance stockholder value.

The segment operates in geographically diverse and competitive markets yet strives to maximize efficiencies, including transportation costs and
economies of scale, to maintain strong margins. The segment's margins can experience negative pressure from competition, as well as impacts of the
volatility in the cost of raw materials such as fuel, asphalt oil, cement and steel, with fuel and asphalt oil costs having the most significant impact on

MDU Resources Group, Inc. Form 10-K 47

Part II

the segment's recent results. Such volatility and inflationary pressures may continue to have an impact on the segment's margins, including fixed-
price construction contracts that are particularly vulnerable to the volatility of energy and material prices. These increases are partially offset by
mitigation measures implemented by the Company, including price increases, escalation clauses in contracting services contracts, pre-purchased
materials and other cost savings initiatives. While the Company has experienced some supply chain constraints, it continues to have good
relationships with its suppliers and has not experienced any material adverse impacts of shortages or delays on materials. Other variables that can
impact the segment's margins include adverse weather conditions, the timing of project starts or completions and declines or delays in new and
existing projects due to the cyclical nature of the construction industry and governmental infrastructure spending. Accordingly, operating results in
any particular period may not be indicative of the results that can be expected for any other period.

As a people first company, the segment continually takes steps to address the challenge of recruitment and retention of employees. In order to help
attract new workers to the construction industry and enhance the skills of its current employees, the Company has completed construction of a
corporate-wide, state-of-the-art training facility in the Pacific Northwest. The training facility offers hands-on training for heavy equipment operators
and truck drivers, as well as leadership and safety training. Trends in the labor market include an aging workforce and availability issues, and most of
the markets the segment operates in have experienced labor shortages, largely truck drivers, causing increased labor-related costs and delays or
inefficiencies on projects. The new training facility is expected to help address some of these challenges. The Company continues to monitor the
labor markets and assess additional opportunities to enhance and support its workforce. Despite these efforts, the Company expects labor costs to
continue to increase based on the increased demand for services and, to a lesser extent, the recent escalated inflationary environment in the United
States.

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

Years ended December 31,

2022

2021

2020

% change

2022 vs. 2021 2021 vs. 2020

Operating revenues

Cost of sales:

(In millions)

$ 2,534.7 $ 2,228.9 $ 2,178.0

14 %

2 %

Operation and maintenance*

2,009.6 1,737.4 1,676.6

Depreciation, depletion and amortization

Taxes, other than income

Total cost of sales

Gross profit

Selling, general and administrative expense:

Operation and maintenance*

Depreciation, depletion and amortization

Taxes, other than income

112.9

51.3

96.8

47.7

84.8

46.0

2,173.8 1,881.9 1,807.4

360.9

347.0

370.6

155.8

146.0

146.4

4.9

5.9

4.2

5.7

4.8

4.9

Total selling, general and administrative expense

166.6

155.9

156.1

Operating income

Other income (expense)

Interest expense

Income before income taxes

Income tax expense

Net income

194.3

191.1

214.5

(5.4)

1.3

30.1

19.2

20.6

158.8

173.2

194.7

42.6

43.4

47.4

$ 116.2 $ 129.8 $ 147.3

16 %

17 %

8 %

16 %

4 %

7 %

17 %

4 %

7 %

2 %

(515) %

57 %

(8) %

(2) %

(10) %

4 %

14 %

4 %

(6) %

— %

(13) %

16 %

— %

(11) %

63 %

(7) %

(11) %

(8) %

(12) %

* The Company identified certain costs that were reclassified from cost of sales to selling, general and administrative expenses in 2021 and

2020 of $57.4 million and $56.5 million, respectively, and had no impact to net income.

Operating statistics

Revenues

Gross profit

Aggregates

Asphalt

Ready-mix concrete

Other products*

Contracting services

2022

2021

2020

2022

2021

2020

(In millions)

496.6 $

444.0 $

406.6

69.6 $

60.6 $

427.5

609.5

407.3

339.8

584.4

344.3

349.9

547.0

356.3

41.7

85.9

63.6

40.4

81.5

64.0

62.7

45.5

74.4

82.6

1,187.7

1,017.5

1,069.7

100.1

100.5

105.4

Intracompany eliminations

(593.9)

(501.1)

(551.5)

—

$ 2,534.7 $ 2,228.9 $ 2,178.0

360.9 $

347.0 $

370.6

* Other products includes cement, asphalt oil, merchandise, fabric, spreading and other products that individually are not considered

to be a major line of business for the segment.

48 MDU Resources Group, Inc. Form 10-K

Part II

Sales (thousands):

Aggregates (tons)

Asphalt (tons)

Ready-mix concrete (cubic yards)

Average sales price:

Aggregates (per ton)

Asphalt (per ton)

Ready-mix concrete (per cubic yard)

2022

2021

2020

33,994

33,518

30,949

7,254

7,101

4,015

4,267

7,202

4,087

14.61 $

13.25 $

13.14

58.93 $

47.86 $

48.58

151.80 $

136.94 $

133.86

2022 compared to 2021 Construction materials and contracting's earnings decreased $13.6 million as a result of:
• Revenues increased $305.8 million.

◦ Primarily the result of increased revenues across all product lines as the business benefited from higher average selling prices of nearly

$250 million, largely in response to inflationary pressures.

◦ Also impacting materials revenues were:

▪

Increased aggregates sales volumes of $10.2 million due mainly to recent acquisitions contributing 2.2 million tons, offset in part by lower
volumes in certain states.
Increased asphalt sales volumes of $7.2 million from higher demand in California, Minnesota, Montana, North Dakota and Wyoming of
$13.7 million, partially offset by lower volumes in Texas due to less available paving work.

▪ Lower ready-mix concrete sales volumes of $38.5 million across all regions resulting from lower residential demand and fewer impact

projects.

▪ Decreased revenues for other products associated with volumes, largely related to asphalt oil.
▪

Increased contracting revenues of $170.2 million across most regions as a result of more available agency and commercial work, recent
acquisitions contributing $27.9 million and more available paving work in Idaho, Minnesota, Montana, North Dakota and Wyoming. In
addition, inflationary pressures led to higher contract values in all regions.

◦ These increases were partially offset by an increase in the elimination for internal materials sales used in other products and services.

• Gross profit increased $13.9 million.

◦ Primarily the result of higher average selling prices, as previously noted, contributions from recent acquisitions of $12.9 million and increased

margins for aggregates and ready-mix concrete as a result of implemented price increases outpacing inflationary pressures.

◦ Partially offset by higher operating costs across the business, mostly the result of inflationary pressures. These costs include higher asphalt oil

costs of $59.3 million; higher labor costs of $32.0 million; higher fuel costs of $42.6 million; and higher cement costs of $20.7 million.

• Selling, general and administrative expense increased $10.7 million.

◦ Largely the result of:

▪
▪
▪
▪
▪
▪

Increased payroll-related costs of $11.6 million, partially resulting from inflationary pressures.
Increased travel expenses of $2.3 million.
Increased office expenses of $1.7 million.
Increased professional fees of $1.7 million, partially due to increased legal and audit fees.
Increased expected credit losses of $1.4 million related to the absence of recoveries received during 2021.
Increased safety and training costs.

◦ Offset in part by higher net gains on asset sales of $7.5 million.

• Other income (expense) decreased $6.7 million, primarily resulting from lower returns on the Company's nonqualified benefit plan investments, as

discussed in Note 8.

• Interest expense increased $10.9 million, related to higher debt balances to fund recent acquisitions and higher working capital needs, along with

higher average interest rates.

• Income tax expense decreased $800,000 as a result of lower income before income taxes.

MDU Resources Group, Inc. Form 10-K 49

Part II

2021 compared to 2020 Construction materials and contracting's earnings decreased $17.5 million as a result of:
• Revenues increased $50.9 million.

◦ Largely the result of:

▪ Higher aggregate sales volumes from acquisitions in 2021 contributed $20.1 million and strong demand for airport, commercial and
health care work in Oregon added $16.3 million. Also contributing was an additional $1.6 million due to a few large projects in South
Dakota. These increases were partially offset by lower volumes in Texas of $2.0 million driven by lower energy-related sales volumes.

▪ Higher ready-mix concrete volumes from increased commercial and residential demand in Texas contributed $8.2 million, strong demand

in Oregon added $7.8 million and acquisitions in 2021 contributed an additional $4.5 million. Ready-mix concrete revenues also
benefited from an increase in average sales price in all regions. These increases were partially offset by decreased sales of $14.8 million
due to lower demand in Hawaii as a result of the overall slowdown of the travel industry from COVID-19.

◦ Partially offset by:

▪ Decreased contracting revenues partially due to less available paving work in certain regions of $60.0 million and the absence of a few

large jobs in 2020 of $17.5 million. These decreases were offset in part by strong demand for health care, agency and commercial work in
Oregon of $28.8 million.

▪ Decreased asphalt volumes primarily due to less available highway paving work in the public sector of $26.2 million in certain regions was

partially offset by strong demand in Oregon.

• Gross profit decreased $23.6 million.

◦ Primarily due to:

▪ Lower gross profit and margins in other product lines, primarily due to higher asphalt oil material costs of $15.1 million, along with repair

and maintenance costs of $2.6 million.

▪ Higher fuel costs of $13.3 million across all product lines.
▪ Lower asphalt gross profit of $5.1 million, largely resulting from less available paving work.
▪ Lower contracting services gross profit resulting from less available paving work of $8.6 million, as previously discussed, and the absence

of a few large jobs for $5.4 million. Margins were also impacted by higher fuel costs, as previously discussed.

▪ Lower aggregates gross profit resulting from reduced work in Hawaii due to the overall slowdown of the travel industry resulting from

COVID-19 of $3.9 million, startup costs of $1.3 million associated with new aggregate sites in Texas and $600,000 higher material costs
in Alaska. These decreases were partially offset by higher margins due to strong demand in Oregon of $2.1 million and South Dakota of
$1.4 million along with the effects of recent acquisitions.

▪ Labor constraints, especially truck drivers, which resulted in isolated project delays and staffing inefficiencies across the business.

◦ Partially offset by an increase in ready-mix concrete gross profit of $7.1 million due in part to higher average pricing in all regions and higher

volumes in most regions.

• Selling, general and administrative expense decreased $200,000.

◦ Largely the result of:

▪ The recovery of prior bad debt expense of $2.1 million.
▪ Higher net gains on asset sales of $1.4 million.

◦ Offset in part by:

Increased payroll-related costs of $1.6 million, primarily for higher health care costs.

▪
▪ Higher acquisition costs of $700,000.
▪ An increase in miscellaneous taxes, license and governmental fees.

• Other income increased $500,000, primarily resulting from an out-of-period adjustment in 2020 as a result of previously overstated benefit plan

expenses.

• Interest expense decreased $1.4 million.

◦ Primarily resulting from lower average interest rates of $2.8 million.
◦ Offset in part by higher average debt balances.

• Income tax expense decreased $4.0 million as a result of lower income before income taxes.

Outlook In August 2022, the Company announced its intent to separate this segment into a standalone publicly traded company. The separation is
expected to result in two independent, publicly traded companies: (1) MDU Resources Group, Inc., the existing company and (2) Knife River, a
construction materials and contracting services company. The separation is expected to be completed in the second quarter of 2023 and is expected
to unlock inherent value within the two companies, which each have unique growth prospects and investment opportunities. The Company may, at
any time and for any reason until the proposed transaction is complete, abandon the separation or modify or change its terms. For a complete
discussion of all of the conditions to and the risks and uncertainties associated with the separation and distribution, see Item 1A - Risk Factors.

50 MDU Resources Group, Inc. Form 10-K

Part II

Funding for public projects is dependent on federal and state funding, such as appropriations to the Federal Highway Administration. The American
Rescue Plan Act enacted in the first quarter of 2021 provides $1.9 trillion in COVID-19 relief funding for states, schools and local governments.
States are beginning to move forward with allocating these funds based on federal criteria and state needs, and in some cases, funding of
infrastructure projects could positively impact the segment. Additionally, the bipartisan infrastructure proposal, known as the IRA, was enacted in the
fourth quarter of 2021 and is providing long-term opportunities by designating $119 billion for the repair and rebuilding of roads and bridges across
the Company's footprint. In addition, the IRA provides $369 billion in new funding for clean energy programs. These programs include new tax
incentives for solar, battery storage and hydrogen development along with funding to expand the production of electric vehicles and the build out of
infrastructure to support electric vehicles. In addition to federal funding, 11 out of the 14 states in which the Company operates have implemented
their own funding mechanisms for public projects, including projects related to highways, airports and other public infrastructure. The Company
continues to monitor the progress of these legislative items.

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-mix concrete, asphaltic concrete
and public and private construction markets. The contracting services and construction materials are sold in connection with street, highway and
other public infrastructure projects, as well as private commercial, industrial 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 projects are, however,
dependent on federal and state 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 and potential for reductions
during recessionary periods.

During 2022 and 2021, the Company made strategic purchases and completed acquisitions that support the Company's long-term strategy to
expand its market presence in the higher-margin materials markets. The Company continues to evaluate additional acquisition opportunities. For
more information on the Company's business combinations, see Item 8 - Note 4. In 2022, the Company is upgrading its prestress facility located in
Spokane, Washington. The state-of-the-art facility is expected to be completed during the first half of 2023. The facility is expected to be a platform
for growth through improved productivity and quality, which will help meet strong market demand for prefabricated concrete solutions.

The construction materials and contracting segment's backlog remained strong at December 31, 2022, at $935 million, as compared to backlog at
December 31, 2021, of $708 million. A significant portion of the Company's backlog at December 31, 2022, relates to publicly funded projects,
largely street and highway construction projects, which are primarily driven by public work projects for state departments of transportation. Period
over period increases or decreases in backlog cannot be used as an indicator of future revenues or net income. Of the $935 million of backlog at
December 31, 2022, the Company expects to complete an estimated $836 million during 2023. While the Company believes the current backlog of
work remains firm, prolonged delays in the receipt of critical supplies and materials or continued increases to pricing could result in customers
seeking to delay or terminate existing or pending agreements. Factors noted in Item 1A - Risk Factors can cause revenues to be realized in periods
and at levels that are different from originally projected.

Construction Services
Strategy and challenges The construction services segment provides electrical and mechanical and transmission and distribution specialty
contracting services, as discussed in Items 1 and 2 - Business Properties. The construction services segment focuses on safely executing projects;
providing a superior return on investment by building new and strengthening existing customer relationships; ensuring quality service; effectively
controlling costs; retaining, developing and recruiting talented employees; growing through organic and strategic acquisition opportunities; and
focusing efforts on projects that will permit higher margins while properly managing risk. The growth experienced by the segment in recent years is
due in part to the project awards in the markets served and the ability to support national customers in most of the regions in which it operates.

The construction services segment faces challenges, which are not under direct control of the business, in the markets in which it operates, including
those described in Item 1A - Risk Factors. These factors, and those noted below, have caused fluctuations in revenues, gross margins and earnings in
the past and are likely to cause fluctuations in the future.

• Revenue mix and impact on margins. The mix of revenues based on the types of services the segment provides can impact margins as certain
industries and services provide higher margin opportunities. Larger or more complex projects typically result in higher margin opportunities
since the segment assumes a higher degree of performance risk and there is greater utilization of the segment's resources for longer
construction timelines. However, larger or more complex projects have a higher risk of regulatory and seasonal or cyclical delay. Project
schedules fluctuate, which can affect the amount of work performed in a given period. Smaller or less complex projects typically have a greater
number of companies competing for them, and competitors at times may be more aggressive when pursuing available work. A greater
percentage of smaller scale or less complex work in a given period could negatively impact margins due to the inefficiency of transitioning
between a greater number of smaller projects versus continuous production on a few larger projects.

• Project variability and performance. Margins for a single project may fluctuate period to period due to changes in the volume or type of work
performed, the pricing structure under the project contract or job productivity. Productivity and performance on a project can vary period to
period based on a number of factors, including unexpected project difficulties; unexpected project site conditions; project location, including
locations with challenging operating conditions or difficult geographic characteristics; whether the work is on an open or encumbered right of
way; inclement weather or severe weather events; environmental restrictions or regulatory delays; political or legal challenges related to a

MDU Resources Group, Inc. Form 10-K 51

Part II

project; and the performance of third parties. In addition, the type of contract can impact the margin on a project. Under fixed-price contracts,
which are more common with larger or more complex projects, the segment assumes risk related to project estimates versus execution.
Revenues under this type of contract can vary, sometimes significantly, from original projects due to additional project complexity; timing
uncertainty or extended bidding; extended regulatory or permitting processes; and other factors, which can result in a reduction in profit or
losses on a project.

• Subcontractor work and provision of materials. Some work under project contracts is subcontracted out to other companies and margins on
subcontractor work is generally lower than work performed by the Company. Increased subcontractor work in a given period may therefore
result in lower margins. In addition, inflationary or other pressures may increase the cost of materials under fixed-price contracts and may
result in decreased margins on the project. The Company has worked to implement provisions in project contracts to allow for the pass-through
of inflationary costs to customers where feasible and will continue to do so to mitigate the impacts.

The segment's management continually monitors its operating margins and has been proactive in addressing the inflationary impacts seen across the
United States. The segment is currently experiencing continued labor constraints and increased fuel and material costs, as well as impacts from
delays in the national supply chain. The segment is working with suppliers and providers of goods and services in advance of construction to secure
pricing and reduce delays for goods and services. The inflationary costs and national supply chain challenges experienced by the segment have
increased costs but have not had significant impacts to the procurement of project materials. Such volatility and inflationary pressures may continue
to have an impact on the segment's margins, including fixed-price construction contracts that are particularly vulnerable to the volatility of energy
and material prices. These increases are partially offset by mitigation measures implemented by the Company, including escalation clauses in
contracts, pre-purchased materials and other cost savings initiatives. The segment also continues recruitment and retention efforts to attract and
retain employees. The Company expects these inflationary pressures and national supply chain challenges to continue. 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, as well as increasing duration and complexity of customer capital programs. Most of
the markets the segment operates in have experienced labor shortages which in some cases have caused increased labor-related costs. The Company
continues to monitor the labor markets and expects labor costs to continue to increase based on increases included in the collective bargaining
agreements and, to a lesser extent, the recent escalated inflationary environment in the United States. Due to these and other factors, the Company
believes overall customer and competitor demand for labor resources will continue to increase.

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

Years ended December 31,

2022

2021

2020

Variance

2022 vs. 2021 2021 vs. 2020

Operating revenues

Cost of sales:

(In millions)

$ 2,699.2 $ 2,051.6 $ 2,095.7

32 %

(2) %

Operation and maintenance

2,325.9 1,725.5 1,747.5

Depreciation, depletion and amortization

Taxes, other than income

Total cost of sales

Gross profit

Selling, general and administrative expense:

Operation and maintenance

Depreciation, depletion and amortization

Taxes, other than income

16.9

80.4

15.8

62.4

15.7

74.2

2,423.2 1,803.7 1,837.4

276.0

247.9

258.3

101.5

92.9

98.1

4.6

5.3

4.5

4.8

7.8

4.8

Total selling, general and administrative expense

111.4

102.2

110.7

Operating income

Other income

Interest expense

Income before income taxes

Income tax expense

Net income

164.6

145.7

147.6

7.3

6.3

2.6

3.5

2.0

4.1

165.6

144.8

145.5

40.8

35.4

35.8

$ 124.8 $ 109.4 $ 109.7

35 %

7 %

29 %

34 %

11 %

9 %

2 %

10 %

9 %

13 %

181 %

80 %

14 %

15 %

14 %

(1) %

1 %

(16) %

(2) %

(4) %

(5) %

(42) %

— %

(8) %

(1) %

30 %

(15) %

— %

(1) %

— %

52 MDU Resources Group, Inc. Form 10-K

Part II

Operating Statistics

Business Line

2022

2021

2020

2022

2021

2020

Revenues

Gross profit

(In millions)

Electrical & mechanical

Commercial

Industrial

Institutional

Renewables

Service & other

Transmission & distribution

Utility

Transportation

$ 1,082.5 $

553.2 $

741.5

105.2 $

59.8 $

405.7

215.5

151.1

143.0

457.5

123.1

12.3

374.8

158.8

5.4

43.4

51.3

3.8

(.6)

6.2

1.2

188.4

121.0

19.8

25.1

48.4

41.3

23.8

1.1

21.5

1,997.8

1,334.5

1,401.5

171.6

143.6

136.1

645.1

630.5

72.3

103.1

717.4

733.6

592.5

111.8

704.3

100.3

4.1

92.4

11.9

106.7

15.5

104.4

104.3

122.2

Intrasegment eliminations

(16.0)

(16.5)

(10.1)

—

$ 2,699.2 $ 2,051.6 $ 2,095.7

276.0 $

247.9 $

258.3

2022 compared to 2021 Construction services earnings increased $15.4 million as a result of:
• Revenues increased $647.6 million.

◦ Largely due to:

▪

Increased electrical and mechanical revenues, partially as a result of inflationary pressures as well as:
◦ Higher commercial revenues driven largely by a $251.5 million increase in hospitality projects due to the progress on large projects, a
$121.8 million increase in data center projects driven by both the number of and progress on projects and an increase in general
commercial projects as a result of project mix and progression of contracts.

◦ Higher renewable revenues from the timing of and progress on projects.
◦ Higher institutional revenues largely the result of increased activity and progress on projects from education projects of $26.0 million,

healthcare projects of $24.1 million and government projects.

Increased utility revenues for electrical projects of $37.5 million, underground projects of $24.5 million, distribution projects of
$12.7 million, telecommunications projects of $7.0 million and substation projects, with each sector being driven by higher customer
demand. These increases were partially offset by lower transmission and storm work projects.

◦ Partially offset by:

▪ Lower industrial revenues driven by decreased demand for maintenance, high-tech and refinery projects and lower service revenues driven

by decreased demand for the repair and maintenance of electrical and mechanical projects.

▪ Lower transportation revenues, primarily from lower customer demand for street lighting projects of $39.8 million.

• Gross profit increased $28.1 million.

◦ Largely due to the increased electrical and mechanical revenues previously discussed.
◦ Partially offset by higher operating costs related to inflationary pressures, including labor, materials and equipment costs.

• Selling, general and administrative expense increased $9.2 million resulting from higher payroll-related costs of $5.7 million, increased expected

credit losses of $2.4 million due to changes in estimates during 2021 and higher office expenses.

• Other income increased $4.7 million, primarily related to the Company's joint ventures.

• Interest expense increased $2.8 million due to higher working capital needs and higher interest rates.

• Income tax expense increased $5.4 million as a result of higher income before income taxes.

2021 compared to 2020 Construction services earnings decreased $300,000 as a result of:
• Revenues decreased $44.1 million.

◦ Largely due to:

▪ The completion of several large commercial projects in early 2021 and 2020 in the Las Vegas market of $129.0 million.
▪ Decreased institutional projects of $15.0 million from less available work and the completion of a larger project.
▪ The completion of a significant industrial project of $43.0 million.
▪ Decreased demand for electric transportation projects which includes traffic signalization and street lighting.

◦ Partially offset by:

▪ Higher industrial work due to the number of projects awarded and progress on significant projects of $96.0 million.
▪
▪ Strong demand for utility projects including the progress on substations of $21.0 million and power line repair of $3.0 million.

Increased service work of $37.0 million related to the repair and maintenance of electrical, mechanical and fire protection systems.

MDU Resources Group, Inc. Form 10-K 53

Part II

• Gross profit decreased $10.4 million.

◦ Largely due to:

▪ The absence of higher margin utility projects in 2020 negatively impacted gross profit by $15.0 million, which includes storm power line

repair and fire hardening work.

▪ Decreased transportation gross profit, largely the completion of a higher margin project of $5.1 million.
▪

Institutional projects, primarily the recognition of reduced margins of $9.4 million from lower margin work in 2021 and the impacts of a
job loss of $8.4 million related to change order disputes which resulted in a significant job recognizing higher labor and material costs.

◦ Partially offset by:

Increased industrial gross profit primarily due to a change order settlement of $10.0 million on a significant project.

▪
▪ The absence of a job loss in 2020 of $8.9 million related to a large commercial project.
▪ An increase in the amount of service work awarded and the progress on that work.

• Selling, general and administrative expense decreased $8.5 million.

◦ Largely due to:

▪ Lower bad debt expense of $7.0 million, largely due to changes in estimates related to expected credit losses.
▪ Lower amortization expense of $3.2 million.

◦ Offset in part by:

▪ Higher office expenses of $1.3 million.
▪

Increased payroll-related costs.

• Other income increased $600,000, largely related to increased earnings on investments.

• Interest expense decreased $600,000, largely related to decreased debt balances due to lower working capital needs and increased cash

collections.

• Income tax expense decreased $400,000 as a result of lower income before income taxes.

Outlook Funding for public projects is highly dependent on federal and state funding, such as appropriations to the Federal Highway Administration.
The American Rescue Plan provides $1.9 trillion in COVID-19 relief funding for states, schools and local government including broadband
infrastructure. States are beginning to move forward with allocating these funds based on federal criteria and state needs, and in some cases,
funding of infrastructure projects could positively impact the segment. Additionally, the Infrastructure Investment and Jobs Act, was enacted in the
fourth quarter of 2021 and is providing long-term opportunities by designating funds for investments for upgrades to electric and grid infrastructure,
transportation systems, airports and electric vehicle infrastructure, all industries this segment supports. In addition, the IRA provides $369 billion in
new funding for clean energy programs. These programs include new tax incentives for solar, battery storage and hydrogen development along with
funding to expand the production of electric vehicles and the build out of infrastructure to support electric vehicles. The Company will continue to
monitor the implementation of these legislative items.

The Company continues to have bidding opportunities in the specialty contracting markets in which it operated in during 2022, as evidenced by the
segment's backlog. Although bidding remains highly competitive in all areas, the Company expects the segment's relationship with existing
customers, skilled workforce, quality of service and effective cost management will continue to provide a benefit in securing and executing profitable
projects in the future. The Company has also seen rapidly growing needs for services across the electric vehicle charging, wind generation and energy
storage markets that complement existing renewable projects performed by the Company.

The construction services segment's backlog at December 31 was as follows:

2022

2021

(In millions)

Electrical & mechanical

1,861 $

1,109

Transmission & distribution

270

276

2,131 $

1,385

The increase in backlog at December 31, 2022, as compared to backlog at December 31, 2021, was largely attributable to the new project
opportunities that the Company continues to be awarded across its diverse operations, particularly within the commercial, industrial, institutional,
and power utility markets. The increases in backlog have been offset by decreases in the renewable and transportation markets due to the timing of
project completions. Period over period increases or decreases in backlog cannot be used as an indicator of future revenues or net income. Of the
$2.1 billion of backlog at December 31, 2022, the Company expects to complete an estimated $1.8 billion during 2023. While the Company
believes the current backlog of work remains firm, prolonged delays in the receipt of critical supplies and materials could result in customers seeking
to delay or terminate existing or pending agreements. As of December 31, 2022, customers have not provided the Company with any indications that
they no longer wish to proceed with the planned projects that have been included in backlog. Additionally, the Company continues to further evaluate
potential acquisition opportunities that would be accretive to earnings of the Company and continue to grow the segment's backlog. Factors noted in
Item 1A - Risk Factors can cause revenues to be realized in periods and at levels that are different from originally projected.

54 MDU Resources Group, Inc. Form 10-K

Part II

Other

Years ended December 31,

2022

2021

2020

Variance

2022 vs. 2021 2021 vs. 2020

Operating revenues

Operating expenses:

Operation and maintenance

Depreciation, depletion and amortization

Taxes, other than income

Total operating expenses

Operating loss

Other income

Interest expense

Loss before income taxes

Income tax benefit

Net loss

(In millions)

17.6 $

13.7 $

11.9

28 %

15 %

25.1

15.2

12.2

4.4

4.6

2.7

29.6

19.9

15.0

(12.0)

(6.2)

(3.1)

1.0

1.5

(12.5)

(6.1)

(1.2)

(.2)

(3.5)

(.4)

(11.3) $

(5.9) $

(3.1)

65 %

(4) %

— %

49 %

94 %

150 %

400 %

105 %

500 %

(93) %

25 %

70 %

— %

33 %

(100) %

— %

(63) %

(74) %

50 %

(90) %

Included in Other is insurance activity at the Company's captive insurer and 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.

During 2022, Other experienced higher operation and maintenance expense related to costs incurred of $14.4 million for the announced strategic
initiatives, partially offset by a reduction in the estimated losses recorded at the captive insurer. Other was positively impacted by higher premiums
included in operating revenues in 2022 for the captive insurer compared to 2021.

Other was negatively impacted in 2021 as a result of higher insurance claims experience at the captive insurer and depreciation expense as
compared to 2020. Premiums for the captive insurer were also higher in 2021 compared to 2020, which impacts both operating revenues and
operation and maintenance expense.

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:

Years ended December 31,

2022

2021

2020

(In millions)

Intersegment transactions:

Operating revenues

84.1 $

77.6 $

Operation and maintenance

Purchased natural gas sold

25.9

58.2

18.7

58.9

77.0

19.1

57.9

For more information on intersegment eliminations, see Item 8 - Note 17.

Liquidity and Capital Commitments
At December 31, 2022, the Company had cash and cash equivalents of $80.5 million and available borrowing capacity of $427.3 million under the
outstanding credit facilities of the Company's subsidiaries. The Company expects to meet its obligations for debt maturing within 12 months and its
other operating and capital requirements from various sources, including internally generated funds; credit facilities and commercial paper of the
Company's subsidiaries, as described later in Capital resources; and the issuance of debt and equity securities if necessary.

MDU Resources Group, Inc. Form 10-K 55

Part II

Cash flows

Years ended December 31,

2022

2021

2020

Net cash provided by (used in)

Operating activities

Investing activities

Financing activities

(In millions)

$ 510.0 $ 495.8 $ 768.4

(638.9)

(885.9)

(630.2)

155.2

384.7

(145.1)

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents -- beginning of year

26.3

54.2

(5.4)

59.6

Cash and cash equivalents -- end of year

80.5 $

54.2 $

(6.9)

66.5

59.6

Operating activities

Years ended December 31,

2022

2021

2020

Variance

2022 vs. 2021 2021 vs. 2020

Income from continuing operations

$ 367.3 $ 377.7 $ 390.5

(10.4) $

Adjustments to reconcile net income to net cash provided by operating activities

355.0

350.9

276.2

4.1

Changes in current assets and current liabilities, net of acquisitions:

(In millions)

Receivables

Inventories

Other current assets

Accounts payable

Other current liabilities

Pension and postretirement benefit plan contributions

Other noncurrent changes

Net cash provided by (used in) discontinued operations

(363.3)

(60.0)

(46.6)

(42.3)

(9.4)

(72.0)

186.3

15.3

27.0

(17.6)

(2.8)

(7.2)

31.6

16.0

35.6

(.5)

(.4)

(6.0)

(55.4)

30.3

(.3)

(1.4)

(303.3)

(4.3)

62.6

171.0

44.6

—

49.4

(12.8)

74.7

(57.2)

(35.1)

(103.6)

(.7)

(53.2)

(.1)

(85.7)

1.1

Net cash provided by operating activities

$ 510.0 $ 495.8 $ 768.4

14.2 $

(272.6)

The changes in cash flows from operating activities generally follow the results of operations as discussed in Business Segment Financial and
Operating Data and are also affected by changes in working capital. The increase in cash flows provided by operating activities from 2022 to 2021
was largely driven by higher 2022 accounts payable for natural gas purchases due to higher natural gas prices and colder weather, partially offset by
the associated increased receivables from customers. Partially offsetting the increase in cash flows provided by operating activities was higher
working capital needs at the construction services business due to fluctuations in job activity resulting in higher receivables in the period, as well as
lower collections of accounts receivable compared to 2021, offset in part by increased accounts payable. In addition, higher revenues resulted in
higher receivables in the period at the construction materials and contracting business.

The decrease in cash flows provided by operating activities from 2021 to 2020 was largely driven by an increase in natural gas purchases and the
related unbilled revenues at the natural gas distribution business, partially offset by the associated deferred taxes and increased payables. Also
contributing to the decrease was the payment of previously deferred CARES Act taxes and the timing of income tax payments across all of the
Company's businesses, as well as the timing of insurance claim payments in relation to receipt of insurance reimbursement at the construction
services business. In addition, higher asphalt oil inventory balances due to higher material costs and tank storage balances and higher aggregate
inventory balances as a result of production at the businesses acquired at the construction materials and contracting business contributed to the
decrease. Partially offsetting the decrease in cash flows provided by operating activities was higher bonus depreciation related to acquisitions at
construction materials and contracting business.

56 MDU Resources Group, Inc. Form 10-K

Part II

Investing activities

Years ended December 31,

2022

2021

2020

Variance

(In millions)

Capital expenditures

(656.6) $

(659.4) $

(558.0)

2.8 $

Acquisitions, net of cash acquired

1.8

(237.7)

(106.0)

Net proceeds from sale or disposition of property and other

22.4

15.2

35.6

Investments

(6.5)

(4.0)

(1.8)

239.5

7.2

(2.5)

(101.4)

(131.7)

(20.4)

(2.2)

Net cash used in investing activities

(638.9) $

(885.9) $

(630.2)

247.0 $

(255.7)

2022 vs. 2021 2021 vs. 2020

The decrease in cash used in investing activities from 2022 to 2021 was primarily the result of lower cash used for acquisition activity at the
construction materials and contracting business, along with increased proceeds from asset sales. Decreased capital expenditures at the pipeline
business as a result of the North Bakken Expansion project being placed in service in February 2022 were mostly offset by increased capital
expenditures at the natural gas distribution business for higher natural gas distribution projects, including natural gas mains and meters, and at the
electric business for increased electric production projects, including the construction of Heskett Unit 4 and the repower of Diamond Willow.

The increase in cash used in investing activities from 2021 to 2020 was primarily the result of higher cash used in acquisition activity at the
construction materials and contracting business, partially offset by decreased acquisition activity at the construction services business. In addition,
increased capital expenditures in 2021 at the pipeline business, largely related to the North Bakken Expansion project, and the construction
materials and contracting business contributed to the increase, partially offset by lower capital expenditures at the electric and natural gas
distribution businesses related to reduced electric transmission and distribution projects and reduced natural gas meters and mains.

Financing activities

Years ended December 31,

2022

2021

2020

Variance

2022 vs. 2021 2021 vs. 2020

Issuance of short-term borrowings

Repayment of short-term borrowings

Issuance of long-term debt

Repayment of long-term debt

Debt issuance costs

Proceeds from issuance of common stock

Dividends paid

Repurchase of common stock

Tax withholding on stock-based compensation

$ 246.5 $

50.0 $

75.0

196.5 $

(In millions)

—

(100.0)

(25.0)

361.6

554.0

117.4

(261.7)

(25.0)

(148.6)

(1.9)

(.9)

(.1)

88.8

(.5)

3.4

(176.9)

(171.3)

(166.4)

(7.4)

(4.9)

(6.7)

(4.2)

—

(.4)

100.0

(192.4)

(236.7)

(1.0)

(88.9)

(5.6)

(.7)

(25.0)

(75.0)

436.6

123.6

(.4)

85.4

(4.9)

(6.7)

(3.8)

Net cash provided by (used in) financing activities

$ 155.2 $ 384.7 $

(145.1)

(229.5) $

529.8

The decrease in cash flows provided by financing activities from 2022 to 2021 was largely the result of increased repayment and decreased issuance
of long-term debt at the construction materials and contracting business. Partially offsetting this was increased issuances of short-term borrowings as
long-term debt was replaced with short-term debt at the construction materials and contracting business related to the anticipated spinoff previously
discussed and decreased repayment of short-term borrowings at Montana-Dakota. Partially offsetting the decrease was the increased issuance of
long-term debt at the construction services business as a result of higher working capital needs and the absence of the issuance of common stock
under the Company's "at-the-market" offering during 2022, as discussed in Note 12.

The increase in cash flows provided by financing activities from 2021 to 2020 was largely the result of increased long-term borrowings for
acquisitions at the construction materials and contracting business, and increased long-term borrowings, net of repayments, associated with capital
expenditures at the pipeline, electric and natural gas distribution businesses. The construction services business also increased its long-term
borrowings as a result of increased working capital needs. In addition, net proceeds from the issuance of common stock under the Company's "at-the-
market" offering during 2021 also contributed to the increase in cash flows from financing activities. Partially offsetting these increases were
decreased short-term borrowings during 2021 at the natural gas distribution business. Montana-Dakota repaid $50 million of short-term borrowings
during the first quarter of 2021 related to short-term borrowings during 2020. Montana-Dakota also issued $50 million of short-term borrowings
during the first quarter of 2021 related to financing the higher natural gas purchases, as previously discussed, which was repaid prior to the end of
the year.

Defined benefit pension plans
The Company has noncontributory qualified defined benefit pension plans for certain employees. Plan assets consist of investments in equity and
fixed-income securities. Various actuarial assumptions are used in calculating the benefit expense (income) and liability (asset) related to the
pension plans. Actuarial assumptions include assumptions about the discount rate and expected return on plan assets. For 2022, the Company

MDU Resources Group, Inc. Form 10-K 57

Part II

assumed a long-term rate of return on its qualified defined pension plan assets of 6 percent. Due to the decline in the equity and fixed-income
markets, the Company experienced more of a loss than estimated on its qualified defined pension plan assets. Differences between actuarial
assumptions and actual plan results are deferred and amortized into expense when the accumulated differences exceed 10 percent of the greater of
the projected benefit obligation or the market-related value of plan assets. Therefore, this change in asset values will be reflected in future expenses
of the plans beginning in 2023. The funded status of the plans did not change significantly with the decrease in assets because the liabilities
decreased as well. The Company's benefit obligations for the pension plans also saw a decline in value due to higher discount rates at the end of
2022.

At December 31, 2022, the pension plans' accumulated benefit obligations exceeded these plans' assets by approximately $41.6 million. Pretax
pension income reflected in the Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020, was $2.3 million,
$1.7 million and $684,000, respectively. The Company's pension income is currently projected to be approximately $236,000 in 2023. Funding for
the pension plans is actuarially determined. The Company has no minimum funding requirements for its defined benefit pension plans for 2023 due
to an additional contribution of $20.0 million in 2019, which created prefunding credits to be used in future periods. There were no minimum
required contributions for the years ended December 31, 2022 and 2021 or 2020. For more information on the Company's pension plans, see
Item 8 - Note 18.

Capital expenditures
The Company's capital expenditures for 2020 through 2022 and as anticipated for 2023 through 2025 are summarized in the following table.

Capital expenditures:

Electric

Actual (a)

Estimated

2020

2021

2022

2023

2024

2025

(In millions)

$ 115 $

82 $ 134

$ 112 $ 127 $ 130

Natural gas distribution

193

170

240

224

311

260

Pipeline

235

145

117

127

Construction materials and contracting (b)

191

418

182

125

183

173

Construction services (b)

Other

Total capital expenditures

$ 648 $ 936 $ 657

$ 647 $ 776 $ 728

(b)Capital expenditures for both the construction materials and contracting and construction services segments are

subject to change with the announced strategic initiatives.

The 2022 capital expenditures were funded by internal sources, equity issuance, long-term debt issuances and borrowings under credit facilities and
issuance of commercial paper of the Company's subsidiaries. The Company has included in the estimated capital expenditures for 2023 through
2025 the development and construction of a renewable natural gas facility at the Deschutes County Landfill near Bend, Oregon, at the natural gas
distribution segment; construction of Heskett Unit 4 at the electric segment; and the Wahpeton Expansion and additional growth projects at the
pipeline segment, as previously discussed in Business Segment Financial and Operating Data.

Estimated capital expenditures for the years 2023 through 2025 include those for:

• System upgrades

• Routine replacements

• Service extensions

• Routine equipment maintenance and replacements

• Buildings, land and building improvements

• Pipeline and natural gas storage projects

• Power generation and transmission opportunities

• Environmental upgrades, including:

◦ The investigation of a manufactured gas plant site

◦ The closure of coal ash management units

◦ Upgrades to maintain air emissions compliance at electric generating stations

• Other growth opportunities

58 MDU Resources Group, Inc. Form 10-K

Part II

The Company continues to evaluate potential future acquisitions and other growth opportunities that would be incremental to the outlined capital
program; however, they are dependent upon the availability of economic opportunities and, as a result, capital expenditures may vary significantly
from the estimates in the preceding table. The Company continuously monitors its capital expenditures for project delays and changes in economic
viability and adjusts as necessary. It is anticipated that all of the funds required for capital expenditures for the years 2023 through 2025 will be
funded by various sources, including internally generated funds; credit facilities and commercial paper of the Company's subsidiaries, as described
later; and issuance of debt and equity securities if necessary.

Capital resources
The Company requires significant cash to support and grow its businesses. The primary sources of cash other than cash generated from operating
activities are cash from revolving credit facilities, the issuance of long-term debt and the sale of equity securities.

Debt 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 December 31, 2022. In the event the subsidiaries do not comply with the
applicable covenants and other conditions, alternative sources of funding may need to be pursued. As of December 31, 2022, the Company had
investment grade credit ratings at all entities issuing debt. For more information on the covenants, certain other conditions and cross-default
provisions, see Item 8 - Note 9.

The following table summarizes the outstanding revolving credit facilities of the Company's subsidiaries at December 31, 2022:

Company

Facility

Montana-Dakota Utilities Co.

Commercial paper/Revolving credit agreement (a)

Cascade Natural Gas Corporation

Revolving credit agreement

Intermountain Gas Company

Revolving credit agreement

Centennial Energy Holdings, Inc.

Commercial paper/Revolving credit agreement (e)

Facility
Limit

Amount
Outstanding

Letters
of Credit

Expiration
Date

(In millions)

175.0

117.5 $

—

12/19/24

100.0 (b) $

100.0 (d) $

44.4 $

85.6 $

600.0

298.0 $

2.2 (c)

11/30/27

—

10/13/27

12/19/24

(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). At December 31, 2022, there were no amounts outstanding under the revolving credit agreement.

(b) Certain provisions allow for increased borrowings, up to a maximum of $125.0 million.
(c) Outstanding letter(s) of credit reduce the amount available under the credit agreement.
(d) Certain provisions allow for increased borrowings, up to a maximum of $125.0 million.
(e) 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 $700.0 million). At December 31, 2022, there were no amounts outstanding under the revolving 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, Montana-Dakota and Centennial 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 certain operations of the Company's subsidiaries.

Total equity as a percent of total capitalization was 54 percent and 55 percent at December 31, 2022 and 2021, 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 12 months, plus total equity. Management believes this ratio is an indicator of how the Company is
financing its operations, as well as its financial strength.

Montana-Dakota Montana-Dakota's objective is to maintain acceptable credit ratings in order to access the capital markets through the issuance of
commercial paper. Historically, downgrades in credit ratings have not limited, nor are currently expected to limit, Montana-Dakota's ability to access
the capital markets. If Montana-Dakota were to experience a downgrade of its credit ratings in the future, it may need to borrow under its credit
agreement and may experience an increase in overall interest rates with respect to its cost of borrowings. Prior to the maturity of the credit
agreement, Montana-Dakota expects that it will negotiate the extension or replacement of this agreement. If Montana-Dakota is unable to
successfully negotiate an extension of, or replacement for, the credit agreement, or if the fees on this facility become too expensive, which Montana-
Dakota does not currently anticipate, it would seek alternative funding.

MDU Energy Capital On October 21, 2022, MDU Energy Capital entered into a $11.5 million term loan agreement with a SOFR-based variable
interest rate and a maturity date of July 21, 2023. The agreement contains customary covenants and provisions, including a covenant of MDU
Energy Capital not to permit, at any time, the ratio of total debt to total capitalization to be greater than 70 percent. The covenants also include
certain restrictions on the sale of certain assets, loans and investments.

MDU Resources Group, Inc. Form 10-K 59

Part II

through continued borrowings. 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. Other covenants include restrictions on the sale of certain
assets, limitations on indebtedness and the making of certain investments.

On June 15, 2022, Cascade issued $50.0 million of senior notes under a note purchase agreement with maturity dates ranging from June 15, 2032
to June 15, 2052, at a weighted average interest rate of 4.50 percent. The agreement contains customary covenants and provisions, including a
covenant of Cascade not to permit, at any time, the ratio of debt to total capitalization to be greater than 65 percent. Other covenants include
restrictions on the sale of certain assets, limitations on indebtedness and the making of certain investments.

On January 20, 2023, Cascade entered into a $150.0 million term loan agreement with a SOFR-based variable interest rate and a maturity date of
January 19, 2024. 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. The covenants also include certain restrictions on the sale of certain assets,
loans and investments.

Intermountain On October 13, 2022, Intermountain amended and restated its revolving credit agreement to increase the borrowing capacity to
$100.0 million and extend the maturity date to October 13, 2027. Any borrowings under the revolving credit agreement are classified as long-term
debt as they are intended to be refinanced on a long-term basis through continued borrowings. The credit 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. Other covenants include restrictions on the sale of certain assets, limitations on indebtedness and the making of certain investments.

On June 15, 2022, Intermountain issued $40.0 million of senior notes under a note purchase agreement with maturity dates ranging from June 15,
2052 to June 15, 2062, at a weighted average interest rate of 4.68 percent. The agreement contains customary covenants and provisions, including
a covenant of Intermountain not to permit, at any time, the ratio of debt to total capitalization to be greater than 65 percent. Other covenants include
restrictions on the sale of certain assets, limitations on indebtedness and the making of certain investments.

On January 20, 2023, Intermountain entered into a $125.0 million term loan agreement with a SOFR-based variable interest rate and a maturity
date of January 19, 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. The covenants also include certain restrictions on the sale of certain
assets, loans and investments.

Centennial Centennial's objective is to maintain acceptable credit ratings in order to access the capital markets through the issuance of commercial
paper. Historically, downgrades in Centennial's credit ratings have not limited, nor are currently expected to limit, Centennial's ability to access the
capital markets. If Centennial were to experience a downgrade of its credit ratings in the future, it may need to borrow under its credit agreement and
may experience an increase in overall interest rates with respect to its cost of borrowings. Prior to the maturity of the Centennial credit agreement,
Centennial expects that it will negotiate the extension or replacement of this agreement, which provides credit support to access the capital markets.
In the event Centennial is unable to successfully negotiate this agreement, or in the event the fees on this facility become too expensive, which
Centennial does not currently anticipate, it would seek alternative funding.

On March 18, 2022, Centennial entered into a $100.0 million term loan agreement with a SOFR-based variable interest rate and a maturity date of
March 17, 2023. 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 65 percent. The covenants also include certain restrictions on the sale of certain assets,
loans and investments.

On March 23, 2022, Centennial issued $150.0 million of senior notes under a note purchase agreement with maturity dates ranging from March 23,
2032 to March 23, 2034, at a weighted average interest rate of 3.71 percent. The agreement contains customary covenants and provisions,
including a covenant of Centennial not to permit, at any time, the ratio of debt to total capitalization to be greater than 60 percent. Other covenants
include restrictions on the sale of certain assets, limitations on indebtedness and the making of certain investments.

On December 19, 2022, Centennial entered into a $135.0 million term loan agreement with a SOFR-based variable interest rate and a maturity date
of December 18, 2023. 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 65 percent. The covenants also include certain restrictions on the sale of certain
assets, loans and investments.

WBI Energy Transmission On December 22, 2022, WBI Energy Transmission amended its uncommitted note purchase and private shelf agreement to
increase capacity to $350.0 million with an expiration date of December 22, 2025. On December 22, 2022, WBI Energy Transmission issued
$40.0 million in senior notes under the private shelf agreement with a maturity date of December 22, 2030, at an interest rate of 6.67 percent. WBI
Energy Transmission had $235.0 million of notes outstanding at December 31, 2022, which reduced the remaining capacity under this
uncommitted private shelf agreement to $115.0 million. This agreement contains customary covenants and provisions, including a covenant of WBI
Energy Transmission not to permit, as of the end of any fiscal quarter, the ratio of total debt to total capitalization to be greater than 55 percent.
Other covenants include a limitation on priority debt, restrictions on the sale of certain assets and the making of certain investments.

60 MDU Resources Group, Inc. Form 10-K

Part II

Equity Resources
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 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. For more information on the Company's equity, see Item 8 - Note 12.

In August 2020, the Company amended the Distribution Agreement dated February 22, 2019, with J.P. Morgan Securities LLC and MUFG Securities
Americas Inc., as sales agents. This agreement, as amended, allows the offering, issuance and sale of up to 6.4 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. As of December 31, 2022, the Company had capacity to issue up to 3.6 million additional shares of
common stock under the "at-the-market" offering program. The Company did not issue any shares under the "at-the-market" offering program in
2022. 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.

Dividend restrictions
For information on the Company's dividends and dividend restrictions, see Item 8 - Note 12.

Material cash requirements
For more information on the Company's contractual obligations on long-term debt, operating leases and purchase commitments, see
Item 8 - Notes 9, 10 and 21. At December 31, 2022, the Company's material cash requirements under these obligations were as follows:

Less than 1
year

1-3 years

3-5 years

(In millions)

More than 5
years

Total

Short-term debt

246.5 $

— $

246.5

Long-term debt maturities*

Estimated interest payments**

Operating leases

Purchase commitments

78.1

163.0

38.9

654.7

229.0

46.5

371.6

1,743.9

2,848.3

182.2

903.7

1,477.9

18.5

40.0

143.9

712.9

416.2

185.3

676.5

1,990.9

1,239.4 $

1,346.4 $

757.6 $

3,364.1 $

6,707.5

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

** Represents the estimated interest payments associated with the Company's long-term debt outstanding at

December 31, 2022, assuming current interest rates and consistent amounts outstanding until their respective
maturity dates over the periods indicated in the table above.

Material short-term cash requirements of the Company include repayment of outstanding borrowings and interest payments on those agreements,
payments on operating lease agreements, payment of obligations on purchase commitments and asset retirement obligations. At December 31,
2022, the current portion of asset retirement obligations was $4.6 million and was included in other accrued liabilities on the Consolidated Balance
Sheets.

Material long-term cash requirements of the Company include repayment of outstanding borrowings and interest payments on those agreements,
payments on operating lease agreements, payment of obligations on purchase commitments and asset retirement obligations. At December 31,
2022, the Company had total liabilities of $410.5 million related to asset retirement obligations that are excluded from the table above. Due to the
nature of these obligations, the Company cannot determine precisely when the payments will be made to settle these obligations. For more
information, see Item 8 - Note 11.

Not reflected in the previous table are $2.0 million in uncertain tax positions at December 31, 2022.

The Company has no minimum funding requirements for its defined benefit pension plans for 2023 due to an additional contribution of
$20.0 million in 2019.

The Company's MEPP contributions are based on union employee payroll, which cannot be determined in advance for future periods. The Company
may also be required to make additional contributions to its MEPPs as a result of their funded status. For more information, see Item 1A - Risk
Factors and Item 8 - Note 18.

New Accounting Standards
For information regarding new accounting standards, see Item 8 - Note 2, which is incorporated herein by reference.

MDU Resources Group, Inc. Form 10-K 61

Part II

Critical Accounting Estimates
The Company has prepared its financial statements in conformity with GAAP. The preparation of its financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the
date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Management reviews these
estimates and assumptions based on historical experience, changes in business conditions and other relevant factors believed to be reasonable under
the circumstances.

Critical accounting estimates are defined as estimates that require management to make assumptions about matters that are uncertain at the time
the estimate was made and changes in the estimates could have a material impact on the Company's financial position or results of operations. The
Company's critical accounting estimates are subject to judgments and uncertainties that affect the application of its significant accounting policies
discussed in Item 8 - Note 2. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised.
Consequently, the Company's financial position or results of operations may be materially different when reported under different conditions or when
using different assumptions in the application of the following critical accounting estimates.

Goodwill
The Company performs its goodwill impairment testing annually in the fourth quarter. In addition, the test is performed on an interim basis whenever
events or circumstances indicate that the carrying amount of goodwill may not be recoverable. Examples of such events or circumstances may
include a significant adverse change in business climate, weakness in an industry in which the Company's reporting units operate or recent
significant cash or operating losses with expectations that those losses will continue.

The Company has determined that the reporting units for its goodwill impairment test are its operating segments, or components of an operating
segment, that constitute a business for which discrete financial information is available and for which segment management regularly reviews the
operating results. For more information on the Company's operating segments, see Item 8 - Note 17. Goodwill impairment, if any, is measured by
comparing the fair value of each reporting unit to its carrying value. If the fair value of a reporting unit exceeds its carrying value, the goodwill of the
reporting unit is not impaired. If the carrying value of a reporting unit exceeds its fair value, the Company must record an impairment loss for the
amount that the carrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit. For the years ended
December 31, 2022, 2021 and 2020, there were no impairment losses recorded.

At October 31, 2022, the fair value substantially exceeded the carrying value at the Company's reporting units with goodwill, with the exception of
the natural gas distribution reporting unit. The Company's annual impairment testing indicated the natural gas distribution reporting unit's fair value
is not substantially in excess of its carrying value ("cushion"). Based on the Company's assessment, the estimated fair value of the natural gas
distribution reporting unit exceeded its carrying value, which includes $345.7 million of goodwill, by approximately 8 percent as of October 31,
2022. The decrease in the natural gas distribution reporting unit's cushion from the prior year was primarily attributable to the risk adjusted cost of
capital increasing from 5.0 percent in 2021 to 6.4 percent 2022, which directly correlates with the treasury rates at the date of the test. The natural
gas distribution reporting unit is at risk of future impairment if projected operating results are not met or other inputs into the fair value
measurement model change.

Determining the fair value of a reporting unit requires judgment and the use of significant estimates which include assumptions about the Company's
future revenue, profitability and cash flows, long-term growth rates, amount and timing of estimated capital expenditures, inflation rates, risk
adjusted cost of capital, operational plans, and current and future economic conditions, among others. The fair value of each reporting unit is
determined using a weighted combination of income and market approaches. The Company believes that the estimates and assumptions used in its
impairment assessments are reasonable and based on available market information.

The Company uses a discounted cash flow methodology for its income approach. Under the income approach, the discounted cash flow model
determines fair value based on the present value of projected cash flows over a specified period and a residual value related to future cash flows
beyond the projection period. Both values are discounted using a rate which reflects the best estimate of the risk adjusted cost of capital at each
reporting unit. The risk adjusted cost of capital varies by reporting unit and was in the range of 6 percent to 10 percent in 2022, 5 percent to
9 percent for 2021 and 4 percent to 8 percent for 2020.

Under the market approach, the Company estimates fair value using various multiples derived from enterprise value to EBITDA for comparative peer
companies for each respective reporting unit. These multiples are applied to operating data for each reporting unit to arrive at an indication of fair
value. In addition, the Company adds a reasonable control premium when calculating the fair value utilizing the peer multiples, which is estimated
as the premium that would be received in a sale in an orderly transaction between market participants. The Company used a 20 percent control
premium in 2022 and a 15 percent control premium in 2021 and 2020.

The Company uses significant judgment in estimating its five-year forecast. The assumptions underlying cash flow projections are in sync as
applicable with the Company's strategy and assumptions. Future projections are heavily correlated with the current year results of operations. Future
results of operations may vary due to economic and financial impacts. The long-term growth rates are developed by management based on industry
data, management's knowledge of the industry and management's strategic plans. The long-term growth rate varies by reporting unit. Construction

62 MDU Resources Group, Inc. Form 10-K

Part II

materials and contracting and construction services long-term growth rate was 3 percent in 2022, 2021 and 2020. Natural gas distribution's long-
term growth rate has been in the range of 1.5 percent to 3 percent in 2022, 2021 and 2020.

Regulatory accounting
The Company is subject to rate regulation by state public service commissions and/or the FERC. Regulatory assets generally represent incurred or
accrued costs that have been deferred and are expected to be recovered in rates charged to customers. Regulatory liabilities generally represent
amounts that are expected to be refunded to customers in future rates or amounts collected in current rates for future costs.

Management continually assesses the likelihood of recovery in future rates of incurred costs and refunds to customers associated with regulatory
assets and liabilities. Decisions made by the various regulatory agencies can directly impact the amount and timing of these items. Therefore,
expected recovery or refund of these deferred items generally is based on specific ratemaking decisions or precedent for each item. If future recovery
of costs is no longer probable, the Company would be required to include those costs in the statement of income or accumulated other
comprehensive loss in the period in which it is no longer deemed probable. The Company believes that the accounting subject to rate regulation
remains appropriate and its regulatory assets are probable of recovery in current rates or in future rate proceedings. At December 31, 2022 and
2021, the Company's regulatory assets were $494.8 million and $476.5 million, respectively, and regulatory liabilities were $474.9 million and
$445.1 million, respectively. At December 31, 2022 and 2021, regulatory assets in recovery were $427.8 million and $367.7 million, respectively,
and regulatory assets not in recovery were $67.0 million and $108.8 million, respectively.

Revenue recognition
Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. The recognition of revenue requires the Company to make estimates and
assumptions that affect the reported amounts of revenue. The accuracy of revenues reported on the Consolidated Financial Statements depends on,
among other things, management's estimates of total costs to complete projects because the Company uses the cost-to-cost measure of progress on
construction contracts for revenue recognition.

To determine the proper revenue recognition method for contracts, the Company evaluates whether two or more contracts should be combined and
accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation.
This evaluation requires significant judgment and the decision to combine a group of contracts or separate the combined or single contract into
multiple performance obligations could change the amount of revenue and profit recorded in a given period. For most contracts, the customer
contracts with the Company to provide a significant service of integrating a complex set of tasks and components into a single project. Hence, the
Company's contracts are generally accounted for as one performance obligation.

The Company recognizes construction contract revenue over time using an input method based on the cost-to-cost measure of progress for contracts
because it best depicts the transfer of assets to the customer which occurs as the Company incurs costs on the contract. Under the cost-to-cost
measure of progress, the costs incurred are compared with total estimated costs of a performance obligation. Revenues are recorded proportionately
to the costs incurred. This method depends largely on the ability to make reasonably dependable estimates related to the extent of progress toward
completion of the contract, contract revenues and contract costs. Since contract prices are generally set before the work is performed, the estimates
pertaining to every project could contain significant unknown risks such as volatile labor, material and fuel costs, weather delays, adverse project site
conditions, unforeseen actions by regulatory agencies, performance by subcontractors, job management and relations with project owners. Changes in
estimates could have a material effect on the Company's results of operations, financial position and cash flows. For the years ended December 31,
2022 and 2021, the Company's total construction contract revenue was $3.8 billion and $3.0 billion, respectively.

Several factors are evaluated in determining the bid price for contract work. These include, but are not limited to, the complexities of the job, past
history performing similar types of work, seasonal weather patterns, competition and market conditions, job site conditions, work force safety,
reputation of the project owner, availability of labor, materials and fuel, project location and project completion dates. As a project commences,
estimates are continually monitored and revised as information becomes available and actual costs and conditions surrounding the job become
known. If a loss is anticipated on a contract, the loss is immediately recognized.

Contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to
exist when the modification either creates new or changes the existing enforceable rights and obligations. Generally, contract modifications are for
goods or services that are not distinct from the existing contract due to the significant integration of services provided in the context of the contract
and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and the measure of
progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis.

MDU Resources Group, Inc. Form 10-K 63

Part II

The Company's construction contracts generally contain variable consideration including liquidated damages, performance bonuses or incentives,
claims, unpriced change orders and penalties or index pricing. The variable amounts usually arise upon achievement of certain performance metrics
or change in project scope. The Company estimates the amount of revenue to be recognized on variable consideration using one of the two prescribed
estimation methods, the expected value method or the most likely amount method, depending on which method best predicts the most likely amount
of consideration the Company expects to be entitled to or expects to incur. Assumptions as to the occurrence of future events and the likelihood and
amount of variable consideration are made during the contract performance period. Estimates of variable consideration and assessment of
anticipated performance and all information (historical, current and forecasted) that is reasonably available to management. The Company only
includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue
recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Changes in circumstances could impact
management's estimates made in determining the value of variable consideration recorded. When determining if the variable consideration is
constrained, the Company considers if factors exist that could increase the likelihood of the magnitude of a potential reversal of revenue. The
Company updates its estimate of the transaction price each reporting period and the effect of variable consideration on the transaction price is
recognized as an adjustment to revenue on a cumulative catch-up basis.

The Company believes its estimates surrounding the cost-to-cost method are reasonable based on the information that is known when the estimates
are made. The Company has contract administration, accounting and management control systems in place that allow its estimates to be updated
and monitored on a regular basis. Because of the many factors that are evaluated in determining bid prices, it is inherent that the Company's
estimates have changed in the past and will continually change in the future as new information becomes available for each job.

Pension and other postretirement benefits
The Company has noncontributory defined benefit pension plans and other postretirement benefit plans for certain eligible employees. Various
actuarial assumptions are used in calculating the benefit expense (income) and liability (asset) related to these plans. Costs of providing pension and
other postretirement benefits bear the risk of change, as they are dependent upon numerous factors based on assumptions of future conditions.

The Company makes various assumptions when determining plan costs, including the current discount rates and the expected long-term return on
plan assets, the rate of compensation increases, actuarially determined mortality data and health care cost trend rates. In selecting the expected
long-term return on plan assets, which is considered to be one of the key variables in determining benefit expense or income, the Company considers
historical returns, current market conditions, the mix of investments and expected future market trends, including changes in interest rates and
equity and bond market performance. Another key variable in determining benefit expense or income is the discount rate. In selecting the discount
rate, the Company matches forecasted future cash flows of the pension and postretirement plans to a yield curve which consists of a hypothetical
portfolio of high-quality corporate bonds with varying maturity dates, as well as other factors, as a basis. The Company's pension and other
postretirement benefit plan assets are primarily made up of equity and fixed-income investments. Fluctuations in actual equity and bond market
returns, as well as changes in general interest rates, may result in increased or decreased pension and other postretirement benefit costs in the
future. Management estimates the rate of compensation increase based on long-term assumed wage increases and the health care cost trend rates
are determined by historical and future trends.

The Company believes the estimates made for its pension and other postretirement benefits are reasonable based on the information that is known
when the estimates are made. These estimates and assumptions are subject to a number of variables and are expected to change in the future.
Estimates and assumptions will be affected by changes in the discount rate, the expected long-term return on plan assets, the rate of compensation
increase and health care cost trend rates. A 50 basis point change in the assumed discount rate and the expected long-term return on plan assets
would have had the following effects at December 31, 2022:

Pension Benefits

Other
Postretirement Benefits

2022

2021

2022

2021

Part II

Service cost

Interest cost

Plan participants' contributions

Actuarial gain

Benefits paid

Benefit obligation at end of year

Change in net plan assets:

—

10,522

9,819

—

1,416

1,896

569

1,600

1,862

641

(85,303)

(12,140)

(18,401)

(12,802)

(24,672)

(23,542)

(4,009)

(3,996)

312,044

411,497

54,931

73,460

Fair value of plan assets at beginning of year

373,109

383,834

100,158

101,639

Actual return on plan assets

Employer contribution

Plan participants' contributions

Benefits paid

(77,975)

12,817

(20,893)

1,398

—

501

569

476

641

(24,672)

(23,542)

(4,009)

(3,996)

Fair value of net plan assets at end of year

270,462

373,109

76,326

100,158

Funded status - (under) over

Amounts recognized in the Consolidated Balance Sheets at December 31:

Noncurrent assets - other

Other accrued liabilities

Noncurrent liabilities - other

Benefit obligation (liabilities) assets - net amount recognized

Amounts recognized in accumulated other comprehensive loss:

Actuarial loss (gain)

Prior service credit

Total

Amounts recognized in regulatory assets or liabilities:

Actuarial loss (gain)

Prior service credit

Total

(41,582) $

(38,388) $

21,395 $

26,698

— $

—

— $

—

36,325 $

45,863

1,044

544

41,582

38,388

13,886

18,621

(41,582) $

(38,388) $

21,395 $

26,698

32,378 $

25,976 $

(2,923) $

—

(289)

32,378 $

25,976 $

(3,212) $

2,367

(290)

2,077

141,207 $

142,166 $

(1,439) $

(14,727)

—

(3,796)

(5,193)

141,207 $

142,166 $

(5,235) $

(19,920)

Employer contributions and benefits paid in the preceding table include only those amounts contributed directly to, or paid directly from, plan
assets. Amounts related to regulated operations are recorded as regulatory assets or liabilities and are expected to be reflected in rates charged to
customers over time. For more information on regulatory assets and liabilities, see Note 6.

In 2022 and 2021, the actuarial gain recognized in the benefit obligation was primarily the result of an increase in the discount rate. For more
information on the discount rates, see the table below. Unrecognized pension actuarial gains and losses in excess of 10 percent of the greater of the
projected benefit obligation or the market-related value of assets are amortized over the average life expectancy of plan participants for frozen plans.
The market-related value of assets is determined using a five-year average of assets.

The pension plans all have accumulated benefit obligations in excess of plan assets. The projected benefit obligation, accumulated benefit obligation
and fair value of plan assets for these plans at December 31 were as follows:

Projected benefit obligation

Accumulated benefit obligation

Fair value of plan assets

2022

2021

(In thousands)

312,044 $

411,497

312,044 $

411,497

270,462 $

373,109

MDU Resources Group, Inc. Form 10-K 107

Part II

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. Prior service credit is amortized on a straight-line basis over the average remaining service period of active participants. These
components related to the Company's pension and other postretirement benefit plans for the years ended December 31 were as follows:

Pension Benefits

Other
Postretirement Benefits

2022

2021

2020

2022

2021

2020

Components of net periodic benefit credit:

(In thousands)

Service cost

Interest cost

Expected return on assets

Amortization of prior service credit

Recognized net actuarial loss (gain)

— $

1,416 $

1,600 $

10,522

9,819

12,093

1,896

1,862

(19,455)

(19,576)

(19,949)

(5,288)

(5,098)

—

(1,398)

1,532

2,437

(5,019)

(1,398)

6,683

8,017

7,172

(219)

287

Net periodic benefit credit, including amount capitalized

(2,250)

(1,740)

(684)

(3,593)

(3,010)

(2,161)

Less amount capitalized

Net periodic benefit cost credit

—

175

150

156

(2,250)

(1,740)

(684)

(3,768)

(3,160)

(2,317)

Other changes in plan assets and benefit obligations recognized in

accumulated comprehensive loss:

Net (gain) loss

Amortization of actuarial loss

Amortization of prior service credit

Reclassification of postretirement liability adjustment from

regulatory asset

2,369

(265)

934

(4,141)

(2,811)

(1,310)

(1,286)

(1,155)

—

(281)

125

(135)

100

—

5,343

—

(992)

—

Total recognized in accumulated other comprehensive loss

6,402

(1,551)

(221)

(5,289)

(2,846)

(259)

(306)

101

—

(464)

Other changes in plan assets and benefit obligations recognized in

regulatory assets or liabilities:

Net (gain) loss

Amortization of actuarial gain (loss)

Amortization of prior service credit

Reclassification of postretirement liability adjustment from

regulatory asset

9,757

(5,116)

4,546

11,920

(6,292)

(3,793)

(5,373)

(6,731)

(6,017)

500

110

—

(5,343)

—

1,273

1,298

1,297

—

992

—

Total recognized in regulatory assets or liabilities

(959)

(11,847)

(1,471)

14,685

(4,884)

(2,477)

Total recognized in net periodic benefit credit, accumulated other

comprehensive loss and regulatory assets or liabilities

3,193 $

(15,138) $

(2,376) $

5,628 $

(10,890) $

(5,258)

Weighted average assumptions used to determine benefit obligations at December 31 were as follows:

Discount rate

Expected return on plan assets

Rate of compensation increase

Pension Benefits

Other
Postretirement Benefits

2022

2021

2022

2021

5.06 %

6.50 %

N/A

2.64 %

6.00 %

N/A

5.07 %

6.00 %

3.00 %

2.66 %

5.50 %

3.00 %

Weighted average assumptions used to determine net periodic benefit cost (credit) for the years ended December 31 were as follows:

Discount rate

Expected return on plan assets

Rate of compensation increase

Pension Benefits

Other
Postretirement Benefits

2022

2.64 %

6.00 %

N/A

2021

2.30 %

6.00 %

N/A

2022

2.66 %

5.50 %

3.00 %

2021

2.30 %

5.50 %

3.00 %

The expected rate of return on pension plan assets is based on a targeted asset allocation range determined by the funded ratio of the plan. As of
December 31, 2022, the expected rate of return on pension plan assets is based on the targeted asset allocation range of 40 percent to 50 percent
equity securities and 50 percent to 60 percent fixed-income securities and the expected rate of return from these asset categories. The expected rate
of return on other postretirement plan assets is based on the targeted asset allocation range of 10 percent to 20 percent equity securities and
80 percent to 90 percent fixed-income securities and the expected rate of return from these asset categories. The expected return on plan assets for
other postretirement benefits reflects insurance-related investment costs.

108 MDU Resources Group, Inc. Form 10-K

Part II

Health care rate assumptions for the Company's other postretirement benefit plans as of December 31 were as follows:

Health care trend rate assumed for next year

Health care cost trend rate - ultimate

Year in which ultimate trend rate achieved

2022

2021

7.5 %

4.5 %

2033

7.0 %

4.5 %

2031

The Company's other postretirement benefit plans include health care and life insurance benefits for certain retirees. The plans underlying these
benefits may require contributions by the retiree depending on such retiree's age and years of service at retirement or the date of retirement. The
Company contributes a flat dollar amount to the monthly premiums which is updated annually on January 1.

The Company does not expect to contribute to its defined benefit pension plans in 2023 due to an additional $20.0 million contributed to the plans
in 2019 creating prefunding credits to be used in future years. The Company expects to contribute approximately $595,000 to its postretirement
benefit plans in 2023.

The following benefit payments, which reflect future service, as appropriate, and expected Medicare Part D subsidies at December 31, 2022, are as
follows:

Years

2023

2024

2025

2026

2027

Pension
Benefits

Other
Postretirement
Benefits

Expected
Medicare
Part D Subsidy

(In thousands)

24,936 $

4,275 $

24,882

24,749

24,605

24,387

4,371

4,456

4,509

4,523

2028-2032

114,850

16,917

Outside investment managers manage the Company's pension and postretirement assets. The Company's investment policy with respect to pension
and other postretirement assets is to make investments solely in the interest of the participants and beneficiaries of the plans and for the exclusive
purpose of providing benefits accrued and defraying the reasonable expenses of administration. The Company strives to maintain investment
diversification to assist in minimizing the risk of large losses. The Company's policy guidelines allow for investment of funds in cash equivalents,
fixed-income securities and equity securities. The guidelines prohibit investment in commodities and futures contracts, equity private placement,
employer securities, leveraged or derivative securities, options, direct real estate investments, precious metals, venture capital and limited
partnerships. The guidelines also prohibit short selling and margin transactions. The Company's practice is to periodically review and rebalance asset
categories based on its targeted asset allocation percentage policy.

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 pension plans' assets are determined using the market approach.

The carrying value of the pension plans' Level 2 cash equivalents approximates fair value and is determined using observable inputs in active
markets or the net asset value of shares held at year end, which is determined using other observable inputs including pricing from outside sources.

The estimated fair value of the pension plans' Level 1 and Level 2 equity securities are based on the closing price reported on the active market on
which the individual securities are traded or other known sources including pricing from outside sources. The estimated fair value of the pension
plans' Level 1 and Level 2 collective and mutual funds are based on the net asset value of shares held at year end, based on either published market
quotations on active markets or other known sources including pricing from outside sources. The estimated fair value of the pension plans' Level 2
corporate and municipal bonds is determined using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids,
offers, future cash flows and other reference data. The estimated fair value of the pension plans' Level 1 U.S. Government securities are valued
based on quoted prices on an active market. The estimated fair value of the pension plans' Level 2 U.S. Government securities are valued mainly
using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, to be announced prices, future cash
flows and other reference data. The estimated fair value of the pension plans' Level 2 pooled separate accounts are determined using observable
inputs in active markets or the net asset value of shares held at year end, or other observable inputs. Some of these securities are valued using
pricing from outside sources.

All investments measured at net asset value in the tables that follow are invested in commingled funds, separate accounts or common collective
trusts which do not have publicly quoted prices. The fair value of the commingled funds, separate accounts and common collective trusts are
determined based on the net asset value of the underlying investments. The fair value of the underlying investments held by the commingled funds,
separate accounts and common collective trusts is generally based on quoted prices in active markets.

MDU Resources Group, Inc. Form 10-K 109

Part II

The fair value of the Company's pension plans' assets (excluding cash) by class were as follows:

Assets:

Cash equivalents

Equity securities:

U.S. companies

International companies

Collective and mutual funds (a)

Corporate bonds

Municipal bonds

U.S. Government securities

Pooled separate accounts (b)

Investments measured at net asset value (c)

Fair Value Measurements
at December 31, 2022, Using

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(In thousands)

Significant
Unobservable
Inputs
(Level 3)

Balance at
December 31,
2022

— $

8,170 $

— $

8,170

7,388

—

121,072

—

3,044

—

467

33,371

81,363

5,904

880

3,241

—

7,388

467

154,443

81,363

5,904

3,924

3,241

5,562

Total assets measured at fair value

131,504 $

133,396 $

— $

270,462

(a) Collective and mutual funds invest approximately 29 percent in corporate bonds, 24 percent in common stock of large-cap U.S. companies, 16 percent in common

stock of international companies, 7 percent cash and cash equivalents, 7 percent in U.S. Government securities and 17 percent in other investments.

(b) Pooled separate accounts are invested 100 percent in cash and cash equivalents.
(c)

In accordance with ASC 820 - Fair Value Measurements, certain investments that were measured at net asset value per share (or its equivalent) have not been
classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items
presented in the Consolidated Balance Sheets.

Assets:

Cash equivalents

Equity securities:

U.S. companies

International companies

Collective and mutual funds (a)

Corporate bonds

Municipal bonds

U.S. Government securities

Pooled separate accounts (b)

Investments measured at net asset value (c)

Fair Value Measurements
at December 31, 2021, Using

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(In thousands)

Significant
Unobservable
Inputs
(Level 3)

Balance at
December 31,
2021

— $

4,637 $

— $

4,637

7,483

—

167,093

—

7,113

—

1,279

41,383

125,167

7,507

1,902

3,088

—

7,483

1,279

208,476

125,167

7,507

9,015

3,088

6,457

Total assets measured at fair value

181,689 $

184,963 $

— $

373,109

(a) Collective and mutual funds invest approximately 37 percent in corporate bonds, 19 percent in common stock of international companies, 16 percent in common

stock of large-cap U.S. companies, 9 percent in U.S. Government securities and 19 percent in other investments.

(b) Pooled separate accounts are invested 100 percent in cash and cash equivalents.
(c)

110 MDU Resources Group, Inc. Form 10-K

Part II

The estimated fair values of the Company's other postretirement benefit plans' assets are determined using the market approach.

The estimated fair value of the other postretirement benefit plans' Level 2 cash equivalents is valued at the net asset value of shares held at year
end, based on published market quotations on active markets, or using other known sources including pricing from outside sources. The estimated
fair value of the other postretirement benefit plans' Level 1 and Level 2 equity securities is based on the closing price reported on the active market
on which the individual securities are traded or other known sources including pricing from outside sources. The estimated fair value of the other
postretirement benefit plans' 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.

The fair value of the Company's other postretirement benefit plans' assets (excluding cash) by asset class were as follows:

Assets:

Cash equivalents

Equity securities:

U.S. companies

Collective and mutual funds (a)

Insurance contract (b)

Total assets measured at fair value

Fair Value Measurements
at December 31, 2022, Using

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(In thousands)

Significant
Unobservable
Inputs
(Level 3)

Balance at
December 31,
2022

— $

4,196 $

— $

4,196

2,572

—

69,548

2,577 $

73,749 $

—

— $

2,572

69,548

76,326

(a) Collective and mutual funds invest approximately 29 percent in corporate bonds, 24 percent in common stock of large-cap U.S. companies,16 percent in common

stock of international companies, 7 percent in cash and cash equivalents,7 percent in U.S. Government securities and 17 percent in other investments.

(b) The insurance contract invests approximately 69 percent in corporate bonds, 13 percent in U.S. Government securities, 14 percent in common stock of large-cap

U.S. companies and 4 percent in common stock of small-cap U.S. companies.

Assets:

Cash equivalents

Equity securities:

U.S. companies

International companies

Collective and mutual funds (a)

Insurance contract (b)

Investments measured at net asset value (c)

Fair Value Measurements
at December 31, 2021, Using

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(In thousands)

Significant
Unobservable
Inputs
(Level 3)

Balance at
December 31,
2021

— $

4,281 $

— $

4,281

2,332

—

93,447

—

2,332

93,447

Total assets measured at fair value

2,336 $

97,819 $

— $

100,158

(a) Collective and mutual funds invest approximately 37 percent in corporate bonds, 19 percent in common stock of international companies, 16 percent in common

stock of large-cap U.S. companies, 9 percent in U.S. Government securities and 19 percent in other investments.

(b) The insurance contract invests approximately 58 percent in corporate bonds, 13 percent in common stock of large-cap U.S. companies, 13 percent in U.S.

(c)

Government securities, 5 percent in common stock of small-cap U.S. companies and 11 percent in other investments.
In accordance with ASC 820 - Fair Value Measurements, certain investments that were measured at net asset value per share (or its equivalent) have not been
classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items
presented in the Consolidated Balance Sheets.

MDU Resources Group, Inc. Form 10-K 111

Part II

Nonqualified 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 that generally provide for defined benefit payments
at age 65 following the employee's retirement or, upon death, to their beneficiaries for a 15-year period. In February 2016, the Company froze the
unfunded, nonqualified defined benefit plans to new participants and eliminated benefit increases. Vesting for participants not fully vested was
retained.

The projected benefit obligation and accumulated benefit obligation for these plans at December 31 were as follows:

Projected benefit obligation

Accumulated benefit obligation

2022

2021

(In thousands)

74,730 $

92,918

74,730 $

92,918

The components of net periodic benefit cost are included in other income on the Consolidated Statements of Income. These components related to
the Company's nonqualified defined benefit plans for the years ended December 31 were as follows:

2022

2021

2020

(In thousands)

Components of net periodic benefit cost:

Service cost

Interest cost

Recognized net actuarial loss

— $

2,142

950

1,912

1,164

Net periodic benefit cost

3,092 $

3,076 $

2,606

1,192

3,856

Weighted average assumptions used at December 31 were as follows:

Benefit obligation discount rate

Benefit obligation rate of compensation increase

Net periodic benefit cost discount rate

2022

2021

4.97 %

2.39 %

N/A

2.39 %

1.97 %

Net periodic benefit cost rate of compensation increase

N/A

The amount of future benefit payments for the unfunded, nonqualified defined benefit plans at December 31, 2022, are expected to aggregate as
follows:

Nonqualified benefits

6,651 $

7,183 $

7,430 $

7,537 $

7,420 $

29,930

2023

2024

2025

2026

2027

2028-2032

(In thousands)

In 2012, the Company established a nonqualified defined contribution plan for certain key management employees. In 2020, the plan was frozen to
new participants and no new Company contributions will be made to the plan after December 31, 2020. Vesting for participants not fully vested was
retained. A new nonqualified defined contribution plan was adopted in 2020, effective January 1, 2021, to replace the plan originally established in
2012 with similar provisions. Expenses incurred under these plans for 2022, 2021 and 2020 were $3.3 million, $2.4 million and $1.8 million,
respectively.

The amount of investments that the Company anticipates using to satisfy obligations under these plans at December 31 was as follows:

Investments

Insurance contracts*

Life insurance**

Other

Total investments

2022

2021

(In thousands)

98,041 $

109,603

38,448

7,361

38,356

10,190

143,850 $

158,149

* For more information on the insurance contracts, see Note 8.

** Investments of life insurance are carried on plan participants (payable upon the

employee's death).

112 MDU Resources Group, Inc. Form 10-K

Part II

Defined contribution plans
The Company sponsors a defined contribution plan for eligible employees and the costs incurred under this plan were $46.4 million in 2022,
$45.4 million in 2021 and $50.1 million in 2020.

Multiemployer plans
The Company contributes to a number of MEPPs under the terms of collective-bargaining agreements that cover its union-represented employees.
The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

• Assets contributed to the MEPP by one employer may be used to provide benefits to employees of other participating employers

• If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating

employers

• If the Company chooses to stop participating in some of its MEPPs, the Company may be required to pay those plans an amount based on the

underfunded status of the plan, referred to as a withdrawal liability

The Company's participation in these plans is outlined in the following table. Unless otherwise noted, the most recent Pension Protection Act zone
status available in 2022 and 2021 is for the plan's year-end at December 31, 2021, and December 31, 2020, respectively. The zone status is
based on information that the Company received from the plan and is certified by the plan's actuary. Among other factors, plans in the red zone are
generally less than 65 percent funded, plans in the yellow zone are between 65 percent and 80 percent funded, and plans in the green zone are at
least 80 percent funded.

Pension Fund

EIN/Pension
Plan Number

Pension Protection Act
Zone Status

2022

2021

FIP/RP Status
Pending/
Implemented

Contributions

2022

2021

2020

(In thousands)

Surcharge
Imposed

Expiration Date
of Collective
Bargaining
Agreement

Edison Pension Plan

936061681-001

Green

No $ 18,750 $ 18,331 $ 16,121

IBEW Local 212 Pension

Trust

316127280-001

Green as of
4/30/2021

1,622

1,733

1,521

IBEW Local 357 Pension

Plan A

886023284-001

Green

No 12,876

6,485

9,913

IBEW Local 82 Pension

Plan

316127268-001

Green as of
6/30/2022

Green as of
6/30/2021

1,854

1,353

1,373

IBEW Local 648 Pension

Plan

316134845-001

Yellow as of
2/28/2022

Yellow as of
02/28/2021

Implemented

915

706

526

IBEW Local 683 Pension

Fund Pension Plan

341442087-001

Green

3,362

1,238

1,240

Idaho Plumbers and

Pipefitters Pension Plan

826010346-001

Green as of
5/31/2022

Green as of
5/31/2021

1,613

1,528

1,370

National Electrical

Benefit Fund

Pension and Retirement
Plan of Plumbers and
Pipefitters Local 525

Pension Trust Fund for
Operating Engineers

Sheet Metal Workers
Pension Plan of
Southern CA, AZ, and
NV

Western Conference of

530181657-001

Green

No 18,060 14,361 14,484

886003864-001

Green as of
6/30/2022

Green as of
6/30/2021

6,304

4,345

6,266

946090764-001

Yellow

Implemented

2,484

2,495

2,680

956052257-001

Green

Yellow

Implemented

3,400

2,615

3,255

12/31/2023

6/1/2025

5/31/2024

12/3/2023

9/1/2024

5/26/2024

3/31/2023

5/31/2022-
5/31/2027 *

9/30/2024

3/31/2023-
6/15/2026

6/30/2024

12/31/2023-
12/31/2025

Teamsters Pension Plan

916145047-001

Other funds

Total contributions

Green

3,127

3,006

3,025

26,909 24,192 23,670

$ 101,276 $ 82,388 $ 85,444

Plan includes contributions required by collective bargaining agreements which have expired but contain provisions automatically renewing their terms in the absence
of a subsequent negotiated agreement.

MDU Resources Group, Inc. Form 10-K 113

Part II

The Company was listed in the plans' Forms 5500 as providing more than 5 percent of the total contributions for the following plans and plan years:

Pension Fund

Edison Pension Plan

IBEW Local 82 Pension Plan

IBEW Local 124 Pension Trust Fund

IBEW Local 212 Pension Trust Fund

IBEW Local 357 Pension Plan A

IBEW Local 648 Pension Plan

IBEW Local 683 Pension Fund Pension Plan

IBEW Local Union No 226 Open End Pension Fund

Idaho Plumbers and Pipefitters Pension Plan

International Union of Operating Engineers Local 701 Pension Trust Fund

Minnesota Teamsters Construction Division Pension Fund

Pension and Retirement Plan of Plumbers and Pipefitters Local 525

Southwest Marine Pension Trust

Year Contributions to Plan Exceeded More Than 5 Percent
of Total Contributions (as of December 31 of the Plan's Year-End)

2021 and 2020

2020

2021 and 2020

The Company also contributes to a number of multiemployer other postretirement plans under the terms of collective-bargaining agreements that
cover its union-represented employees. These plans provide benefits such as health insurance, disability insurance and life insurance to retired union
employees. Many of the multiemployer other postretirement plans are combined with active multiemployer health and welfare plans. The Company's
total contributions to its multiemployer other postretirement plans, which also includes contributions to active multiemployer health and welfare
plans, were $81.0 million, $66.1 million and $63.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Amounts contributed in 2022, 2021 and 2020 to defined contribution multiemployer plans were $67.9 million, $54.8 million and $54.2 million,
respectively.

114 MDU Resources Group, Inc. Form 10-K

Note 19 - Jointly Owned Facilities
The consolidated financial statements include the Company's ownership interests in three coal-fired electric generating facilities (Big Stone Station,
Coyote Station and Wygen III) and one major transmission line (BSSE). Each owner of the jointly owned facilities is responsible for financing its
investment. The Company's share of the jointly owned facilities operating expenses was reflected in the appropriate categories of operating expenses
(electric fuel and purchased power; operation and maintenance; and taxes, other than income) in the Consolidated Statements of Income.

At December 31, the Company's share of the cost of utility plant in service, construction work in progress and related accumulated depreciation for
the jointly owned facilities was as follows:

Part II

Ownership
Percentage

2022

2021

(In thousands)

Big Stone Station:

22.7 %

Utility plant in service

157,699 $

157,259

Construction work in progress

Less accumulated depreciation

231

571

48,590

47,293

109,340 $

110,537

BSSE:

50.0 %

Utility plant in service

107,260 $

107,424

Construction work in progress

Less accumulated depreciation

—

6,182

4,506

101,078 $

102,918

Coyote Station:

25.0 %

Utility plant in service

158,274 $

157,764

Construction work in progress

Less accumulated depreciation

1,807

784

111,203

109,202

48,878 $

49,346

Wygen III:

25.0 %

Utility plant in service

66,238 $

66,357

Construction work in progress

Less accumulated depreciation

273

108

12,477

11,383

54,034 $

55,082

Note 20 - 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. Certain regulatory proceedings and cases may also contain recurring mechanisms that can have an annual true-up. Examples of these
recurring mechanisms include: infrastructure riders, transmission trackers, renewable resource cost adjustment riders, as well as weather
normalization and decoupling mechanisms. The following paragraphs summarize the Company's significant open regulatory proceedings and cases by
jurisdiction. The Company is unable to predict the ultimate outcome of these matters, the timing of final decisions of the various regulators and
courts, or the effect on the Company's results of operations, financial position or cash flows.

IPUC
Intermountain filed a request with the IPUC for a natural gas general rate increase on December 1, 2022. The request is for an increase of
$11.3 million annually or 3.2 percent above current rates. The requested increase is primarily to recover investments made since the last rate case
in 2016 and the depreciation, operation and maintenance expenses and taxes associated with the increased investments. The IPUC has up to seven
months to issue a decision on the request, which is currently pending.

Intermountain defers the difference between the actual cost of gas spent to serve customers and the amount approved to be recovered from
customers and annually prepares a true-up pursuant to the purchased gas adjustment tariff. On December 27, 2022, Intermountain filed an
application with the IPUC for an out-of-cycle cost of gas adjustment requesting an increase in rates of approximately $56.5 million annually or
approximately 17.1 percent above current rates. The primary reason for the requested increase was to mitigate the under-collection balance due to
the significant increase in the commodity price for natural gas. On January 30, 2023, the request was approved with rates effective February 1,
2023.

MDU Resources Group, Inc. Form 10-K 115

Part II

MNPUC
Great Plains defers the difference between the actual cost of gas spent to serve customers and that recovered from customers on a monthly basis.
Annually, Great Plains prepares a true-up pursuant to the purchased gas adjustment tariff. On August 30, 2021, the MNPUC issued an order to allow
Great Plains recovery of an out-of-cycle cost of gas adjustment of $8.8 million over a period of 27 months. The order was effective September 1,
2021, and was subject to a prudence review by the MNPUC. The requested increase was for the February 2021 extreme cold weather, primarily in
the central United States, and market conditions surrounding the natural gas commodity market. On October 19, 2022, the MNPUC issued a final
order disallowing $845,000 of the gas costs. These costs, which were deferred as a regulatory asset in natural gas costs recoverable through rate
adjustments, were then recorded to expense as they were no longer recoverable from customers. On November 8, 2022, Great Plains filed a request
for reconsideration, which was denied by the MNPUC on January 6, 2023.

On June 1, 2022, Great Plains filed an application with the MNPUC for a decrease in its depreciation and amortization rates of approximately
$1.2 million annually or a decrease from a combined rate of 4.5 percent to 2.8 percent. Great Plains requested the rates be retroactive to January 1,
2022. On November 8, 2022, the MNPUC approved a decrease of $1.0 million annually with rates retroactive to January 1, 2022.

MTPSC
On November 4, 2022, Montana-Dakota filed an application with the MTPSC for an electric general rate increase of approximately $10.5 million
annually or 15.2 percent above current rates. The requested increase is primarily to recover investments made since the last rate case, including the
Heskett 4 gas turbine, increases in operation and maintenance expenses, and increases in property taxes. On January 24, 2023, the MTPSC
approved Montana-Dakota's request for an interim increase of approximately $1.7 million or 2.7 percent above current rates, subject to refund,
effective February 1, 2023. The MTPSC has 9 months to render a final decision on the rate case. The matter is pending before the MTPSC with a
hearing scheduled for June 20, 2023.

NDPSC
On May 16, 2022, Montana-Dakota filed an application with the NDPSC for an electric general rate increase of approximately $25.4 million annually
or 12.3 percent above current rates. The requested increase is primarily to recover investments in production, transmission and distribution facilities
and the associated depreciation, operation and maintenance expenses and taxes associated with the increased investment. On July 14, 2022, the
NDPSC approved an interim rate increase of approximately $10.9 million annually or 5.3 percent above current rates, subject to refund, for service
rendered on and after July 15, 2022. The lower interim rate increase is largely due to excluding the recovery of Heskett Unit 4, which is expected to
be in service in the summer of 2023. The matter is pending before the NDPSC with a hearing scheduled for May 1, 2023.

Montana-Dakota has a renewable resource cost adjustment rate tariff that allows for annual adjustments for recent projected capital costs and related
expenses for projects determined to be recoverable under the tariff. On November 1, 2022, Montana-Dakota filed an annual update to its renewable
resource cost adjustment requesting to recover a revenue requirement of approximately $17.9 million annually, which was revised to $17.0 million
annually on January 31, 2023. The update reflects a decrease of approximately $1.0 million from the revenues currently included in rates. On
February 22, 2023, this matter was approved by the NDPSC with rates effective March 1, 2023.

WUTC
On March 24, 2022, Cascade filed a request for tariff revision with the WUTC to rectify an inadvertent IRS normalization violation resulting from its
tariff established in 2018 that passes back to customers the reversal of plant-related excess deferred income taxes through an annual rate
adjustment. This request was made in response to the issuances of an IRS private letter ruling to another Washington utility with the same annual
rate adjustment tariff, which addressed its normalization violations. The private letter ruling concluded the tariff to refund excess deferred income
taxes without corresponding adjustments for other components of rate base or changes in depreciation or income tax expense, is an impermissible
methodology under the IRS normalization and consistency rules. Cascade's request proposes a similar remedy through the tariff to recover the excess
amounts refunded to customers while this tariff has been in place, and revises the method going forward to reflect excess deferred income taxes in
rates in the same manner as other components of rate base from its most recent general rate case. Cascade requested recovery of the excess
refunded to customers of approximately $3.3 million and elimination of the currently deferred but not yet refunded balance. A multi-party settlement
was filed with the WUTC on October 21, 2022. On January 23, 2023, the WUTC denied recovery of the excess refunded to customers, but approved
the tariff revision going forward to rectify the inadvertent normalization violation. On February 1, 2023, Cascade filed a motion for clarification with
the WUTC on the currently deferred but not yet refunded balance.

FERC
On September 1, 2022, Montana-Dakota filed an update to its transmission formula rate under the MISO tariff for its multi-value project and
network upgrade charges for $15.4 million, which was effective January 1, 2023.

On January 27, 2023, WBI Energy Transmission filed a general rate case with the FERC for increases in its transportation and storage services rates
that also includes a Greenhouse Gas Cost Recovery Mechanism for anticipated future costs. New rates will be in effect no later than August 1, 2023.

116 MDU Resources Group, Inc. Form 10-K

Part II

Note 21 - Commitments and 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.

At December 31, 2022 and 2021, the Company accrued liabilities which have not been discounted of $32.9 million and $37.0 million,
respectively. At December 31, 2022 and 2021, the Company also recorded corresponding insurance receivables of $10.4 million and $14.1 million,
respectively, and regulatory assets of $20.9 million and $21.2 million, respectively, related to the accrued liabilities. The accruals are for
contingencies resulting from litigation and environmental matters. 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 riverbed site
adjacent to a commercial property site acquired by Knife River - Northwest from Georgia-Pacific West, Inc. along the Willamette River. 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. The EPA
entered into a consent order with certain other PRPs referred to as the Lower Willamette Group for a remedial investigation and feasibility study. The
Lower Willamette Group has indicated that it has incurred over $115.0 million in investigation related costs. Knife River - Northwest has joined with
approximately 100 other PRPs, including the Lower Willamette Group members, in a voluntary process to establish an allocation of costs for the site.
Costs to be allocated would include costs incurred by the Lower Willamette Group as well as costs to implement and fund remediation of the site.

In January 2017, the EPA issued a Record of Decision adopting a selected remedy which is expected to take 13 years to complete with a then
estimated present value of approximately $1 billion. Corrective action will not be taken until remedial design/remedial action plans are approved by
the EPA. In 2020, the EPA encouraged certain PRPs to enter into consent agreements to perform remedial design covering the entire site and
proposed dividing the site into multiple subareas for remedial design. Certain PRPs executed consent agreements for remedial design work and
certain others were issued unilateral administrative orders to perform design work. Knife River - Northwest is not subject to either a voluntary
agreement or unilateral order to perform remedial design work. In February 2021, the EPA announced that 100 percent of the site's area requiring
active cleanup is in the remedial design process. Site-wide remediation activities are not expected to commence for a number of years.

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 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.

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 Claims have been made against Cascade for cleanup of environmental contamination at manufactured gas plant sites
operated by Cascade's predecessors and a similar claim has been made against Montana-Dakota for a site operated by Montana-Dakota and its
predecessors. Any accruals related to these claims are reflected in regulatory assets. For more information, see Note 6.

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 from historic operations of the manufactured gas plant. An environmental assessment was
started in 2020, which is estimated to cost approximately $1.8 million. The environmental assessment report is expected to be submitted to the

MDU Resources Group, Inc. Form 10-K 117

Part II

MTDEQ in 2024. Montana-Dakota and another party 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. Montana-Dakota has accrued costs of $725,000 for the remediation and
investigation costs, and has incurred costs of $922,000 as of December 31, 2022. Montana-Dakota received notice from a prior insurance carrier
that it will participate in payment of defense costs incurred in relation to the claim. On December 9, 2021, Montana Dakota filed an application with
the MTPSC for deferred accounting treatment for costs associated with the investigation and remediation of the site. The MTPSC approved the
application for deferred accounting treatment as requested on July 26, 2022.

A claim was made against Cascade 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 impacts 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 confirmed that impacts have affected soil and groundwater at the site, as well as sediments in the adjacent Port Washington Narrows. 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 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 $12.1 million of which $9.9 million has been incurred as of December 31, 2022.
Based on the site investigation, preliminary remediation alternative costs were provided by consultants in August 2020. The preliminary information
received through the completion of the data report allowed for the projection of possible costs for a variety of site configurations, remedial measures
and potential natural resource damage claims of between $13.6 million and $71.0 million. At December 31, 2022, Cascade has accrued
$2.2 million for the remedial investigation and feasibility study, as well as $17.5 million for remediation of this site. The accrual for remediation
costs will be reviewed and adjusted, if necessary, after the completion of the 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.

A claim was made against Cascade for impacts 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 impacts 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
developed a cleanup action plan and completed public review in 2020. The development of the remediation design is underway, with the Draft Pre-
Remedial Design Investigation Data Report submitted to Washington Ecology in early 2023. The remedy construction is expected to occur following
the approval of the final design. 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, the plant
converted 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.

The Company has received notices from and entered into agreements with certain of its insurance carriers that they will participate in the defense for
certain 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, the Company intends to seek recovery of remediation costs through its natural gas rates charged to customers.

Purchase commitments
The Company has entered into various commitments largely consisting of contracts for natural gas and coal supply; purchased power; natural gas
transportation and storage; asphalt oil supply; royalties; information technology; and construction materials. Certain of these contracts are subject to
variability in volume and price. The commitment terms vary in length, up to 37 years. The commitments under these contracts as of December 31,
2022, were:

Purchase commitments

712,875 $

258,074 $

158,152 $

103,677 $

81,619 $

676,489

2023

2024

2025

2026

2027

Thereafter

(In thousands)

These commitments were not reflected in the Company's consolidated financial statements. Amounts purchased under various commitments for the
years ended December 31, 2022, 2021 and 2020, were $1.0 billion, $849.3 million and $666.0 million, respectively.

Guarantees
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
December 31, 2022, the fixed maximum amounts guaranteed under these agreements aggregated $341.8 million. Certain of the guarantees also
have no fixed maximum amounts specified. The amounts of scheduled expiration of the maximum amounts guaranteed under these agreements
aggregate to $51.3 million in 2023; $148.4 million in 2024; $126.8 million in 2025; $1.3 million in 2026; $800,000 in 2027; $1.7 million
thereafter; and $11.5 million, which has no scheduled maturity date. There were no amounts outstanding under the previously mentioned guarantees

118 MDU Resources Group, Inc. Form 10-K

Part II

at December 31, 2022. 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 December 31, 2022, the fixed maximum amounts guaranteed under these letters of credit
aggregated $30.0 million. The amounts of scheduled expiration of the maximum amounts guaranteed under these letters of credit aggregate to
$29.5 million in 2023 and $500,000 in 2024. There were no amounts outstanding under the previously mentioned letters of credit at
December 31, 2022. 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 December 31, 2022.

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 December 31, 2022, approximately $1.3 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 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 December 31, 2022, 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 $29.5 million.

Note 22 - Subsequent Events
On January 20, 2023, Cascade entered into a $150.0 million term loan agreement with a SOFR-based variable interest rate and a maturity date of
January 19, 2024. 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. The covenants also include certain restrictions on the sale of certain assets,
loans and investments.

MDU Resources Group, Inc. Form 10-K 119

Part II

Definitions

The following abbreviations and acronyms used in Notes to Consolidated Financial Statements are defined below:
Abbreviation or Acronym
AFUDC

Allowance for funds used during construction

ASC

ASU

Big Stone Station

BSSE

Btu

Cascade

Centennial

Centennial Capital

Company

Coyote Creek

Coyote Station

EBITDA

EIN

EPA

FASB

FERC

Fidelity

FIP

GAAP

Great Plains

IBEW

Intermountain

IPUC

IRS

Knife River

FASB Accounting Standards Codification

FASB Accounting Standards Update

475-MW coal-fired electric generating facility near Big Stone City, South Dakota (22.7 percent
ownership)

345-kilovolt transmission line from Ellendale, North Dakota, to Big Stone City, South Dakota
(50 percent ownership)

British thermal unit

Cascade Natural Gas Corporation, an indirect wholly owned subsidiary of MDU Energy Capital

Centennial Energy Holdings, Inc., a direct wholly owned subsidiary of the Company

Centennial Holdings Capital LLC, a direct wholly owned subsidiary of Centennial

MDU Resources Group, Inc.

Coyote Creek Mining Company, LLC, a subsidiary of The North American Coal Corporation

427-MW coal-fired electric generating facility near Beulah, North Dakota (25 percent ownership)

Earnings before interest, taxes, depreciation, depletion and amortization

Employer Identification Number

United States Environmental Protection Agency

Financial Accounting Standards Board

Federal Energy Regulatory Commission

Fidelity Exploration & Production Company, a direct wholly owned subsidiary of WBI Holdings
(previously referred to as the Company's exploration and production segment)
Funding improvement plan

Accounting principles generally accepted in the United States of America

Great Plains Natural Gas Co., a public utility division of Montana-Dakota

International Brotherhood of Electrical Workers

Intermountain Gas Company, an indirect wholly owned subsidiary of MDU Energy Capital

Idaho Public Utilities Commission

Internal Revenue Service

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

K-Plan

LIBOR

Company's 401(k) Retirement Plan
London Inter-bank Offered Rate

MDU Construction Services

MDU Construction Services Group, Inc., a direct wholly owned subsidiary of Centennial

MDU Energy Capital

MDU Energy Capital, LLC, a direct wholly owned subsidiary of the Company

MEPP

MISO

MMBtu

MNPUC

Multiemployer pension plan

Million Btu

Minnesota Public Utilities Commission

Montana-Dakota

Montana-Dakota Utilities Co. a direct wholly owned subsidiary of MDU Energy Capital

MTDEQ

MTPSC

NDPSC
PRP

SDPUC

SEC

Montana Department of Environmental Quality

Montana Public Service Commission

Megawatt

North Dakota Public Service Commission

Potentially Responsible Party

Rehabilitation plan

South Dakota Public Utilities Commission

United States Securities and Exchange Commission

Securities Act

Securities Act of 1933, as amended

120 MDU Resources Group, Inc. Form 10-K

SOFR

VIE

Secured Overnight Financing Rate

Variable interest entity

Washington DOE

Washington State Department of Ecology

WBI Energy Transmission

WBI Energy Transmission, Inc., an indirect wholly owned subsidiary of WBI Holdings

WBI Holdings

WUTC

Wygen III

WBI Holdings, Inc., a direct wholly owned subsidiary of Centennial

Washington Utilities and Transportation Commission

100-MW coal-fired electric generating facility near Gillette, Wyoming (25 percent ownership)

Part II

MDU Resources Group, Inc. Form 10-K 121

Part II

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

The following information includes the evaluation of disclosure controls and procedures by the Company's chief executive officer and the chief
financial officer, along with any significant changes in internal controls of the Company.

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 other procedures are 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 other 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 December 31, 2022, that has materially affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.

Management's Annual Report on Internal Control Over Financial Reporting
The information required by this item is included in this Form 10-K at Item 8 - Management's Report on Internal Control Over Financial Reporting.

Attestation Report of the Registered Public Accounting Firm
The information required by this item is included in this Form 10-K at Item 8 - Report of Independent Registered Public Accounting Firm.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

122 MDU Resources Group, Inc. Form 10-K

Part III

Item 10. Directors, Executive Officers and Corporate Governance

Information required by this item will be included in the Company's Proxy Statement, which is incorporated herein by reference.

Item 11. Executive Compensation

Information required by this item will be included in the Company's Proxy Statement, which is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

Equity Compensation Plan Information
The following table includes information as of December 31, 2022, with respect to the Company's equity compensation plans:

Plan Category

(a)
Number of securities to
be issued upon exercise
of outstanding options,

warrants and rights

(b)
Weighted average
exercise price of
outstanding options,
warrants and rights

(c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))

Equity compensation plans approved by stockholders (1)

754,044 (2) $

Equity compensation plans not approved by stockholders

Total

N/A

754,044

— (3)

N/A

—

2,635,636 (4)(5)

N/A

2,635,636

(1) Consists of the Non-Employee Director Long-Term Incentive Compensation Plan and the Long-Term Performance-Based Incentive Plan.
(2) Consists of restricted stock awards and performance share awards.
(3) No weighted average exercise price is shown for the restricted stock awards or performance share awards because such awards have no exercise price.
(4) This amount includes 2,493,022 shares available for future issuance under the Long-Term Performance-Based Incentive Plan in connection with grants of

restricted stock, performance units, performance shares or other equity-based awards.

(5) This amount includes 142,614 shares available for future issuance under the Non-Employee Director Long-Term Incentive Compensation Plan.

The remaining information required by this item will be included in the Company's Proxy Statement, which is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information required by this item will be included in the Company's Proxy Statement, which is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

Information required by this item about aggregate fees billed to the Company by its principal accountant, Deloitte & Touche LLP (PCAOB ID No. 34),
will be included in the Company's Proxy Statement, which is incorporated herein by reference.

MDU Resources Group, Inc. Form 10-K 123

Part IV

Item 15. Exhibits, Financial Statement Schedules

(a) Financial Statements, Financial Statement Schedules and Exhibits

Index to Financial Statements and Financial Statement Schedules

1. Financial Statements

The following consolidated financial statements required under this item are
included under Item 8 - Financial Statements and Supplementary Data.

Page

Consolidated Statements of Income for each of the three years in the period ended

December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Comprehensive Income for each of the three years in the
period ended December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Balance Sheets at December 31, 2022 and 2021 . . . . . . . . . . . . . . . . . .

Consolidated Statements of Equity for each of the three years in the period ended

December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows for each of the three years in the period

ended December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. Financial Statement Schedules
The following financial statement schedules are included in Part IV of this report.

Schedule I - Condensed Financial Information of Registrant (Unconsolidated)

Condensed Statements of Income and Comprehensive Income for each of the three

years in the period ended December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Condensed Balance Sheets at December 31, 2022 and 2021 . . . . . . . . . . . . . . . . . . . .

Condensed Statements of Cash Flows for each of the three years in the period ended
December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

125

126

127

All other schedules have been omitted because they are not applicable or the required information is included elsewhere in the financial statements
or related notes.

3. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

128

124 MDU Resources Group, Inc. Form 10-K

MDU RESOURCES GROUP, INC.
Schedule I - Condensed Financial Information of Registrant (Unconsolidated)
Condensed Statements of Income and Comprehensive Income

Years ended December 31,

2022

2021

2020

Part IV

Operating revenues

Operating expenses

Operating loss

Other income

Interest expense

Loss before income taxes

Income taxes

(In thousands)

— $

14,323

(14,323)

—

(14,323)

(1,623)

—

Equity in earnings of subsidiaries from continuing operations

Income from continuing operations

379,976

377,731

390,527

367,276

377,731

390,527

Equity in earnings (loss) of subsidiaries from discontinued operations

213

400

(322)

Net income

Comprehensive income

$ 367,489 $ 378,131 $ 390,205

$ 377,910 $ 385,205 $ 384,229

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

MDU Resources Group, Inc. Form 10-K 125

Part IV

MDU RESOURCES GROUP, INC.
Schedule I - Condensed Financial Information of Registrant (Unconsolidated)
Condensed Balance Sheets

(In thousands, except shares and per share amounts)

2022

2021

December 31,

Assets

Current assets:

Cash and cash equivalents

Receivables, net

Accounts receivable from subsidiaries

Prepayments and other current assets

Total current assets

Noncurrent assets

Investments

Investment in subsidiaries

Deferred income taxes

Operating lease right-of-use assets

Other

Total noncurrent assets

Total assets

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

Accounts payable to subsidiaries

Taxes payable

Dividends payable

Accrued compensation

Operating lease liabilities due within one year

Other accrued liabilities

Total current liabilities

Noncurrent liabilities:

Operating lease liabilities

Other

Total noncurrent liabilities

Commitments and contingencies

Stockholders' equity:

Common stock
Authorized - 500,000,000 shares, $1.00 par value
Shares issued - 204,162,814 at December 31, 2022 and 203,889,661 at December 31, 2021

Other paid-in capital

Retained earnings

Accumulated other comprehensive loss

Treasury stock at cost - 538,921 shares

Total stockholders' equity

Total liabilities and stockholders' equity

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

126 MDU Resources Group, Inc. Form 10-K

19,486 $

4,410

53,285

3,237

80,418

6,159

6,120

49,696

2,528

64,503

50,206

55,686

3,581,754

3,368,537

12,668

7,364

114

2,068

26,558

3,646,768

3,458,259

$ 3,727,186 $ 3,522,762

2,354 $

4,402

572

45,246

4,312

17,907

74,835

65,192

65,222

2,546

6,133

1,672

44,229

4,098

7,309

66,039

73,787

73,849

204,163
1,466,037

203,889
1,461,205

1,951,138

1,762,410

(30,583)

(41,004)

(3,626)

3,587,129

3,382,874

$ 3,727,186 $ 3,522,762

MDU RESOURCES GROUP, INC.
Schedule I - Condensed Financial Information of Registrant (Unconsolidated)
Condensed Statements of Cash Flows

Part IV

Years ended December 31,

Net cash provided by operating activities
Investing activities:

Investments in and advances to subsidiaries
Investments

Net cash used in investing activities
Financing activities:

Proceeds from issuance of common stock
Dividends paid
Repurchase of common stock
Tax withholding on stock-based compensation

Net cash used in financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents - beginning of year

Cash and cash equivalents - end of year

2022

2021

2020

(In thousands)

242,199 $

187,297 $

226,642

(45,000)
(885)
(45,885)

(102,000)
(391)

(102,391)

(67,000)
(4)

(67,004)

(149)
(176,915)
(3,525)
(2,398)
(182,987)
13,327
6,159
19,486 $

88,767
(171,354)
(2,992)
(1,949)

(87,528)
(2,622)
8,781

3,385
(166,405)
—
(163)

(163,183)
(3,545)
12,326

6,159 $

8,781

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

Notes to Condensed Financial Statements
Note 1 - Summary of Significant Accounting Policies
Basis of presentation The condensed financial information reported in Schedule I is being presented to comply with Rule 12-04 of Regulation S-X.
The information is unconsolidated and is presented for the parent company only, MDU Resources Group, Inc. (the Company) as of and for the years
ended December 31, 2022, 2021 and 2020. In Schedule I, investments in subsidiaries are presented under the equity method of accounting where
the assets and liabilities of the subsidiaries are not consolidated. The investments in net assets of the subsidiaries are recorded on the Condensed
Balance Sheets. The income from subsidiaries is reported as equity in earnings of subsidiaries on the Condensed Statements of Income. The material
cash inflows on the Condensed Statements of Cash Flows are primarily from the dividends and other payments received from its subsidiaries and the
proceeds raised from the issuance of equity securities. The consolidated financial statements of the Company reflect certain businesses as
discontinued operations. These statements should be read in conjunction with the consolidated financial statements and notes thereto of the
Company.

Earnings per common share Please refer to the Consolidated Statements of Income of the registrant for earnings per common share. In addition, see
Item 8 - Note 2 for information on the computation of earnings per common share.

Note 2 - Debt At December 31, 2022, the Company had no long-term debt maturities. For more information on debt, see Item 8 - Note 9.

Note 3 - Dividends The Company depends on earnings and dividends from its subsidiaries to pay dividends on common stock. Cash dividends paid to
the Company by subsidiaries were $242.1 million, $188.1 million and $228.4 million for the years ended December 31, 2022, 2021 and 2020,
respectively.

MDU Resources Group, Inc. Form 10-K 127

Part IV

Exhibits

Exhibit
Number

Exhibit Description

Amended and Restated Certificate of Incorporation of MDU
Resources Group, Inc.

Amended and Restated Bylaws of MDU Resources Group, Inc.

Indenture, dated as of December 15, 2003, between MDU
Resources Group, Inc. and The Bank of New York, as trustee

First Supplemental Indenture, dated as of November 17,
2009, between MDU Resources Group, Inc. and the Bank of
New York Mellon, as trustee

Fifth Amended and Restated Credit Agreement, dated as of
December 19, 2019, among Centennial Energy Holdings,
Inc., U.S. Bank National Association, as Administrative Agent,
and The Several Financial Institutions party thereto

Montana-Dakota Utilities Co. Amended and Restated Credit
Agreement, dated December 19, 2019, among Montana-
Dakota Utilities Co., Various Lenders, and Wells Fargo Bank,
National Association, as Administrative Agent

Centennial Energy Holdings, Inc. Note Purchase Agreement,
dated December 20, 2012, among Centennial Energy
Holdings, Inc. and various purchasers of the notes

Montana-Dakota Utilities Co. Note Purchase Agreement, dated
July 24, 2019, among Montana-Dakota Utilities Co. and
various purchasers of the notes

MDU Resources Group, Inc. Description of Securities
Registered Pursuant to Section 12 of the Securities and
Exchange Act of 1934

Filed
Herewith

Form

8-K

S-8

Incorporated by Reference

Period
Ended Exhibit

Filing
Date

File
Number

3.2

5/8/19

1-03480

3.1

4(f)

2/15/19

1-03480

1/21/04 333-11203

10-K 12/31/09

4(c)

2/17/10

1-03480

10-K 12/31/19

4(c)

2/21/20

1-03480

10-K 12/31/19

4(d)

2/21/20

1-03480

10-Q

6/30/19

4(a)

8/2/19

1-03480

10-Q

9/30/19

4(a)

11/1/19

1-03480

10-K 12/31/19

4(g)

2/21/20

1-03480

WBI Energy Transmission, Inc. Second Amendment and
Restatement Note Purchase and Private Shelf Agreement,
effective as of December 22, 2022, among Prudential
Investment Management, Inc. and certain investors described
therein

MDU Resources Group, Inc. Supplemental Income Security
Plan, as amended and restated May 10, 2017

MDU Resource Group, Inc. Director Compensation Policy, as
amended May 11, 2022

Deferred Compensation Plan for Directors, as amended
May 15, 2008

Non-Employee Director Stock Compensation Plan, as
amended May 12, 2011

MDU Resources Group, Inc. Non-Employee Director Long-
Term Incentive Compensation Plan, as amended May 17,
2012

MDU Resources Group, Inc. Long-Term Performance-Based
Incentive Plan, as amended February 11, 2016

MDU Resources Group, Inc. Executive Incentive
Compensation Plan, as amended November 12, 2020, and
Rules and Regulations, as amended November 12, 2020

Form of Performance Share Award Agreement under the Long-
Term Performance-Based Incentive Plan, as amended
February 13, 2020

Form of Performance Share Award Agreement under the Long-
Term Performance-Based Incentive Plan, as amended
February 11, 2021

Form of Performance Share Award Agreement under the Long-
Term Performance-Based Incentive Plan, as amended
February 17, 2022

10-Q

6/30/17

10(d)

8/4/17

1-03480

10-Q

6/30/22

10(b)

8/5/22

1-03480

10-Q

6/30/08

10(a)

8/7/08

1-03480

10-Q

6/30/11

10(a)

8/5/11

1-03480

10-Q

6/30/12

10(a)

8/7/12

1-03480

10-K 12/31/15

10(f)

2/19/16

1-03480

10-K 12/31/20

10(h)

2/19/21

1-03480

10-K 12/31/19

10(k)

2/21/20

1-03480

10-K 12/31/20

10(l)

2/19/21

1-03480

10-K 12/31/21

10(k)

2/23/22

1-03480

3(a)

3(b)

4(a)

4(b)

*4(c)

*4(d)

4(e)

4(f)

4(g)

*4(h)

+10(a)

+10(b)

+10(c)

+10(d)

+10(e)

+10(f)

+10(g)

+10(h)

+10(i)

+10(j)

128 MDU Resources Group, Inc. Form 10-K

Exhibit
Number

+10(k)

+10(l)

+10(m)

+10(n)

+10(o)

+10(p)

+10(q)

+10(r)

+10(s)

+10(t)

+10(u)

+10(v)

+10(w)

Exhibit Description

Restricted Stock Unit Award Agreement under the Long-Term
Performance-Based Incentive Plan, as amended February 11,
2021

Restricted Stock Unit Award Agreement under the Long-Term
Performance-Based Incentive Plan, as amended February 17,
2022

Restricted Stock Unit Award Agreement under the Long-Term
Performance-Based Incentive Plan, as amended February 16,
2023

Form of MDU Resources Group, Inc. Indemnification
Agreement for Section 16 Officers and Directors, dated
May 15, 2014

Form of Amendment No. 1 to Indemnification Agreement,
dated May 15, 2014

MDU Resources Group, Inc. Section 16 Officers and Directors
with Indemnification Agreements Chart, as of February 1,
2023

MDU Resources Group, Inc. Nonqualified Defined
Contribution Plan, as amended and restated November 12,
2020

MDU Resources Group, Inc. Deferred Compensation Plan
Adoption Agreement, as amended August 12, 2021

MDU Resources Group, Inc. Deferred Compensation Plan
Document, dated November 12, 2020

MDU Resources Group, Inc. 401(k) Retirement Plan, as
restated April 1, 2020

MDU Resources Group, Inc. 401(k) Retirement Plan, as
amended January 1, 2022

MDU Resources Group, Inc. 401(k) Retirement Plan, as
amended August 17, 2022

MDU Resources Group, Inc. 401(k) Retirement Plan, as
amended December 28, 2022

+10(x)

Employment Letter for Jeffrey S. Thiede, dated May 16, 2013

+10(y)

Jason L. Vollmer Offer Letter, dated September 20, 2017

+10(z)

Cooperation Agreement, dated as of January 24, 2023, by and
among Keith A. Meister, Corvex Management LP and MDU
Resources Group, Inc.

+10(aa)

Retention Agreement for Jeffrey S. Thiede, dated February 17,
2023

+10(ab)

David C. Barney Offer Letter, dated February 17, 2023

31(a)

31(b)

Subsidiaries of MDU Resources Group, Inc.

Consent of Independent Registered Public Accounting Firm

Certification of Chief Executive Officer filed pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer filed pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

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

Mine Safety Disclosures

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

Part IV

Incorporated by Reference

Filed
Herewith

Form

Period
Ended Exhibit

Filing
Date

File
Number

10-K 12/31/20

10(n)

2/19/21

1-03480

10-K 12/31/21 10(m)

2/23/22

1-03480

8-K

10.1

5/15/14

1-03480

10.2

5/15/14

1-03480

10-K 12/31/20

10(r)

2/19/21

1-03480

10-Q

9/30/21

10(c)

11/4/21

1-03480

8-K

10.2

11/12/20

1-03480

10-Q

3/31/20

10(a)

5/8/20

1-03480

10-K 12/31/21

10(w)

2/23/22

1-03480

10-Q

9/30/22

10(a)

11/3/22

1-03480

10-K 12/31/13 10(ab)

2/21/14

1-03480

8-K

10.1

9/21/17

1-03480

10.1

1/24/23

1-03480

MDU Resources Group, Inc. Form 10-K 129

Part IV

Exhibit
Number

Exhibit Description

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

Incorporated by Reference

Filed
Herewith

Form

Period
Ended Exhibit

Filing
Date

File
Number

* 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.

Item 16. Form 10-K Summary

None.

130 MDU Resources Group, Inc. Form 10-K

Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

Part IV

MDU Resources Group, Inc.

Date:

February 24, 2023

By:

/s/ David L. Goodin

David L. Goodin

(President and Chief Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the date indicated.

Signature

/s/ David L. Goodin

David L. Goodin

(President and Chief Executive Officer)

/s/ Jason L. Vollmer

Jason L. Vollmer

(Vice President and Chief Financial Officer)

/s/ Stephanie A. Barth

Stephanie A. Barth

(Vice President, Chief Accounting Officer and Controller)

Title

Date

Chief Executive Officer and Director

February 24, 2023

Chief Financial Officer

February 24, 2023

Chief Accounting Officer

February 24, 2023

/s/ Dennis W. Johnson

Dennis W. Johnson

(Chair of the Board)

/s/ German Carmona Alvarez

German Carmona Alvarez

/s/ Thomas Everist

Thomas Everist

/s/ Karen B. Fagg

Karen B. Fagg

/s/ Patricia L. Moss

Patricia L. Moss

/s/ Dale S. Rosenthal

Dale S. Rosenthal

/s/ Edward A. Ryan

Edward A. Ryan

/s/ David M. Sparby

David M. Sparby

/s/ Chenxi Wang

Chenxi Wang

Director

February 24, 2023

MDU Resources Group, Inc. Form 10-K 131

March 24, 2023

Fellow Stockholders:

I invite you to attend our annual meeting at 11 a.m. CDT May 9, 2023, at 909 Airport Road in Bismarck, North
Dakota, where you will have the opportunity to engage with our Board of Directors and senior management
team. Please check our website at www.mduproxy.com for additional information about our meeting.

During the meeting, we will hear the results of stockholder voting on the items outlined in this Proxy Statement,
including election of our Board of Directors, the advisory votes regarding the frequency of voting on and the
compensation paid to our named executive officers, and ratification of our independent auditors. I encourage you
to promptly follow the instructions on your notice or proxy card to vote your shares on these items.

We had very strong operational performance in 2022. I look forward to sharing with you our results as well as
the strong growth trajectory we believe we are on at each of our businesses, with an all-time high combined
backlog of more than $3 billion of work at our construction businesses and planned capital investments of $2.5
billion over the next five years at our regulated energy delivery businesses.

I will give an update on the great progress we’re making toward completing the anticipated separation of Knife
River Corporation into an independent, publicly traded company and the strategic review of MDU Construction
Services Group, Inc. We expect both initiatives to be complete in the second quarter as we work to optimize
value for you, our shareholders, by working to create two pure-play, publicly traded companies, with one
focused on regulated energy delivery and the other on construction materials.

I appreciate your continued investment in MDU Resources and look forward to visiting with you May 9.

Sincerely,

David L. Goodin
President and Chief Executive Officer

MDU Resources Group, Inc. Proxy Statement

(This page is intentionally left blank.)

MDU Resources Group, Inc. Proxy Statement

Proxy Statement

1200 West Century Avenue

Mailing Address:
P.O. Box 5650
Bismarck, North Dakota 58506-5650
(701) 530-1000

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD May 9, 2023

March 24, 2023

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MDU Resources Group, Inc. will be held at 909 Airport Road, Bismarck,
North Dakota 58504, on Tuesday, May 9, 2023, at 11:00 a.m., Central Daylight Saving Time, for the following purposes:

Items of
Business

1. Election of directors;

2. Advisory vote to approve the frequency of future advisory votes to approve the compensation paid to the company’s named

executive officers;

3. Advisory vote to approve the compensation paid to the company’s named executive officers;

4. Ratification of the appointment of Deloitte & Touche LLP as the company’s independent registered public accounting firm for

2023; and

5. Transaction of any other business that may properly come before the meeting or any adjournment(s) thereof.

Record Date

The board of directors has set the close of business on March 10, 2023, as the record date for the determination of stockholders
who will be entitled to notice of, and to vote at, the meeting and any adjournment(s) thereof.

Meeting
Attendance

All stockholders as of the record date of March 10, 2023, are cordially invited to attend the annual meeting. You must request an
admission ticket to attend. If you are a stockholder of record and plan to attend the meeting, please contact MDU Resources
Group, Inc. by email at CorporateSecretary@mduresources.com or by telephone at 701-530-1010 to request an admission ticket.
A ticket will be sent to you by mail.

If your shares are held beneficially in the name of a bank, broker, or other holder of record, and you plan to attend the annual
meeting, you will need to submit a written request for an admission ticket by mail to: Investor Relations, MDU Resources Group,
Inc., P.O. Box 5650, Bismarck, ND 58506 or by email at CorporateSecretary@mduresources.com. The request must include
proof of stock ownership as of March 10, 2023, such as a bank or brokerage firm account statement or a legal proxy from the
bank, broker, or other holder of record confirming ownership. A ticket will be sent to you by mail.

Requests for admission tickets must be received no later than May 2, 2023. You must present your admission ticket and state-
issued photo identification, such as a driver’s license, to gain admittance to the meeting.

Proxy
Materials

This Proxy Statement will first be sent to stockholders requesting written materials on or about March 24, 2023. A Notice of
Availability of Proxy Materials (Notice) will also be sent to certain stockholders on or about March 24, 2023. The Notice contains
basic information about the annual meeting and instructions on how to view our proxy materials and vote online.

By order of the Board of Directors,

Karl A. Liepitz

Secretary

Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 9, 2023.
The 2023 Notice of Annual Meeting and Proxy Statement and 2022 Annual Report to Stockholders
are available at www.mduproxy.com.

MDU Resources Group, Inc. Proxy Statement

TABLE OF CONTENTS

PROXY STATEMENT SUMMARY

EXECUTIVE COMPENSATION (continued)

Proxy Statement

Annual Meeting Information . . . . . . . . . . . . . . . . . . . . . . . .

Company Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Business Performance Highlights . . . . . . . . . . . . . . . . . . . .

Financial Performance Highlights . . . . . . . . . . . . . . . . . . . .

Corporate Governance Practices . . . . . . . . . . . . . . . . . . . . .

Compensation Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sustainability Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .

BOARD OF DIRECTORS

Item 1. Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . .

Director Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Board Evaluations and Process for Selecting Directors . .

Board Skills and Diversity Matrix . . . . . . . . . . . . . . . . . . . .

CORPORATE GOVERNANCE

Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Oversight of Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . .

Stockholder Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stockholder Communications with the Board . . . . . . . . . .

Board Leadership Structure . . . . . . . . . . . . . . . . . . . . . . . . .

Board’s Role in Risk Oversight . . . . . . . . . . . . . . . . . . . . . .

Board Meetings and Committees . . . . . . . . . . . . . . . . . . . .

Additional Governance Features . . . . . . . . . . . . . . . . . . . . .

Corporate Governance Materials . . . . . . . . . . . . . . . . . . . . .

Related Person Transaction Disclosure . . . . . . . . . . . . . . .

COMPENSATION OF NON-EMPLOYEE DIRECTORS

Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECURITY OWNERSHIP

Security Ownership Table . . . . . . . . . . . . . . . . . . . . . . . . . .

Hedging Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Greater than 5% Beneficial Owners . . . . . . . . . . . . . . . . . .

Delinquent Section 16(a) Reports . . . . . . . . . . . . . . . . . . .

EXECUTIVE COMPENSATION

Other Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation Governance . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation Committee Report . . . . . . . . . . . . . . . . . . . . .

Executive Compensation Tables . . . . . . . . . . . . . . . . . . . . . .

Summary Compensation Table . . . . . . . . . . . . . . . . . . . . .

Grants of Plan-Based Awards . . . . . . . . . . . . . . . . . . . . . . .

Outstanding Equity Awards at Fiscal Year-End . . . . . . . .

Option Exercises and Stock Vested . . . . . . . . . . . . . . . . . .

Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nonqualified Deferred Compensation . . . . . . . . . . . . . . . .

Potential Payments upon Termination or

Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CEO Pay Ratio Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . .

Pay Versus Performance . . . . . . . . . . . . . . . . . . . . . . . . . . .

AUDIT MATTERS

Item 4. Ratification of the Appointment of

Deloitte & Touche LLP as the Company’s Independent

Registered Public Accounting Firm for 2023 . . . . . . . . .

Annual Evaluation and Selection of Deloitte &

Touche LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Audit Fees and Non-Audit Fees . . . . . . . . . . . . . . . . . . . . .

Policy on Audit Committee Pre-Approval of Audit

and Permissible Non-Audit Services . . . . . . . . . . . . .

Audit Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INFORMATION ABOUT THE ANNUAL MEETING

Who Can Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notice and Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Revoking Your Proxy or Changing Your Vote . . . . . . . . . .

Discretionary Voting Authority . . . . . . . . . . . . . . . . . . . . . .

Voting Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 2. Advisory Vote to Approve the Frequency of Future

Proxy Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Advisory Votes to Approve the Compensation to the

Electronic Delivery of Proxy Statement . . . . . . . . . . . . . .

Company’s Named Executive Officers . . . . . . . . . . . . . . . .

Householding of Proxy Materials . . . . . . . . . . . . . . . . . . . .

Item 3. Advisory Vote to Approve the Compensation Paid

MDU Resources Group, Inc. 401(k) Plan . . . . . . . . . . . .

to the Company’s Named Executive Officers . . . . . . . . . . .

Information Concerning Executive Officers . . . . . . . . . . . . . .

Compensation Discussion and Analysis . . . . . . . . . . . . . . . . .

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2022 Compensation Framework . . . . . . . . . . . . . . . . . . . . .

2022 Compensation for Our Named

Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annual Meeting Admission and Guidelines . . . . . . . . . . .

Conduct of the Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stockholder Proposals, Director Nominations, and

Other Items of Business for 2024 Annual Meeting . .

MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Cautionary information and forward-looking statements. This Proxy Statement contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From
time to time, we may also provide oral or written forward-looking statements in other materials we release to the public. Such forward-
looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995.

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, trends, objectives, goals, strategies, including the anticipated separation of Knife River Corporation or the proposed future
structure of two pure-play publicly traded companies, future events, or performance, and underlying assumptions (many of which are based,
in turn, upon further assumptions) and other statements that are other than statements of historical facts. Forward-looking statements
involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those
indicated (both favorably and unfavorably). These risks and uncertainties include, but are not limited to, those described in Part I—Item 1A
“Risk Factors” in our 2022 Annual Report on Form 10-K (2022 Form 10-K) and subsequent Securities and Exchange Commission (SEC)
filings. Caution should be taken not to place undue reliance on any such forward-looking statements. We undertake no obligation to update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable
law. Website references throughout this document are provided for convenience only, and the content on the referenced websites is not
incorporated by reference into this document.

MDU Resources Group, Inc. Proxy Statement

Proxy Statement

PROXY STATEMENT SUMMARY

To assist you in reviewing the company’s 2022 performance and voting your shares, we call your attention to key elements of our 2023
Proxy Statement. The following is only a summary and does not contain all the information you should consider. You should read the entire
Proxy Statement carefully before voting. For more information about these topics, please review the full Proxy Statement and our 2022
Annual Report to Stockholders.

■ Annual Meeting Information
Meeting Information

Summary of Stockholder Voting Matters

Time and Date

Voting Matters

11:00 a.m.
Central Daylight Saving Time
Tuesday, May 9, 2023

Place

MDU Service Center
909 Airport Road
Bismarck, ND 58504

Board Vote
Recommendation

FOR Each Nominee

Item 1. Election of Directors

Item 2. Advisory Vote to Approve the Frequency of Future

FOR One Year

Advisory Votes to Approve the Compensation Paid to
the Company’s Named Executive Officers

Item 3. Advisory Vote to Approve the Compensation Paid to
the Company’s Named Executive Officers

Item 4. Ratification of the Appointment of Deloitte &

Touche LLP as the Company’s Independent
Registered Public Accounting Firm for 2023

FOR

See Page

Who Can Vote
If you held shares of MDU Resources Group, Inc. common stock at the close of business on March 10, 2023, you are entitled to vote at
the annual meeting. You are encouraged to vote in advance of the meeting using one of the following voting methods.

How to Vote

Registered Stockholders

If your shares are held directly with our stock registrar, you can vote any one of four ways:

: By Internet:

) By Telephone:

Go to the website shown on the Notice of Availability of Proxy Materials (Notice) or Proxy Card, if you
received one, and follow the instructions.

Call the telephone number shown on the Notice or Proxy Card, if you received one, and follow the
instructions given by the voice prompts.

Voting via the Internet or by telephone authorizes the named proxies to vote your shares in the same
manner as if you marked, signed, dated, and returned the Proxy Card by mail. Your voting instructions
may be transmitted up until 11:59 p.m. Eastern Time on May 8, 2023.

* By Mail:

If you received a paper copy of the Proxy Statement, Annual Report, and Proxy Card, mark, sign, date,
and return the Proxy Card in the postage-paid envelope provided.

In Person:

Attend the annual meeting, or send a personal representative with an appropriate proxy, to vote by
ballot at the meeting.

Beneficial Stockholders

If you held shares beneficially in the name of a bank, broker, or other holder of record (sometimes referred to as holding shares “in street
name”), you will receive voting instructions from said bank, broker, or other holder of record. If you wish to vote in person at the meeting, you
must obtain a legal proxy from your bank, broker, or other holder of record of your shares and present it at the meeting.

1 MDU Resources Group, Inc. Proxy Statement

■ Company Overview

MDU Resources is Building a Strong America

A strong infrastructure is the heart of our country’s economy. It is the natural gas and electricity that power business, industry, and our
daily lives. It is the pipes and wires that connect our homes, factories, offices and stores to bring them to life. It is the transportation
network of roads, highways, and airports that keeps our economy moving. Infrastructure is our business.

Proxy Statement

Our Vision
With integrity, Building a Strong America® while being a great and safe place to work.

Our Mission

Deliver superior value to stakeholders by providing essential infrastructure and services to America.

Our Integrity Code

Commitment to Integrity

We will conduct business legally and ethically with our best
skills and judgment.

Commitment to Shareholders

We will act in the best interests of our corporation and protect
its assets.

Commitment to Employees

We will work together to provide a safe and positive workplace.

Commitment to Customers, Suppliers
and Competitors

We will compete in business only by lawful and ethical means.

Commitment to Communities

We will be a responsible and valued corporate citizen.

Our Strategy

Deliver superior value and achieve industry-leading performance with two pure-play companies of regulated energy delivery and
construction materials, while pursuing organic growth opportunities and strategic acquisitions of well-managed companies and properties.

Our Businesses

Electric and Natural Gas Utilities

Pipeline

Our utility companies serve more than 1.18 million
customers across eight states.

We provide natural gas transportation, underground
natural gas storage, cathodic protection and other
energy-related services.

Construction Materials and Contracting

Construction Services

Knife River Corporation is a Top 10 producer of
aggregates in America, has approximately 1.1 billion
tons of aggregate reserves, and employs more than
5,000 people during peak construction season.

MDU Construction Services Group, Inc. is one of
the largest electrical contractors in the United
States, with approximately 9,000 employees.

MDU Resources Group, Inc. Proxy Statement 2

Proxy Statement

■ Business Performance Highlights

Future Structure of MDU Resources
The company’s board of directors has determined the future company structure that is most likely to maximize long-term value for
stockholders is to create two pure-play publicly traded companies, one focused on regulated energy delivery and the other on
construction materials. To achieve this future structure, the company is working toward a separation of Knife River Corporation to create
a standalone leading construction materials company, and it is evaluating options to optimize the value of its construction services
business, with the review expected to be complete in the second quarter of 2023.

In addition to pursuing each of these strategic initiatives, all of our business segments performed well despite inflationary pressures and
supply chain challenges throughout 2022.

Regulated Energy Delivery

■ Continued Growth with New Customers. Over 18,000 new customers were connected to our utilities system, representing customer

growth of 1.6%.

■ Investing in Electric Generation. The electric segment continues to make progress toward reducing its greenhouse gas emissions. In

2022, operations were ceased at the company’s last wholly owned coal-fired electric generating facility, Heskett Station Units 1 and
2 in Mandan, North Dakota. Construction of Heskett Station Unit 4, an 88-megawatt natural-gas fired simple-cycle combustion
turbine, is expected to be complete in the summer of 2023.

■ Joint Regional Transmission Line Project. The electric segment and Otter Tail Power Company announced another Midcontinent

Independent System Operator-approved joint regional transmission line project. Together, the companies plan to develop, construct
and co-own a 95-mile, 345-kilovolt transmission line that would span from Jamestown to Ellendale in North Dakota. We expect the
project to create a more resilient regional transmission grid, helping to ensure reliable and affordable electric service to our
customers.

■ Natural Gas Pipeline Expansion. The pipeline segment put the North Bakken Expansion project into service on February 1, 2022 and

has announced other significant growth projects in various stages and pending regulatory approvals, including the 2023 Line Section
27 Expansion project in northwestern North Dakota expecting to add natural gas transportation capacity of 175 million cubic feet per
day; Grasslands South Expansion from western North Dakota to northern Wyoming, which is expected to add natural gas
transportation capacity of 94 million cubic feet per day; and Line Section 15 Expansion in western South Dakota, which is expected
to add natural gas transportation capacity of 25 million cubic feet per day.

Construction Materials & Services

■ Record Revenues. The construction materials segment had record revenues of $2.53 billion in 2022 and earnings of $116.2 million,
compared to revenues of $2.23 billion and earnings of $129.8 million in 2021. Demand remained strong for construction materials
and contracting work as evidenced by a record backlog at December 31, 2022 of $935 million, up 32% compared to $708 million
at December 31, 2021.

■ Growth Opportunities. The construction materials and contracting segment continued its growth through acquisitions in 2022. Allied

Concrete and Supply Co., a producer of ready-mixed concrete in California, was acquired in December 2022. In addition to pursuing
additional acquisitions, the segment expects ongoing growth opportunities, including through projects that result from the U.S.
Infrastructure Investment and Jobs Act that provides approximately $650 billion of reauthorized funds for the Department of
Transportation surface transportation program and $550 billion of new infrastructure funds.

■ Record Revenues. The construction services segment earned record revenues of $124.8 million in 2022, compared to $109.4 million
in 2021. Revenues were a record $2.70 billion, compared to $2.05 billion in 2021. Demand continues to be extremely strong for
construction services work, with the construction services having a record backlog of $2.13 billion at December 31, 2022, up, 54%
compared to $1.38 billion at December 31, 2021.

■ Renewable Electric Generation Project. The construction services segment continues to emphasize its premier services for renewable
electric generation projects. The construction services segment subsidiary completed construction in October 2022 on a 200-
megawatt solar facility in Moapa, Nevada, installing 621,093 solar modules, as well as ancillary facilities for the project.

3 MDU Resources Group, Inc. Proxy Statement

Performance from Continuing Operations

Electric Distribution

Retail Sales (million kWh)

Customers

Natural Gas Distribution

Retail Sales (MMdk)

Transportation (MMdk)

Customers

Proxy Statement

2018

2019

2020

2021

2022

3,354.4

143,022

3,314.3

143,346

3,204.5

143,782

3,271.6

3,343.9

144,103

144,561

112.6

149.5

123.7

166.1

114.5

160.0

115.3

174.4

131.2

167.7

957,727

977,468

997,146

1,016,670

1,034,821

Pipeline Transportation (MMdk)

351.5

429.7

438.6

471.1

482.9

Construction Materials and Contracting Revenues (millions)

$1,925.9

$2,190.7

$2,178.0

$2,228.9

$2,534.7

Construction Services Revenues (millions)

$1,371.5

$1,849.3

$2,095.7

$2,051.6

$2,699.2

■ Financial Performance Highlights

■ The company achieved earnings of $367.5 million, or $1.81 per share.
■ Our return on invested capital in 2022 was 7.1%.
■ The chart below shows our earnings per share from continuing operations and compound annual growth rate (CAGR) of 4.5% over the

last five years.

■ Returned $178 million to stockholders through dividends during 2022:

¨ Increased annual dividend for the 32nd straight year to 87.5 cents per share paid during 2022;
¨ Paid uninterrupted dividends for 85 straight years; and
¨ Member of the elite S&P High-Yield Dividend Aristocrats Index which recognizes companies within the S&P Composite 1500 Index

that have followed a managed dividend policy of consistently increasing dividends annually for at least 20 years.

■ Member of the S&P MidCap 400.

32 Years
of Consecutive

Dividend Increases

Dividends Paid
$836 Million
Over the Last 5 Years

85 Years
of Uninterrupted

Dividend Payments

MDU Resources Group, Inc. Proxy Statement 4

Earnings per Share from Continuing OperationsCAGR = 4.5%$1.38$1.69$1.95$1.87$1.8120182019202020212022$0.00$0.25$0.50$0.75$1.00$1.25$1.50$1.75$2.00
Proxy Statement

■ Corporate Governance Practices

MDU Resources is committed to strong corporate governance aligned with stockholder interests. The board, through its nominating and
governance committee, regularly monitors leading practices in governance and adopts measures that it determines are in the best interests
of the company and its stockholders. The following highlights our corporate governance practices and policies. See the sections entitled
“Corporate Governance” and “Executive Compensation” for more information on the following:

ü Annual Election of All Directors

ü Standing Committees Consist Entirely of Independent

Directors

ü Majority Voting for Directors

ü Active Investor Outreach Program

ü No Shareholder Rights Plan

ü One Class of Stock

ü Succession Planning and Implementation Process

ü Stock Ownership Requirements for Directors and Executive

Officers

ü Separate Board Chair and CEO

ü Anti-Hedging and Anti-Pledging Policies for Directors and

Executive Officers

ü Executive Sessions of Independent Directors at Every

Regularly Scheduled Board Meeting

ü No Related Party Transactions by Our Directors or Executive

Officers

ü Annual Board and Committee Self-Evaluations

ü Compensation Recovery/Clawback Policy

ü Risk Oversight by Full Board and Committees

ü Annual Advisory Approval on Executive Compensation

ü Environmental and Social Oversight by Full Board and

Board Committee

ü Mandatory Retirement for Directors at Age 76

ü Proxy Access for Stockholders

ü Directors May Not Serve on More Than Three Public Boards

Including the Company’s Board

ü All Directors are Independent Other Than Our CEO

ü Diverse Board in Terms of Gender, Race, Experience, Skills

and Tenure

Recognition for Gender Diversity

MDU Resources was recognized in 2022 for gender diversity on its board of directors:

50/50 Women on BoardsTM as a “3+” company for having three or more women on its board of directors.

5 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Director Nominees

The board recommends a vote FOR the election of each of the following nominees for director. Ten directors stand for election. Additional
information about each director’s background and experience can be found beginning on page 16.

Name

German Carmona
Alvarez

Director
Since
2022

Age

Thomas Everist

1995

Primary Occupation

Board Committees

Global president of applied intelligence of
Wood PLC

• Compensation
• Nominating and Governance

President and chair of The Everist Company,
an investment and land development company,
formerly engaged in aggregate, concrete, and
asphalt production

• Compensation
• Nominating and Governance

Karen B. Fagg

2005

Former vice president of DOWL LLC, dba
DOWL HKM, an engineering and design firm

• Compensation (Chair)
• Environmental and Sustainability

David L. Goodin

2013

Dennis W. Johnson

2001

Patricia L. Moss

2003

Dale S. Rosenthal

2021

President and chief executive officer,
MDU Resources Group, Inc.

Chair, president, and chief executive officer of
TMI Group Incorporated, manufacturers of
casework and architectural woodwork

Former president and chief executive officer of
Cascade Bancorp, a financial holding
company, subsequently merged into First
Interstate Bank

Former senior executive, including strategic
director, division president of Clark Financial
Group, and chief financial officer of Clark
Construction Group, a building and civil
construction firm

Executive officer

Chair of the board

• Compensation
• Environmental and Sustainability (Chair)

• Audit
• Nominating and Governance

Edward A. Ryan

2018

Former executive vice president and general
counsel of Marriott International

• Audit
• Nominating and Governance (Chair)

David M. Sparby

2018

Chenxi Wang

2019

Former senior vice president and group
president, revenue, of Xcel Energy and
president and chief executive officer of its
subsidiary, NSP-Minnesota

Founder and managing general partner of Rain
Capital Fund, L.P., a cybersecurity-focused
venture fund

• Audit (Chair)
• Environmental and Sustainability

• Audit
• Environmental and Sustainability

Independence

Board Refreshment

Tenure

Diversity

Gender

Four director
nominees are
women.

40%

Race/Ethnicity

Average
Tenure

11.5
Years

90%

New Members

The board has determined that all
director nominees, other than Mr.
Goodin, meet the independence
standards set by the NYSE and SEC.

Five new
members have
been elected
or appointed
to the board
over the last
five years.

0-4
Years

5-10
Years

11+
Years

The average tenure of the director nominees
reflects a balance of company experience and
new perspective.

Two director
nominees are

ethnically diverse. 20%

In addition to the director nominees described above, on January 24, 2023, the company entered into a cooperation agreement
(Cooperation Agreement) with Corvex Management LP, pursuant to which Corvex Management LP partner, James H. Gemmel, was appointed
as a non-voting board observer and, subject to Federal Energy Regulatory Commission (FERC) approval, to the board of directors. For further
details on the Cooperation Agreement, see the section entitled “Corporate Governance.”

MDU Resources Group, Inc. Proxy Statement 6

Proxy Statement

■ Compensation Highlights

The company’s executive compensation is based on providing market competitive compensation opportunities to attract top talent focused
on achievement of short and long-term business results. Our compensation program is structured to align compensation with the
company’s financial performance as a substantial portion of our executive compensation is directly linked to performance incentive awards.

■ Over 80% of our chief executive officer’s target compensation and approximately 70% of our other named executive officers’ target

compensation are at risk.

■ 100% of our named executive officers’ annual incentive and 75% of their long-term incentive are performance-based and tied to
performance against pre-established, specific, measurable goals. Time-vesting restricted stock units represent 25% of our named
executive officers’ long-term incentive and require the executive to remain employed with the company through the vesting period.

■ We require our executive officers to own a significant amount of company stock based upon a multiple of their base salary.

■ The 2022 annual cash incentive award program for executive officers included a diversity, equity and inclusion performance modifier

based upon the company’s achievement of certain measures to attract, retain, and develop a diverse and inclusive workforce.

2022 Named Executive Officer Target Pay Mix

At the 2022 Annual Meeting, the company’s advisory vote
to approve executive compensation received support from
over 95% of the common stock represented at the
meeting and entitled to vote on the matter.

7 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Key Features of Our Executive Compensation Program

What We Do

þ Pay for Performance - Annual incentive and the performance share award portion of the long-term incentive are tied to performance

measures set by the compensation committee and comprise the largest portion of executive compensation.

þ Independent Compensation Committee - All members of the compensation committee meet the independence standards under the

New York Stock Exchange listing standards and the Securities and Exchange Commission rules.

þ Independent Compensation Consultant - The compensation committee retains an independent compensation consultant to evaluate

executive compensation plans and practices.

þ Competitive Compensation - Executive compensation reflects executive performance, experience, relative value compared to other
positions within the company, relationship to competitive market value compensation, corporate and business segment economic
environment, and the actual performance of the overall company and the business segments.

þ Annual Cash Incentive - Payment of annual cash incentive awards is based on overall company performance measured in terms of
earnings per share in addition to business segment performance measured in terms of pre-established annual financial measures
for business segment executives.

þ Long-Term Equity Incentive - 2022 long-term incentive awards may be earned at the end of a three-year period. Payment of

performance share awards, which represent 75% of the executive's long-term incentive, are based on the achievement of pre-
established performance measures. Payment of time-vesting restricted stock unit shares, which represent 25% of the executive's
long-term incentive, are based on retention of the executive at the end of the three-year period. All long-term incentives are paid
through shares of common stock which encourages stock ownership by our executives.

þ Balanced Mix of Pay Components - The target compensation mix represents a balance of annual cash and long-term equity-based

compensation.

þ Mix of Financial Goals - Use of a mixture of financial goals to measure performance prevents overemphasis on a single metric.
þ Diversity, Equity and Inclusion Modifier - The 2022 annual cash incentive included a diversity, equity and inclusion (DEI) modifier
aimed at furthering the company’s diversity, equity and inclusion initiatives. The DEI modifier increases or decreases the annual
incentive up to 5% based on the compensation committee’s consideration of the company’s progress on DEI initiatives.

þ Annual Compensation Risk Analysis - Risks related to our compensation programs are regularly analyzed through an annual

compensation risk assessment.

þ Stock Ownership and Retention Requirements - Executive officers are required to own, within five years of appointment or promotion,
company common stock equal to a multiple of their base salary. Our CEO is required to own stock equal to six times his base
salary, and the other named executive officers are required to own stock equal to three times their base salary. The executive
officers also must retain at least 50% of the net after-tax shares of stock vested through the long-term incentive plan for the earlier
of two years or until termination of employment. Net performance shares must also be held until share ownership requirements are
met.

þ Clawback Policy - If the company’s audited financial statements are restated due to any material noncompliance with the financial
reporting requirements under the securities laws, the compensation committee may, or shall if required, demand repayment of
some or all incentives paid to our executive officers within the last three years.

What We Do Not Do

ý Stock Options - The company does not use stock options as a form of incentive compensation.
ý Employment Agreements - Executives do not, in the normal course, have employment agreements entitling them to specific

payments upon termination or a change of control of the company.

ý Perquisites - Executives do not receive perquisites that materially differ from those available to employees in general.
ý Hedge Stock - Executives are not allowed to hedge company securities.
ý Pledge Stock - Executives are not allowed to pledge company securities in margin accounts or as collateral for loans.
ý No Dividends or Dividend Equivalents on Unvested Shares - We do not provide for payment of dividends or dividend equivalents on

unvested share awards.

ý Tax Gross-Ups - Executives do not receive tax gross-ups on their compensation.

MDU Resources Group, Inc. Proxy Statement 8

Proxy Statement

■ Sustainability Highlights

MDU Resources is an essential services infrastructure company and
manages its business with a long-term view toward sustainable
operations, focusing on how economic, environmental, and social
impacts help the corporation continue Building a Strong America®.
We integrate sustainability efforts into our business strategy because
these efforts directly affect long-term business viability and
profitability. Our focus on sustainability helps ensure we are a good
corporate citizen while creating opportunities to increase revenues and
profitability, create a competitive advantage, and attract a skilled and
diverse workforce. We have invested significantly more time and
resources into our environmental, social and governance efforts in the
past several years. Highlights of our enhanced efforts and
achievements in the past year are set forth below. For the company’s
complete outline of environmental, governance and social
responsibilities, see our Sustainability Report. The information
provided in the Sustainability Report is not part of this Proxy
Statement and is not incorporated by reference as part of this Proxy
Statement.

Reporting Frameworks

To better serve our investors and other stakeholders, we report environmental, social, governance, and sustainability (ESG/sustainability)
metrics relevant and important to our operations in the frameworks that provide our stakeholders more uniform and transparent data and
information, allowing for comparison with our peers and other companies operating in our industries. For our applicable industries, we
report ESG/sustainability metrics using frameworks developed by the Sustainability Accounting Standards Board (SASB), the reporting
templates developed by the Edison Electric Institute (EEI) and the American Gas Association (AGA), and we continue to incorporate
guidance from the Task Force on Climate-Related Financial Disclosures (TCFD) into our reporting as summarized below:

Reporting Frameworks

Business Segment

SASB

AGA

EEI / AGA

TCFD

Construction Materials and Contracting

Construction Services

Pipeline

Electric and Natural Gas Utilities

We continue to enhance and expand our disclosure of the company’s governance, strategy, risk management,
and metrics and targets related to climate risk in accordance with guidance from the TCFD.

9 MDU Resources Group, Inc. Proxy Statement

Governance of Environmental and Social Responsibility

MDU Resources is committed to strong corporate governance practices in all areas, including governance of environmental and social
responsibility. For more information on the company’s governance practices and policies, see the “Corporate Governance” section in this
Proxy Statement. Below is an overview of our governance practices related to the oversight of environmental and social responsibility:

Proxy Statement

The board of directors is ultimately responsible for oversight
responsibility with respect to environmental, health, safety, and
other social sustainability matters applicable to the company.

The environmental and sustainability committee is a standing
committee of the board and meets quarterly in conjunction with the
regular board meetings. The committee assists the board in fulfilling
its oversight responsibilities with respect to environmental, social,
and other sustainability matters, including climate change risks and
opportunities, health, safety, and other social sustainability matters.

The management policy committee is comprised of the business unit
presidents and senior company officers. The committee meets
monthly, or more frequently as warranted, and is responsible for the
management of risks and pursuit of opportunities related to
environmental and social sustainability matters, including climate
change, health, safety, and other social sustainability matters.

The executive sustainability committee is comprised of corporate and
business unit senior executives and supports execution of the
company’s environmental and sustainability strategy and
establishes, maintains, and enhances the processes, procedures,
and controls for the company’s environmental and sustainability
disclosures.

Board of Directors

⇓

Environmental and Sustainability
Committee of the Board

⇓

Management Policy Committee

⇓

Executive Sustainability Committee

Environmental Stewardship

■ Carbon Footprint. While we have reported carbon emissions from our electric generating fleet for many years, as of January 1, 2022, we

began tracking our Scope 1 and Scope 2 carbon emissions across the company to establish our corporatewide baseline of emissions. For
more information on anticipated future reporting and emission reduction goals, see our Sustainability Report.

■ Retirement of Coal Facilities. We have ceased operating all wholly owned coal-fired generation facilities, with Units 1 and 2 at Heskett

Station near Mandan, North Dakota, being retired in early 2022 as more economical options exist to supply energy for our customers.
These retirements will further reduce our greenhouse gas emissions intensity as we progress toward our reduction target of 45% by
2030, compared to 2005 levels, from owned generating facilities. During 2022, Montana-Dakota Utilities Co. began construction of a
new 88-MW simple-cycle natural gas-fired combustion peaking turbine unit at the existing Heskett Station.

MDU Resources Group, Inc. Proxy Statement 10

Proxy Statement

■ Generation Capacity by Fuel Type. Montana-Dakota Utilities Co.’s historical and year-end 2022 total generating capacity by fuel type

shows the shift from coal to more renewable resources as follows:

■ Methane Emissions. We have established a near-term methane emissions intensity reduction target of 25% by 2030, compared to our
2020 rate, at our natural gas pipeline business. In addition WBI Energy, Inc. joined the One Nation’s Energy Future Coalition (ONE
Future Coalition) in 2022. The ONE Future Coalition is a group of more than 55 natural gas companies working together to voluntarily
reduce methane emissions across the natural gas value chain to 1% or less by 2025. It is comprised of some of the largest natural gas
production, gathering and boosting, processing, transmission and storage, and distribution companies in the U.S.

■ Climate Scenario Analysis. The company completed a climate scenario analysis in 2021 for its electric generation operations following

guidance from the TCFD.

■ Climate-Related Risks and Opportunities. In 2022, according to TCFD guidance, our businesses enhanced their understanding and

identification of our climate-related risks and opportunities over the short, medium and long term. This exercise helps us strategically
prepare to mitigate potential risks and optimize opportunities. Examples of some of the key items identified include:

☐

Both risks and opportunities from increased frequency and duration of severe weather events. For instance, property and facility
damage is a risk that can result from inclement weather. Weather-related damage also presents an opportunity, however, as our
construction businesses can provide infrastructure repair and reconstruction services.

Both risks and opportunities from efforts to decarbonize electric generation sources. This requires investment in, partnership with,
and construction of renewable energy sources, such as wind and solar generation and biogas producers. It is also expected that
natural gas will be needed as a backup generation fuel source for periods when renewable sources are unavailable.

Changes in public policy to address climate change could create risks and opportunities as demand for the company’s products
and services could be impacted, costs could escalate, and modifications and additional investment in our regulated energy
delivery business may be necessary to ensure reliability of service to customers.

We intend to include our full risks and opportunities assessment in the company’s 2022 Sustainability Report, which is expected to be
available in the third quarter of 2023.

■ Environmental Recognitions.

☐ Intermountain Gas Company received the 2022 ENERGY STAR® Market Leader Award for its efforts to promote energy-
efficient residential construction and help homebuyers and residents experience the quality, comfort, and value that
come with living in an ENERGY STAR-certified home or apartment.

■ Renewable Diesel. In 2021, a number of Knife River Corporation’s west coast operations used renewable diesel fuel in their on-road and
off-road fleets. Engine performance, engine maintenance, and fuel efficiency results were positive during the pilot, and Knife River
Corporation is beginning to utilize renewable diesel in more locations where feasible. In Oregon, Knife River Corporation has successfully
piloted the use of renewable diesel fuel in its on-road and off-road fleet vehicles, reducing GHG emissions and improving fuel efficiency,
and expects that greater than 90% of its 2023 diesel consumption in Oregon (and approximately 18% of its company-wide diesel
consumption) will be renewable diesel.

11 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

■ Environmental-Related Investments. Knife River Corporation has invested in Blue Planet Systems Corporation to pursue the use of

synthetic aggregates in ready-mix concrete. Blue Planet Systems Corporation is testing methods of creating synthetic limestone by using
carbon dioxide captured from existing sources. The synthetic limestone could then be used as a component of concrete. In addition to
sequestering carbon dioxide through this process, the use of synthetic limestone could also prolong the life of natural aggregate sources.

■ Warm-Mix Asphalt. Knife River Corporation produces and places warm-mix asphalt in applications where warm-mix asphalt is allowed.
Warm-mix asphalt is produced at cooler temperatures than traditional hot-mix asphalt methods, which reduces the amount of fuel
needed in the production process, thereby reducing emissions and fumes.

■ Recycling. Knife River Corporation continues its long-standing practice of recycling and reusing building materials. Recycling conserves
natural resources, uses less energy, reduces waste disposal at local landfills, and ultimately costs less for our customers. Knife River
Corporation recycles or reuses asphalt pavement, pre-consumer asphalt shingles, refined fuel oil, demolition concrete, returned concrete
at ready-mix plants, fly ash, slag, silica fume and other cement-replacement materials, and dimension stone reject material.

■ Energy Efficiency. Our utility companies actively pursue programs to increase energy efficiency and conservation for electric and natural
gas customers. This includes partnering with local community action agencies in providing low-income assistance for utility customers
and offering residential and commercial incentive programs that promote installation of energy-efficient electric and natural gas
equipment.

■ Renewable Natural Gas. Our utility companies are pursuing additional opportunities to provide renewable natural gas to customers. We
have produced renewable natural gas from the Billings, Montana, landfill for customer use since 2010. In Idaho, three dairy digesters
have been adding renewable natural gas to our system for customer use since 2020.

Social Responsibility

MDU Resources knows that it operates at the discretion of various stakeholders, including customers, stockholders, employees,
regulators, lawmakers, and the communities where we do business. It is these stakeholders who allow us to conduct our business and
are vital to our success. MDU Resources remains committed to maintaining the trust of these stakeholders by operating with integrity
and being a good corporate citizen. Below are highlights of our social responsibility programs relating to our employees, stockholders,
communities, and customers.

■ Our Employees and Human Capital Management. At the core of Building a Strong America® is building a strong workforce. At MDU

Resources, this means building a strong team of employees with a focus on integrity and safety and a commitment to diversity, equity,
and inclusion. Our team included 14,929 employees located in 44 states plus Washington D.C. as of December 31, 2022. Our number
of employees peaked in the third quarter at just over 16,800. Our Employer Information Report EEO-1 is available on our website at
www.mdu.com/careers. The information on our website is not part of this Proxy Statement and is not incorporated by reference into this
Proxy Statement.

☐ Diversity, Equity, and Inclusion. MDU Resources is committed to an inclusive environment that respects
the differences and embraces the strengths of our diverse employees. Essential to the company’s
success is its ability to attract, retain, and engage the best people from a broad range of backgrounds
and build an inclusive culture where all employees feel valued and contribute their best. To aid in the
company’s commitment to an inclusive environment, each business segment has a diversity officer who
serves as a conduit for diversity-related issues and provides a voice for all employees. The company
requires employees to participate in training on the company’s code of conduct and additional courses
focusing on diversity, effective leadership, equal employment opportunity, workplace harassment,
respect, and unconscious bias. The company has three strategic goals related to diversity:

• Enhance collaboration efforts through cooperation and sharing of best practices to create new ways of meeting employee,

customer, and stockholder needs;

• Maintain a culture of integrity and safety by ensuring employees understand these essential values, which are part of the

company’s vision statement; and

• Increase productivity and profitability through the creation of a work environment that values all perspectives and methods of

accomplishing work.

MDU Resources Group, Inc. Proxy Statement 12

Proxy Statement

☐ CEO Action for Diversity and Inclusion Pledge. In March 2022, MDU Resources’ chief executive officer signed the CEO Action for
Diversity and Inclusion Pledge, joining more than 2,000 chief executive officers in signing and committing to four goals to be a
catalyst for further conversations and action around diversity and inclusion in the workplace. The four goals include:

• Cultivating environments that support open dialogue on complex and often-difficult conversations.

• Implementing and expanding unconscious bias education and training.

• Sharing best-practice diversity, equity and inclusion programs and initiatives.

• Engaging boards of directors when developing and evaluating diversity, equity and inclusion strategies.

☐ Executive Compensation and Diversity, Equity, and Inclusion. In February 2022, the board of directors approved a performance modifier
for the 2022 annual incentive award program for executive officers based upon the company’s achievement of certain measures to
attract, retain, and develop a diverse and inclusive workforce. The DEI modifier includes a focus on representation of diverse
employees in executive succession plans, outreach efforts to attract diverse candidates for open positions at the company,
implementing enhanced diversity, equity, and inclusion training and mentoring for new employees, and development of enhanced
employee data dashboards to further support the company’s efforts to attract, retain, and develop a diverse and inclusive workforce.
For more information on the DEI modifier and the results for 2022, please refer to the “2022 Compensation for Our Named
Executive Officers” section in the “Compensation Discussion and Analysis.”

☐ Building People. Building a strong workforce begins with employee recruitment. The company uses a variety of means to recruit new
employees for open positions, including posting on the company’s website, employee referrals, union workforce, direct recruitment,
advertising, social media, career fairs, partnerships with colleges and technical schools, job service organizations, and associations
connected with a variety of professions. The company also utilizes internship programs to introduce individuals to the company’s
business operations and provide a possible source of future employees. Building a strong workforce also requires developing
employees in their current positions and for future advancement. The company provides opportunities for advancement through job
mobility, succession planning, and promotions both within and between business segments. The company provides employees the
opportunity to further develop and grow through various forms of training, mentorship programs, and internship programs.

☐ Knife River Training Center. While labor challenges continue to impact many construction companies, Knife River Corporation is

actively engaged in attracting, training and retaining the next generation of construction-industry employees. In February 2022, the
company completed a state-of-the-art training center on a 230-acre tract of property in the Pacific Northwest, featuring an 80,000
square-foot heated indoor arena for training on trucks and heavy equipment and an attached 16,000 square-foot classroom and
conference room facility. The center is used company-wide to enhance the skills of current employees and to recruit and teach skills
to new employees through both classroom education and hands-on experience. It also is used by Knife River Corporation’s customers
and industry peers, who send employees to the center to take courses on heavy equipment, truck driving, leadership development,
facilitator training, safety training and more.

In 2022, the center hosted approximately 4,500 individuals for various trainings, classes, meetings and events. The facility plays a
critical role in Knife River Corporation’s workforce remaining sustainable and contributes to showcasing construction as a career of
choice.

Knife River Corporation’s outreach efforts to market the training center have included interfacing with historically underrepresented
groups, and the company has partnered with the National Association of Minority Contractors to provide scholarships for training to
qualifying employees of minority-owned businesses.

☐ The Knife River Corporation training center received the 2022 Risk Management Excellence Award presented by Liberty
Mutual Insurance Company. The award recognizes outstanding employee health and safety achievement related to an
industry-leading, state-of-the-art training center leading to better training and lowering risks to the employees and
general public. Liberty Mutual Insurance Company has granted this award less than 20 times in their 100-year history.

☐ Safety. The company is committed to safety and health in the workplace. To ensure safe work environments, the company provides
training, adequate resources, and appropriate follow-up on any unsafe conditions or actions. The company has policies and training
that support safety in the workplace, including training on safety matters through classroom and toolbox meetings on job sites. To
facilitate a strong safety culture, MDU Resources has a safety leadership council that aims to identify and adopt best management
practices to aid in the prevention of occupation injuries and illness.

13 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

☐ Ethics Reporting. MDU Resources’ employees are encouraged to ask questions or report concerns to their supervisor. If employees
have concerns that something may be unethical or illegal within the company, they are encouraged to report their concerns to a
human resources representative, a company executive, or their compliance officer. For those wishing to remain anonymous, MDU
Resources also has an anonymous reporting hotline. Employees, customers, and other stakeholders can report confidentially and
anonymously through this third-party telephone and internet-based reporting system any concerns about possible unethical or illegal
activities. Reports are carefully considered and investigated. Summaries of the reports and investigative results are provided to the
audit committee of the board of directors.

■ Vendor Code of Conduct. MDU Resources has a Vendor Code of Conduct that outlines our expectations of vendors, including ethical

business practices, workplace safety, environmental stewardship and compliance with applicable laws and regulations.

■ Our Stockholders. MDU Resources’ management is committed to acting in the best interest of the corporation, protecting its assets, and
serving the long-term interests of the company’s stockholders. This includes protecting our tangible interests, such as property and
equipment, as well as intangible assets, such as our reputation, information, and intellectual property. For information on our
stockholder outreach program, see “Stockholder Engagement” in the section entitled “Corporate Governance” of this Proxy Statement.

■ Our Communities.

☐ Community Health and Safety. The pipeline and natural gas utility companies’ pipeline integrity and safety management programs

provide guidelines for the continual evaluation of their pipeline systems using risk-based criteria that allows our companies to take
proactive measures to ensure public safety and protect the environment. In addition, the pipeline safety management systems are
comprehensive, continuous improvement programs designed to promote a culture dedicated to employee and public safety and
environmental protection while maintaining the safety and reliability of our natural gas distribution, transmission, and storage
facilities.

☐ Charitable Giving. MDU Resources is proud of its record of

supporting qualified organizations that enhance quality of life.
Our philanthropic goal is to be a “neighbor of choice.” The MDU
Resources Foundation was incorporated in 1983 to support the
corporation’s charitable efforts and has contributed more than
$42 million to worthwhile organizations. In 2022, the MDU
Resources Foundation contributed $2.3 million to charitable
organizations. In addition to contributions through the MDU
Resources Foundation, our business segments and companies
regularly make charitable donations and in-kind donations to the
communities where they do business.

☐ Volunteerism. We encourage and support community volunteerism by our employees. The MDU Resources Foundation contributes a
$750 grant to an eligible nonprofit organization after an employee or group of employees volunteer a minimum of 25 hours to the
organization during non-company hours in a calendar year. Eligible organizations are local 501(c) nonprofit organizations providing
services in categories of civic and community activities, culture and arts, education, environment, and health and human services. In
2022, the foundation granted $98,000 under this program, matching over 6,929 employee volunteer hours.

☐ Education. We encourage support of educational institutions by all employees. The MDU Resources Foundation matches contributions

up to $750 to educational institutions by employees. In addition, the MDU Resources Foundation maintains two separate
scholarship programs, which includes funding scholarship programs at institutions of higher education and scholarships for employee
family members.

MDU Resources Group, Inc. Proxy Statement 14

2022 Foundation ContributionsCivic/Community (34%)Culture/Art (4%)Education (27%)Environment (4%)Health/Human Services (30%)

Proxy Statement

■ Our Customers.

☐ Our utility companies consistently rank high in customer satisfaction. In the J.D. Power 2022 Gas Utility Residential
Customer Satisfaction StudySM, Cascade Natural Gas Corporation ranked first, Intermountain Gas Company third, and
Montana-Dakota Utilities Co. sixth among mid-size natural gas utilities in the west region.

☐ Montana-Dakota Utilities Co. was announced as an Edison Electric Institute (EEI) Emergency Response Award recipient.
Presented to EEI member companies, the Emergency Response Awards recognize recovery and assistance efforts of
electric companies following service disruptions caused by extreme weather or other natural events.

The company believes in corporate social responsibility and the fundamental commitment to its stakeholders: customers,
employees, suppliers, communities, and stockholders. With the company’s origin and rich history in providing electric and
natural gas utility service to rural communities in North Dakota, South Dakota, Montana, and Wyoming, our utility
companies have long operated under the motto “In the Community to Serve®.” Infrastructure is our business and we define
our purpose as “Building a Strong America®” in recognition of our mission to deliver value to our stakeholders.

15 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

BOARD OF DIRECTORS

ITEM 1. ELECTION OF DIRECTORS

The board currently consists of ten directors, all of whom are standing for election to the board at the 2023 annual meeting to hold office
until the 2024 annual meeting and until their successors are duly elected and qualified.

The board has affirmatively determined all the director nominees, other than David L. Goodin, our president and chief executive officer, are
independent in accordance with New York Stock Exchange (NYSE) rules, our governance guidelines, and our bylaws.

Our bylaws provide for a majority voting standard for the election of directors. See “Additional Information - Majority Voting” below for
further detail.

Each of the director nominees has consented to be named in this Proxy Statement and to serve as a director, if elected. We do not know of
any reason why any nominee would be unable or unwilling to serve as a director, if elected. If a nominee becomes unable to serve or will not
serve, proxies may be voted for the election of such other person nominated by the board as a substitute or the board may choose to reduce
the number of directors.

Information about each director nominee’s share ownership is presented under “Security Ownership.”

The shares represented by the proxies received will be voted for the election of each of the ten nominees named below unless you indicate
in the proxy that your vote should be cast against any or all the director nominees or that you abstain from voting. Each nominee elected as
a director will continue in office until his or her successor has been duly elected and qualified or until the earliest of his or her resignation,
retirement, or death.

The ten nominees for election to the board at the 2023 annual meeting, all proposed by the board upon recommendation of the nominating
and governance committee, are listed below with brief biographies. The nominees’ ages are current as of December 31, 2022.

On January 24, 2023, the company entered into the Cooperation Agreement with Corvex Management LP, pursuant to which Corvex
Management LP partner, James H. Gemmel, was appointed as a non-voting board observer and, subject to FERC approval, to the board of
directors. For further details on the Cooperation Agreement, see the section entitled “Corporate Governance.”

On August 4, 2022, the company announced its intention to separate its indirect, wholly owned subsidiary, Knife River Corporation, from
the company. The separation is anticipated to result in two independent, publicly traded companies. If the spin-off transaction is
completed, the company expects that one or more of its directors may become directors of Knife River Corporation, in which case they will
resign from the company’s board of directors at such time.

The board of directors recommends that the stockholders

vote FOR the election of each nominee.

MDU Resources Group, Inc. Proxy Statement 16

Proxy Statement

Director Nominees

German Carmona Alvarez
Age 54

Independent Director Since 2022
Compensation Committee
Nominating and Governance Committee

Key Contributions to the Board: With 15 years of global experience in the building materials industry, Mr.
Carmona Alvarez brings broad industry expertise to the board. Mr. Carmona Alvarez also contributes experience
and expertise in human capital management, digital and information technology, finance, and mergers and
acquisitions.

Career Highlights

• Global president of applied intelligence of the consulting and engineering company Wood PLC, Aberdeen, United Kingdom, since 2021.

Director of Wood PLC USA, Houston, Texas, the United States affiliate of Wood PLC, since 2022.

• Senior vice-president and global digital practice leader of NEORIS, a technology and digital strategy consulting firm with presence in 27

countries focusing on the design strategy and execution of agile digital transformation programs, from March 2019 to July 2021.

• Executive vice-president finance, information technology and shared services of CEMEX Inc., a global building materials company from
2016 to 2019; senior vice president of continuous improvement and commercial strategy from 2014 to 2016; senior vice president of
aggregates and mining resources from 2012 to 2014; global vice president of organization, compensation and benefits from
2009-2012; global vice president of human resources planning and development from 2006 to 2009; corporate vice president of
human capital from 2004 to 2006.

• Senior principal of strategy and transformation of The Boston Consulting Group, a general management consulting firm that practices in

business strategy, from 2000 to 2004.

Other Leadership Experience

• Former board chair of Strata.ai, a strategy and venture building firm focused on decision science, artificial intelligence and extended

reality, from 2020 to 2022.

• Former board of trustees of ITESM/Tec Milenio, a private institution of higher education, from 2010 to 2017.

Thomas Everist
Age 73

Independent Director Since 1995
Compensation Committee
Nominating and Governance Committee

Key Contributions to the Board: With a 44-year career in the construction materials and mining industry,
Mr. Everist brings critical knowledge of the construction materials and contracting industry to the board.
Mr. Everist also contributes strong business leadership and management capabilities and insights through
his role as president and chair of his companies for over 35 years. His experience on the board of another
public company further enhances his contributions to the board.

Career Highlights

• President and chair of The Everist Company, Sioux Falls, South Dakota, an investment and land development company, since April

2002. Prior to January 2017, The Everist Company was engaged in aggregate, concrete, and asphalt production.

• Managing member of South Maryland Creek Ranch, LLC, a land development company, since June 2006; president of SMCR, Inc., an
investment company, since June 2006; and managing member of MCR Builders, LLC, which provides residential building services to
South Maryland Creek Ranch, LLC, since November 2014.

• Director and chair of Everist Genomics, Inc., Ann Arbor, Michigan, a company that provided solutions for personalized medicines, from

May 2002 to July 2021, and chief executive officer from August 2012 to December 2012.

• President and chair of L.G. Everist, Inc., Sioux Falls, South Dakota, an aggregate production company, from 1987 to April 2002.

Other Leadership Experience

• Director of publicly traded Raven Industries, Inc., Sioux Falls, South Dakota, a general manufacturer of electronics, flow controls, and

engineered films, from May 1996 to December 2021, and chair from April 2009 to May 2017.

• Director and compensation committee chair of Bell, Inc., Sioux Falls, South Dakota, a manufacturer of folding cartons and packages,

from April 2011 to July 2022.

• Director and audit committee chair of Showplace Wood Products, Inc., Sioux Falls, South Dakota, a custom cabinets manufacturer,

since January 2000.

• Director of Angiologix Inc., Mountain View, California, a medical diagnostic device company, from July 2010 through October 2011

when it was acquired by Everist Genomics, Inc.

• Member of the South Dakota Investment Council, the state agency responsible for investing state funds, from July 2001 to June 2006.

17 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Karen B. Fagg
Age 69

Independent Director Since 2005
Compensation Committee
Environmental and Sustainability Committee
Key Contributions to the Board: Through her management experience and knowledge in the fields of engineering,
environment, and energy resource development, including four years as director of the Montana Department of
Natural Resources and Conservation and over eight years as president, chief executive officer, and chair of her
own engineering and environmental services company, as well as her service on a number of Montana state and
community boards, Ms. Fagg contributes experience in responsible natural resource development with an
informed perspective of the construction, engineering, and energy industries.

Career Highlights

• Vice president of DOWL LLC, dba DOWL HKM, an engineering and design firm, from April 2008 until her retirement in December 2011.

• President of HKM Engineering, Inc., Billings, Montana, an engineering and environmental services firm, from April 1995 to June 2000,

and chair, chief executive officer, and majority owner from June 2000 through March 2008. HKM Engineering, Inc. merged with
DOWL LLC in April 2008.

• Employed with MSE, Inc., Butte, Montana, an energy research and development company, from 1976 through 1988, and vice president

of operations and corporate development director from 1993 to April 1995.

• Director of the Montana Department of Natural Resources and Conservation, the state agency charged with promoting stewardship of
Montana’s water, soil, energy, and rangeland resources; and administering several grant and loan programs, from 1989 through 1992.

Other Leadership Experience

• Director and member of the quality committee of the Intermountain Health Peaks Region Board, since January 2023.

• Director and finance committee chair of the Montana State Fund, the state’s largest workers’ compensation insurance company, from

March 2021 to present; Director of SCL Health Montana Regional Board from January 2020 to present, including a term as chair; and
member of Carroll College Board of Trustees from 2005 through 2010, and from August 2019 through June 2022.

• Former member of several regional, state, and community boards, including director of St. Vincent’s Healthcare from October 2003 to
October 2009 and January 2016 through January 2020, including a term as chair; director of the Billings Catholic Schools Board from
December 2011 through December 2018, including a term as chair; the First Interstate BancSystem Foundation from June 2013 to
2016; the Montana Justice Foundation from 2013 to 2015; Montana Board of Investments from 2002 through 2006; Montana State
University’s Advanced Technology Park from 2001 to 2005; and Deaconess Billings Clinic Health System from 1994 to 2002.

David L. Goodin
Age 61

Director Since 2013
President and Chief Executive Officer

Key Contributions to the Board: Serving as president and chief executive officer of MDU Resources Group, Inc.
since 2013, Mr. Goodin is the only officer of the company that serves on our board. With 30 years of operating
and leadership positions with our utility operations and ten years in his current position, he brings utility
industry experience to the board as well as extensive knowledge of our company and its business operations.
He contributes valuable insight into management’s views and perspectives and the day-to-day operations of the
company.

Career Highlights

• President and chief executive officer and a director of the company since January 4, 2013.

• Prior to January 4, 2013, served as chief executive officer and president of Intermountain Gas Company, Cascade Natural Gas

Corporation, Montana-Dakota Utilities Co., and Great Plains Natural Gas Co.

• Began his career in 1983 at Montana-Dakota Utilities Co. as a division electrical engineer and served in positions of increasing
responsibility until 2007 when he was named president of Cascade Natural Gas Corporation; positions included division electric
superintendent, electric systems manager, vice president-operations, and executive vice president-operations and acquisitions.

Other Leadership Experience

• Member of the U.S. Bancorp Western North Dakota Advisory Board since January 2013.

• Director of Sanford Bismarck, an integrated health system dedicated to the work of health and healing, and Sanford Living Center, from

January 2011 through December 2021.

• Board member of the BSC Innovations Foundation, an extension of Bismarck State College providing curriculum to Saudi Arabia

industries, since August 1, 2018.

• Current vice chair of the North Dakota State University (NDSU) Foundation and Alumni Association, a foundation with a mission of

cultivating a culture of philanthropy through educating students, engaging alumni and supporters, and growing future leaders.

• Former board member of numerous industry associations, including the American Gas Association, the Edison Electric Institute, the

North Central Electric Association, the Midwest ENERGY Association, and the North Dakota Lignite Energy Council.

MDU Resources Group, Inc. Proxy Statement 18

Proxy Statement

Dennis W. Johnson
Age 73

Independent Director Since 2001
Chair of the Board

Key Contributions to the Board: With over 48 years of experience in business management, manufacturing,
and finance, holding positions as chair, president, and chief executive officer of TMI Group Incorporated for 41
years, as well as his prior service as a director of the Federal Reserve Bank of Minneapolis, Mr. Johnson brings
operational, management, strategic planning, specialty contracting, and financial knowledge and insight to the
board. Mr. Johnson also contributes significant knowledge of local, state, and regional issues involving North
Dakota, the state where we are headquartered and have significant operations, resulting from his service on
several state and local organizations.

Career Highlights

• Chair of the board of the company effective May 8, 2019; and vice chair of the board from February 15, 2018 to May 8, 2019.

• Chair, president, and chief executive officer of TMI Group Incorporated as well as its two wholly owned subsidiary companies, TMI
Corporation and TMI Transport Corporation, manufacturers of casework and architectural woodwork in Dickinson, North Dakota;
employed since 1974 and serving as president or chief executive officer since 1982.

Other Leadership Experience

• Member of the Bank of North Dakota Advisory Board of Directors since August 2017, currently serving as vice chair.

• President of the Dickinson City Commission from July 2000 through October 2015.

• Director of the Federal Reserve Bank of Minneapolis from 1993 through 1998.

• Served on numerous industry, state, and community boards, including the North Dakota Workforce Development Council (chair); the

Decorative Laminate Products Association; the North Dakota Technology Corporation; and the business advisory council of the Steffes
Corporation, a metal manufacturing and engineering firm.

• Served on North Dakota Governor Sinner’s Education Action Commission; the North Dakota Job Service Advisory Council; the North
Dakota State University President’s Advisory Council; North Dakota Governor Schafer’s Transition Team; and chaired North Dakota
Governor Hoeven’s Transition Team.

Patricia L. Moss
Age 69

Independent Director Since 2003
Compensation Committee
Environmental and Sustainability Committee

Other Current Public Boards:
--First Interstate BancSystem, Inc.
--Aquila Group of Funds

Key Contributions to the Board: With substantial experience in the finance and banking industry, including
service on the boards of public banking and investment companies, Ms. Moss contributes broad knowledge of
finance, business development, human resources, and compliance oversight, as well as public company
governance, to the board. Through her business experience and knowledge of the Pacific Northwest, Ms. Moss
also provides insight on state, local, and regional economic and political issues where a significant portion of
our operations and the largest number of our employees are located.

Career Highlights

• President and chief executive officer of Cascade Bancorp, a financial holding company, Bend, Oregon, from 1998 to January 3, 2012;
chief executive officer of Cascade Bancorp’s principal subsidiary, Bank of the Cascades, from 1998 to January 3, 2012, serving also as
president from 1998 to 2003; and chief operating officer, chief financial officer and secretary of Cascade Bancorp from 1987 to 1998.

Other Leadership Experience

• Member of the Oregon Investment Council, which oversees the investment and allocation of all state of Oregon trust funds, from

December 2018 to March 2021.

• Director of First Interstate BancSystem, Inc., since May 30, 2017.

• Director of Cascade Bancorp and Bank of the Cascades from 1993, and vice chair from January 3, 2012 until May 30, 2017 when

Cascade Bancorp merged into First Interstate BancSystem, Inc., and became First Interstate Bank.

• Chair of the Bank of the Cascades Foundation Inc. from 2014 to July 31, 2018; co-chair of the Oregon Growth Board, a state board

created to improve access to capital and create private-public partnerships, from May 2012 through December 2018; and a member of
the Board of Trustees for the Aquila Group of Funds, whose core business is mutual fund management and provision of investment
strategies to fund shareholders, from January 2002 to May 2005 (one fund) and from June 2015 to present (currently three funds).

• Former director of the Oregon Investment Fund Advisory Council, a state-sponsored program to encourage the growth of small businesses

in Oregon; the Oregon Business Council, with a mission to mobilize business leaders to contribute to Oregon’s quality of life and
economic prosperity; the North Pacific Group, Inc., a wholesale distributor of building materials, industrial, and hardwood products; and
Clear Choice Health Plans Inc., a multi-state insurance company.

19 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Dale S. Rosenthal
Age 66

Independent Director Since 2021
Audit Committee
Nominating and Governance Committee

Key Contributions to the Board: With 22 years of experience with an integrated construction company, serving in
senior executive positions as strategic director, division president, and chief financial officer, Ms. Rosenthal
contributes expertise in construction, alternative energy, real estate and infrastructure development, risk
management, and corporate strategy. Ms. Rosenthal also brings public board experience with a regulated
public utility company.

Career Highlights

• Strategic director of Clark Construction Group, LLC, a vertically integrated construction company headquartered in Bethesda, Maryland,

from January 2017 to December 2017; division president of Clark Financial Services Group, leveraging Clark’s core turnkey construction
expertise into alternative energy development, from April 2008 to December 2016; chief financial officer and senior vice president of
Clark Construction Group, LLC, from April 2000 to April 2008; and established a Clark subsidiary, Global Technologies Group, which
developed and built data centers for early internet service providers. Ms. Rosenthal joined Clark Construction in 1996.

• Led financing teams for several tax-credit financed housing developers and was instrumental in identifying new sources of funding and

innovative tax structures for complex transactions.

Other Leadership Experience

• Director of Washington Gas Light Company, formerly publicly traded and now a subsidiary of AltaGas Ltd., since October 2014, and

chair of the audit committee from 2018 to 2022. Washington Gas is a regulated public utility company that sells and delivers natural
gas in the District of Columbia and surrounding metropolitan areas.

• Board advisor of Langan Engineering & Environmental Services, a provider of an integrated mix of engineering and environmental

consulting services in support of land development projects, corporate real estate portfolios, and the oil and gas industry, since March
2020.

• Member, Board of Trustees of Cornell University since June 2017, serving on the finance and building and properties committees.

• Director of Transurban Chesapeake LLC, a company that develops and operates toll roads in the Mid-Atlantic region, since August 2021,

and chair of the audit committee since 2022.

Edward A. Ryan
Age 69

Independent Director Since 2018
Audit Committee
Nominating and Governance Committee

Key Contributions to the Board: As a former executive vice president and general counsel for a large public
company with international operations, Mr. Ryan contributes expertise to the board in the areas of corporate
governance, acquisitions, risk management, legal, compliance, and labor relations. Mr. Ryan also brings
senior leadership, transactional, and public company experience.

Career Highlights

• Advisor to the chief executive officer and president of Marriott International from December 2017 to December 31, 2018.

• Executive vice president and general counsel of Marriott International from December 2006 to December 2017; senior vice president
and associate general counsel from 1999 to November 2006; and assumed responsibility for all corporate transactions and corporate
governance in 2005. Mr. Ryan joined Marriott International as assistant general counsel in May 1996.

• Private law practice from 1979 to 1996.

Other Leadership Experience

• Director of C&O Canal Trust, a non-profit partner of the Chesapeake & Ohio Canal National Historical Park, that works in conjunction
with the National Park Service and local communities for park preservation highlighting the park’s historical, natural and cultural
heritage, while embracing the principles of diversity, equity, and inclusion in its work, since January 2022, and chair of the nominating
and governance committee since January 2023.

• Director and finance committee member of Goodwill of Greater Washington, D.C., a non-profit organization whose mission is to transform
lives and communities through education and employment, since January 2015, including a term as chair from January 2020 through
December 2021, vice chair from January 2019 through December 2019, and chair of the finance committee from January 2018
through December 2019.

• Board advisor of Workbox Company, a startup company that provides collaborative coworking space and accelerator services, since

January 2020.

MDU Resources Group, Inc. Proxy Statement 20

Proxy Statement

David M. Sparby
Age 68

Independent Director Since 2018
Audit Committee
Environmental and Sustainability Committee

Key Contributions to the Board: With over 32 years of public utility management and leadership experience with
a large public utility company, including positions as senior vice president and as chief financial officer,
Mr. Sparby provides a broad understanding of the public utility and natural gas pipeline industries, including
renewable energy expertise. His lengthy senior leadership experience with a public company also contributes
to the board.

Career Highlights

• Senior vice president and group president, revenue, of Xcel Energy and president and chief executive officer of its subsidiary, NSP-

Minnesota, from May 2013 until his retirement in December 2014; senior vice president and group president, from September 2011 to
May 2013; chief financial officer from March 2009 to September 2011; and president and chief executive officer of NSP-Minnesota
from 2008 to March 2009. He joined Xcel Energy, or its predecessor Northern States Power Company, as an attorney in 1982 and held
positions of increasing responsibility.

• Attorney with the State of Minnesota, Office of Attorney General, from 1980 to 1982, during which period his responsibilities included

representation of the Department of Public Service and the Minnesota Public Utilities Commission.

Other Leadership Experience

• Board of Trustees of Mitchell Hamline School of Law from July 2011 to July 2020.

• Board of Trustees of the College of St. Scholastica since July 2012, including service as chair from September 2020 to August 2022.

Chenxi Wang
Age 52

Independent Director Since 2019
Audit Committee
Environmental and Sustainability Committee

Key Contributions to the Board: Having significant technology and cybersecurity expertise through her
management and leadership positions with several organizations, Ms. Wang contributes knowledge to the
board on technology and cybersecurity issues. As the founder and managing general partner of a cybersecurity-
focused venture fund, Ms. Wang also provides knowledge regarding capital markets and business development.

Career Highlights

• Founder and managing general partner of Rain Capital Fund, L.P., a cybersecurity-focused venture fund aiming to fund early-stage,
transformative technology innovations in the security market with a goal of supporting women and minority entrepreneurs, since
December 2017.

• Chief strategy officer at Twistlock, Inc., an automated and scalable cloud native cybersecurity platform, from August 2015 to March

2017.

• Vice president, cloud security & strategy of CipherCloud, LLC, a cloud security software company, from January 2015 to August 2015.

• Vice president of strategy of Intel Security, a company focused on developing proactive, proven security solutions and services that

protect systems, networks, and mobile devices, from April 2013 to January 2015.

• Principal analyst and vice president of research at Forrester Research, a market research company that provides advice on existing and

potential impact of technology, from January 2007 to April 2013.

• Assistant research professor and associate professor of computer engineering at Carnegie Mellon University from September 2001

through August 2007.

• Founder and director of Forte Group, an advocacy and education non-profit organization focusing on women in the cybersecurity

industry, since November 2022.

Other Leadership Experience

• Technical Board of Advisors of Secure Code Warriors, a Sydney-based cybersecurity company, since June 2019.

• Board of directors of OWASP Global Foundation, a nonprofit global community that drives visibility and evolution in the safety and

security of the world’s software, from January 2018 to December 2019, including a term as vice chair.

• Recipient of the 2019 Investor in Women Award by Women Tech Founders Foundation, an organization dedicated to advancing women

in the technology industry.

• Board observer of ProjectDiscovery, Inc., an open-source software company that simplifies security operations for engineers and

developers, since October 2022.

• Board observer of Stanza System, Inc., a company that specializes in site reliability engineering, since November 2022.

21 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Additional Information - Majority Voting
A majority of votes cast is required to elect a director in an uncontested election. A majority of votes cast means the number of votes cast
“for” a director’s election must exceed the number of votes cast “against” the director’s election. “Abstentions” and “broker non-votes” do
not count as votes cast “for” or “against” the director’s election. In a contested election, which is an election in which the number of
nominees for director exceeds the number of directors to be elected and which we do not anticipate, directors will be elected by a plurality
of the votes cast.

Unless you specify otherwise when you submit your proxy, the proxies will vote your shares of common stock “for” all directors nominated by
the board of directors. If a nominee becomes unavailable for any reason or if a vacancy should occur before the election, which we do not
anticipate, the proxies will vote your shares in their discretion for another person nominated by the board.

Our policy on majority voting for directors contained in our corporate governance guidelines requires any proposed nominee for re-election as
a director to tender to the board, prior to nomination, his or her irrevocable resignation from the board that will be effective, in an
uncontested election of directors only, upon:

• receipt of a greater number of votes “against” than votes “for” election at our annual meeting of stockholders; and

• acceptance of such resignation by the board of directors.

Following certification of the stockholder vote, the nominating and governance committee will promptly recommend to the board whether or
not to accept the tendered resignation. The board will act on the nominating and governance committee’s recommendation no later than 90
days following the date of the annual meeting.

Brokers may not vote your shares on the election of directors if you have not given your broker specific instructions on how to vote. Please
be sure to give specific voting instructions to your broker so your vote can be counted.

MDU Resources Group, Inc. Proxy Statement 22

Proxy Statement

Board Evaluations and Process for Selecting Directors

Our corporate governance guidelines require that the board, in coordination with the nominating and governance committee, annually
reviews and evaluates the performance and functioning of the board and its committees.

The board evaluation process includes the following steps:

1 QUESTIONNAIRES
During 2022, each director completed an anonymous written questionnaire with the
opportunity to provide comments. In addition, committee members completed a
separate written questionnaire related to the operation of the respective committees.

2 BOARD SUMMARY AND FEEDBACK
The results of the written questionnaires were anonymously aggregated and provided
to the board and each committee. Key strengths and opportunities for improvement of
the board and each committee were reviewed and discussed in an executive session
of the board in connection with this process.

3 BOARD SUCCESSION
As part of the annual board evaluation process, the nominating and governance
committee evaluates our directors considering the current needs of the board and the
company. This evaluation supports the nominating and governance committee’s
consideration of board succession and potential director recruitment throughout the
year.

Director Qualifications, Skills, and Experience
Director nominees are chosen to serve on the board based on their qualifications, skills, and experience, as discussed in their biographies,
and how those characteristics supplement the resources and talent on the board and serve the current needs of the board and the company.
Our governance guidelines provide that directors are not eligible to be nominated or appointed to the board if they are 76 years or older at
the time of the election or appointment. The board does not have term limits on the length of a director’s service.

In making its nominations, the nominating and governance committee assesses each director nominee by a number of key characteristics,
including character, success in a chosen field of endeavor, background in publicly traded companies, independence, and willingness to
commit the time needed to satisfy the requirements of board and committee membership. Although the committee has no formal policy
regarding diversity, the board is committed to having a diverse and broadly inclusive membership. In recommending director nominees, the
committee considers diversity in gender, ethnic background, geographic area of residence, skills, and professional experience.

23 MDU Resources Group, Inc. Proxy Statement

Board Skills and Diversity Matrix

Carmona
Alvarez

Everist

Fagg

Goodin

Johnson Moss

Rosenthal

Ryan

Sparby Wang

Proxy Statement

Skills & Expertise

EXECUTIVE MANAGEMENT/PUBLIC COMPANY

Served as CEO or other senior executive of an organization or
as a director of another publicly traded company

ACCOUNTING/FINANCE

Experience in the preparation and review of financial
statements and financial reports

CAPITAL MARKETS

Experience overseeing company financings, investments,
capital structures, and financial strategy

INFORMATION TECHNOLOGY/CYBERSECURITY

Oversight of or significant background working with
information technology systems, data management, and/or
cybersecurity risks

RISK MANAGEMENT AND COMPLIANCE

Regulatory and compliance expertise or experience in the
identification, assessment, and mitigation of risks facing our
company

INDUSTRY EXPERIENCE

Experience in our businesses and related industries,
including public utilities, natural gas pipelines, construction,
and aggregate mining

LEGAL/CORPORATE GOVERNANCE

Experience in dealing with complex legal and public
company governance issues

HUMAN CAPITAL MANAGEMENT

Experience in enterprise-wide human capital management
and the development of talent, including overseeing diversity
and inclusion efforts.

ENVIRONMENT AND SUSTAINABILITY

Experience addressing environmental and sustainability
issues relating to our businesses

GOVERNMENT/REGULATORY/PUBLIC AFFAIRS

Background or experience in governmental regulations and
public policy issues affecting our businesses

Gender/Age/Tenure

Gender

Age

Tenure

Race/Ethnicity/Nationality

African American/Black

Alaskan Native or Native American

Asian

Hispanic/Latinx

Native Hawaiian or Pacific Islander

White (not Hispanic or Latinx origins)

Two or more Races or Ethnicities

LGBTQ+

MDU Resources Group, Inc. Proxy Statement 24

Proxy Statement

Independence

Board Refreshment

Tenure

90%

The board has determined that all
director nominees, other than Mr.
Goodin, meet the independence
standards set by the NYSE and SEC.

New
Members

0-4
Years

5-10
Years

11+
Years

Five new
members have
been elected
or appointed
to the board
over the last
five years.

Average
Tenure

11.5
Years

Diversity

Gender

Four director
nominees are
women.

40%

Race/Ethnicity

The average tenure of the director nominees
reflects a balance of company experience and
new perspective.

Two director
nominees are

ethnically diverse. 20%

Board Composition and Refreshment
The nominating and governance committee is committed to ensuring that the board reflects a diversity of experience, skills, and
backgrounds to serve the company’s governance and strategic needs. In recognition of the company’s commitment to diversity, the company
was recognized in 2022 by 50/50 Women on Boards™ as a “3+” company for having three or more women on its board of directors.

Each of the nominees has been nominated for election to the board of directors upon recommendation by the nominating and governance
committee and each has decided to stand for election.

In evaluating the needs of the board and the company, the nominating and governance committee focuses on identifying board candidates
that will add gender and ethnic diversity along with relevant industry and leadership experience to the board, as well as a background and
core competencies in the fields of technology, cybersecurity, and public company governance. To support this process, the nominating and
governance committee engaged an independent global search firm in 2021 to assist with identifying, evaluating, and recruiting a diverse
pool of potential director candidates, which led to the appointment of German Carmona Alvarez in 2022. Potential director nominees were
brought to the attention of the nominating and governance committee by board members, management, advisory firms, and various
organizations.

The nominating and governance committee continues to identify individuals as potential board of director candidates, particularly
individuals with industry experience to support the company’s strategy to create two pure-play companies of regulated energy delivery and
construction materials, while pursuing organic growth opportunities and strategic acquisitions. The nominating and governance committee
identified and recommended German Carmona Alvarez be appointment to the board in 2022 based on his expertise with human capital
management, digital and information technology, finance, and mergers and acquisitions as well as his addition to the board’s expertise and
diversity.

By tenure, if the nominees are elected, the board will be comprised of three directors who have served from 0-4 years, three directors who
have served from 5-10 years, and four directors who have served over 11 years. The nominating and governance committee believes this mix
of director tenures provides a balance of experience and institutional knowledge with fresh perspectives. The nominating and governance
committee also takes into consideration any written agreement for director nominations the company is a party to such as the Cooperation
Agreement.

25 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

Director Independence

The board of directors has adopted guidelines on director independence that are included in our corporate governance guidelines. Our
guidelines require that a substantial majority of the board consists of independent directors. In general, the guidelines require that an
independent director must have no material relationship with the company directly or indirectly, except as a director. The board determines
independence on the basis of the standards specified by the New York Stock Exchange (NYSE), the additional standards referenced in our
corporate governance guidelines, and other facts and circumstances the board considers relevant. Based on its review, the board has
determined that all directors, except for our chief executive officer Mr. Goodin, have no material relationship with the company and are
independent.

In determining director independence, the board of directors reviewed and considered information about any transactions, relationships, and
arrangements between the non-employee directors and their immediate family members and affiliated entities on the one hand, and the
company and its affiliates on the other, and in particular the following transactions, relationships, and arrangements:

• Charitable contributions by the company and the MDU Resources Foundation (Foundation) to nonprofit organizations where a director or

immediate family member served as an officer or director of the organization.

◦

The company and the Foundation made charitable contributions to five such nonprofit organizations that collectively totaled $15,500.
None of the contributions made to any of the nonprofit entities exceeded 2% of the relevant entity’s consolidated gross revenues.

• Business relationships with entities with which a director or director nominee is affiliated.

◦ Mr. Carmona Alvarez is currently the global president of applied intelligence of Wood PLC, a consulting and engineering company. The
company paid an affiliate of Wood PLC approximately $6,475,000 in 2022 for services provided. The services were provided in the
ordinary course of business and on substantially the same terms prevailing for comparable services from other consulting and
engineering companies. Mr. Carmona Alvarez (i) played no role in the transactions between the company’s subsidiaries and the Wood
PLC entities; (ii) has no role, influence or oversight of the actual work of the Wood PLC entities with respect to the company; and (iii)
did not receive any commission or have any financial interest in such work in a way that impacts the compensation he receives from
Wood PLC. Mr. Carmona Alvarez had no role in securing or promoting the Wood PLC affiliated services.

◦ Ms. Fagg was a member of the Board of Trustees for Carroll College. The company received payment for services provided to Carroll
College in the amount of $736 in 2022. Ms. Fagg had no role in securing or promoting the services provided to Carroll College.

The board has also determined that all members of the audit, compensation, nominating and governance, and environmental and
sustainability committees of the board are independent in accordance with our guidelines and applicable NYSE and Securities Exchange Act
of 1934 rules, as applicable.

Oversight of Sustainability

We are an essential infrastructure company and manage our business with a long-term view toward sustainable operations, focusing on how
economic, environmental, and social impacts help the company continue Building a Strong America®. We are committed to strong corporate
governance in all areas, including governance of environmental and social responsibility.

Board of Directors. The board of directors is ultimately responsible for oversight with respect to environmental, health, safety, and other
social sustainability matters applicable to the company.

Environmental and Sustainability Committee of the Board. In recognition of its responsibility for oversight with respect to environmental, health,
safety, and other social sustainability matters, the board of directors in May 2019 formed the environmental and sustainability committee as
a standing committee of the board with particular focus on our environmental, workplace health, safety, human capital, and other social
sustainability programs and performance. The environmental and sustainability committee assists the board in fulfilling its oversight
responsibilities with respect to environmental and social sustainability matters, including oversight and review of:

MDU Resources Group, Inc. Proxy Statement 26

Proxy Statement

• Employee, customer, and contractor safety;

• Climate change risks;

• Compliance with environmental, health, and safety laws;

• Human capital management;

• Integration of environmental and social principles into company strategy; and

• Significant public disclosures of environmental and sustainability matters.

Additional oversight responsibilities of our environmental and sustainability committee are discussed on page 34.

Management Policy Committee. The company’s management policy committee is comprised of the presidents of the business units and senior
company officers. The management policy committee meets monthly, or more frequently as warranted, and is responsible for the
management of risks and pursuit of opportunities related to environmental and social sustainability matters, including climate change,
health, safety, and other social sustainability matters.

Executive Sustainability Committee. In 2021, the company established an executive sustainability committee, which is comprised of corporate
and business unit senior executives. The committee is co-chaired by our vice president, chief accounting officer and controller and a
business segment president. The executive sustainability committee responsibilities include:

• Supporting execution of, and making recommendations to advance, the company’s environmental and sustainability strategy; and

• Establishing, maintaining, and enhancing the processes, procedures, and controls for the company’s environmental and sustainability

disclosures.

For information on our sustainability reporting, as well as highlights of our environmental stewardship and social responsibility, see
“Sustainability Highlights” in the Proxy Summary.

27 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Stockholder Engagement

The company has an active stockholder outreach program. We believe in providing transparent and timely information to our investors and
understand the need to align our priorities with those of our key stakeholders. Each year we routinely engage directly or indirectly with our
stockholders, including large institutional stockholders. Management regularly attends and presents at investor and financial conferences
and holds one-on-one meetings with investors. During 2022, the company held meetings, conference calls, and webcasts with numerous
stockholders and investment firms, including focused outreach to our top 30 investors. Our active stockholder outreach program includes:

WHO WE ENGAGE

HOW WE ENGAGE

WHO PARTICIPATES

Institutional Investors

Sell-Side Analysts

Retail Stockholders

Pension Funds

Holders of Bonds

Rating Agencies/Firms

•
•
•
•
•
•

One-on-One and Group Meetings

•
Quarterly Earnings Conference Calls
•
• Written and Electronic Communications
Company-Hosted Events and Presentations
•
• Webcasts with Stockholders and Analysts
Industry and Sell-Side Presentations and
•

Conferences

KEY ENGAGEMENT RESOURCES

Annual Proxy Statement

Quarterly Earnings Webcasts

• MDU Resources Website at investor.mdu.com
•
•
•
•

Annual Stockholder Meeting

Annual Report

Sustainability Report

Public Events and Presentations

SEC Filings

Disclosures to Various Ratings Assessors

Press Releases

•
•
•
•
•

•

•
•

Executive Management

Investor Relations

Senior Leadership

Subject Matter Experts

Board Members

KEY TOPICS OF ENGAGEMENT

Company Strategy

Executive Compensation

Operational and Financial Updates

Knife River Corporation Tax-Free Spinoff

Strategic Review of MDU Construction

Services Group, Inc.

Capital Expenditure Forecast/Capital

Allocation

Sustainability

Environmental, Social, and Corporate

Governance Practices

OUTCOMES OF STOCKHOLDER ENGAGEMENT

•
•

•

Received stockholder feedback regarding strategic initiatives

Enhanced Sustainability Reporting with expanded disclosures of risk
and opportunities in accordance with TCFD

Cooperation Agreement entered into between the company and
Corvex Management LP appointing a new director pending approval
by the Federal Energy Regulatory Commission

•
•

Stockholder feedback regularly shared with our board of directors

Expanded disclosure of financial metrics for our business segments
to help investors better understand key business drivers

Stockholder Communications with the Board

Stockholders and other interested parties who wish to contact the board of directors or any individual director, including our non-employee
chair or non-employee directors as a group, should address a communication in care of the secretary at MDU Resources Group, Inc.,
P.O. Box 5650, Bismarck, ND 58506-5650. The secretary will forward all communications.

MDU Resources Group, Inc. Proxy Statement 28

Proxy Statement

Board Leadership Structure

The board separated the positions of chair of the board and chief executive officer in 2006, and our bylaws and corporate governance
guidelines currently require that our chair be independent. The board believes this structure provides balance and is currently in the best
interest of the company and its stockholders. Separating these positions allows the chief executive officer to focus on the full-time job of
running our business, while allowing the chair to lead the board in its fundamental role of providing advice to and independent oversight of
management. The chair meets and confers regularly between board meetings with the chief executive officer and consults with the chief
executive officer regarding the board meeting agendas, the quality and flow of information provided to the board, and the effectiveness of
the board meeting process. The board believes this split structure recognizes the time, effort, and energy the chief executive officer is
required to devote to the position in the current business environment as well as the commitment required to serve as the chair, particularly
as the board’s oversight responsibilities continue to grow and demand more time and attention. The fundamental role of the board of
directors is to provide oversight of the management of the company in good faith and in the best interests of the company and its
stockholders. The board believes having an independent chair is a means to ensure the chief executive officer is accountable for managing
the company in close alignment with the interests of stockholders including with respect to risk management as discussed below. The board
has found that an independent chair is in a position to encourage frank and lively discussions including during regularly scheduled executive
sessions consisting of only independent directors and to assure that the company has adequately assessed all appropriate business risks
before adopting its final business plans and strategies. The board believes that having separate positions and having an independent outside
director serve as chair is the appropriate leadership structure for the company at this time and demonstrates our commitment to good
corporate governance.

Board’s Role in Risk Oversight

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks,
including economic risks, strategic risks, operational risks, environmental and regulatory risks, competitive risks, climate and weather
conditions, pension plan obligations, cyberattacks or acts of terrorism, and third party liabilities. The board, as a whole and through its
committees, has responsibility for the oversight of risk management. In its risk oversight role, the board of directors has the responsibility to
satisfy itself that the risk management processes designed and implemented by management are adequate for identifying, assessing, and
managing risk. Management is responsible for identifying material risks, implementing appropriate risk management and mitigation
strategies, and providing information regarding material risks and risk management and mitigation to the board. The company’s risk
oversight framework also aligns with its disclosure controls and procedures. For example, the company’s quarterly and annual financial
statements and related disclosures are reviewed by the disclosure committee, which includes certain senior management, who participate in
the risk assessment practices described below.

The board believes establishing the right “tone at the top” and full and open communication between management and the board of
directors are essential for effective risk management and oversight. Our chair meets regularly with our chief executive officer to discuss
strategy and risks facing the company. The chair of the board and chairs of each of the board’s standing committees meet with our chief
executive officer, chief financial officer, and general counsel to discuss risks and presentations to the board regarding risks. Senior
management attends the quarterly board meetings and is available to address questions or concerns raised by the board on risk
management-related and any other matters. Each quarter, the board of directors and its applicable committees receive presentations from
senior management on enterprise risk management issues and strategic matters involving our operations. Senior management annually
presents an assessment to the board of critical enterprise risks that threaten the company’s strategy and business model, including risks
inherent in the key assumptions underlying the company’s business strategy for value creation. Periodically, the board receives presentations
from external experts on matters of strategic importance to the board. At least annually, the board holds strategic planning sessions with
senior management to discuss strategies, key challenges, and risks and opportunities for the company.

In addition, in 2022 the company developed a survey completed by both the board of directors and members of the management policy
committee to identify critical enterprise risks. The company believes this program, which was designed to enable effective and efficient
identification of, and visibility into, critical enterprise risks over the short, intermediate, and long-term, and to facilitate the incorporation of
risk considerations into decision making across the company, and assessing and managing the company’s legal, regulatory, and other
compliance obligations on a global basis, provides valuable insight to the board of directors in its risk oversight efforts. In particular, the
company believes its enterprise risk management programs help clearly define risk management roles and responsibilities among the board,
its committees and management, bring together senior management to discuss risk, promote visibility and constructive dialogue around the
risks relevant to the company’s strategy and operations and helps facilitate appropriate risk response strategies at the board of directors,
board committees, and management.

29 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The Board

While the board is ultimately responsible for risk oversight at our company, our standing board committees assist
the board in fulfilling its oversight responsibilities in certain areas of risk.

Audit Committee

Compensation Committee

Nominating and Governance
Committee

Environmental and
Sustainability Committee

Risk Oversight Responsibilities

ü Financial Reporting

ü Executive Compensation

ü Board Organization

ü Environmental

ü Internal Controls

ü Incentive Plans

ü Board Membership and

Structure

ü Health and Safety

ü Cybersecurity

ü Conflicts of Interest

Assessment

ü Succession Planning

ü Social Sustainability

ü Compliance with Legal and

Regulatory Requirements ü Director Compensation

Policy

ü Corporate Governance

ü Climate Change Risks

Management

The management policy committee meets monthly, or more frequently as warranted, to receive reports from each
business unit on safety, operations, business development, and to discuss the company’s challenges and
opportunities. Reports are also provided by the company’s financial, human resources, legal, and enterprise
information technology departments. Special presentations are made by other employees on matters that affect
the company’s operations. The company has also developed a robust compliance program to promote a culture of
compliance, consistent with the right “tone at the top,” to mitigate risk. The program includes training and
adherence to our code of conduct and legal compliance guide. We further mitigate risk through our internal audit
and legal departments.

• Audit Committee. The audit committee assists the board in fulfilling its oversight responsibilities with respect to risk management in a

general manner and specifically in the areas of financial reporting, internal controls, cybersecurity, compliance with legal and regulatory
requirements, and related person transactions, and, in accordance with NYSE requirements, discusses with the board policies with
respect to risk assessment and risk management and their adequacy and effectiveness. The audit committee receives regular reports on
the company’s compliance program, including reports received through our anonymous reporting hotline. It also receives reports and
regularly meets with the company’s external and internal auditors. During its quarterly meetings in 2022, the audit committee received
presentations or reports from management on cybersecurity and the company’s mitigation of cybersecurity risks as well as assessment and
mitigation reports on other compliance and risk-related topics. The entire board was present for cybersecurity risk presentations and had
access to the reports. The audit committee discussed areas where the company may have material risk exposure, steps taken to manage
such exposure, and the company’s risk tolerance in relation to company strategy. The audit committee reports regularly to the board of
directors on the company’s management of risks in the audit committee’s areas of responsibility.

• Compensation Committee. The compensation committee assists the board in fulfilling its oversight responsibilities with respect to the

management of risks arising from our compensation policies and programs.

• Nominating and Governance Committee. The nominating and governance committee assists the board in fulfilling its oversight

responsibilities with respect to the management of risks associated with board organization, board membership and structure, succession
planning for our directors and executive officers, and corporate governance.

MDU Resources Group, Inc. Proxy Statement 30

Proxy Statement

• Environmental and Sustainability Committee. The environmental and sustainability committee assists the board in fulfilling its oversight

responsibilities with respect to the management of risks related to environmental, human capital management, health, safety, and other
social and sustainability matters that fundamentally affect the company’s business interests and long-term viability. The environmental
and sustainability committee responsibilities include reviewing significant risks and exposures to the company regarding current and
emerging environmental and social sustainability matters, including climate change risks, and discussing with management and
overseeing actions taken by the company in response thereto. The environmental and sustainability committee also reviews the company’s
efforts to integrate social, environmental, and economic principles, including climate change, greenhouse gas emissions management,
energy, water, and waste management, product and service quality, reliability, customer care and satisfaction, public perception, and
company reputation, into the company’s strategy and operations. The environmental and sustainability committee receives regular reports
on the company’s safety statistics relating to organization-wide year-to-date recordable incident rates, days away, restricted or transferred
rates, and preventable vehicle accident rates.

Board Meetings and Committees

During 2022, the board of directors held four regular meetings and seven special meetings. Each director attended at least 75% of the
combined total meetings of the board and the committees on which the director served during 2022, in each case, during the time period
which each director served. Directors are encouraged to attend our annual meeting of stockholders. All directors attended our 2022 annual
meeting of stockholders.

The board has standing audit, compensation, nominating and governance, and environmental and sustainability committees which meet at
least quarterly. The table below provides current committee membership.

Name

German Carmona Alvarez

Thomas Everist

Karen B. Fagg

Patricia L. Moss

Dale S. Rosenthal

Edward A. Ryan

David M. Sparby

Chenxi Wang

C - Chair

● - Member

Audit
Committee

Compensation
Committee

Nominating and
Governance Committee

Environmental and
Sustainability Committee

●

●
C

●

Below is a description of each standing committee of the board. The board has affirmatively determined that each of these standing
committees consists entirely of independent directors pursuant to rules established by the NYSE, rules promulgated under the Securities
and Exchange Commission (SEC), and the director independence standards established by the board. The board has also determined that
each member of the audit committee and the compensation committee is independent under the criteria established by the NYSE and the
SEC for audit committee and compensation committee members, as applicable.

Nominating and Governance Committee

Met Five Times in 2022

The nominating and governance committee met five times during 2022. The current committee members are Edward A. Ryan, chair,
German Carmona Alvarez, Thomas Everist, and Dale S. Rosenthal.

The nominating and governance committee is governed by a written charter and provides recommendations to the board with respect to:

• board organization, membership, and function;

• committee structure and membership;

• succession planning for our executive management and directors; and

• our corporate governance guidelines.

31 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The nominating and governance committee assists the board in overseeing the management of risks in the committee’s areas of
responsibility.

The committee identifies individuals qualified to become directors and recommends to the board the director nominees for the next annual
meeting of stockholders. The committee also identifies and recommends to the board individuals qualified to become our principal officers
and the nominees for membership on each board committee. The committee oversees the evaluation of the board and management.

In identifying nominees for director, the committee consults with board members, management, search firms, consultants, organizational
representatives, and other individuals likely to possess an understanding of our business and knowledge concerning suitable director
candidates.

In evaluating director candidates, the committee, in accordance with our corporate governance guidelines, considers an individual’s:

• background, character, and experience, including experience relative to our company’s lines of business;

• skills and experience which complement the skills and experience of current board members;

• success in the individual’s chosen field of endeavor;

• skill in the areas of accounting and financial management, banking, business management, human resources, marketing, operations,

public affairs, law, technology, risk management, and governance;

• background in publicly traded companies, including service on other public company boards of directors;

• geographic area of residence;

• business and professional experience, skills, gender, and ethnic background, as appropriate in light of the current composition and needs

of the board;

• independence, including any affiliation or relationship with other groups, organizations, or entities; and

• compliance with applicable law and applicable corporate governance, code of conduct and ethics, conflict of interest, corporate

opportunities, confidentiality, stock ownership and trading policies, and other policies and guidelines of the company.

Our bylaws also contain requirements that a person must meet to qualify for service as a director.

In addition, on January 24, 2023, the company entered into the Cooperation Agreement with Corvex Management LP, pursuant to which
Corvex Management LP partner, James H. Gemmel, was appointed as a non-voting board observer and, subject to FERC approval, to the
board of directors.

The nominating and governance committee assesses these considerations annually in connection with the nomination of directors for
election at the annual meeting of stockholders. The committee seeks a collective background of board members to provide a portfolio of
experience and knowledge that serves the company’s governance and strategic needs and best perpetrates our long-term success. Directors
should have demonstrated experience and knowledge that is relevant to the board’s oversight role of the company’s business. The
nominating and governance committee also considers the board’s diversity in recommending nominees, including diversity of experience,
expertise, ethnicity, gender, and geography. The composition of the current board and the board nominees reflects diversity in business and
professional experience, skills, ethnicity, gender, and geography.

Audit Committee

Met Nine Times in 2022

The audit committee is a separately-designated committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange
Act of 1934 and is governed by a written charter.

The audit committee met nine times during 2022. The current audit committee members are David M. Sparby, chair, Dale S. Rosenthal,
Edward A. Ryan, and Chenxi Wang. The board of directors determined that Mr. Sparby and Ms. Rosenthal are “audit committee financial
experts” as defined by SEC rules, and all audit committee members are financially literate within the meaning of the listing standards of the
NYSE. All members also meet the independence standard for audit committee members under our director independence guidelines, the
NYSE listing standards, and SEC rules.

MDU Resources Group, Inc. Proxy Statement 32

Proxy Statement

The audit committee assists the board of directors in fulfilling its oversight responsibilities to the stockholders and serves as a
communication link among the board, management, the independent registered public accounting firm, and the internal auditors. The audit
committee reviews and discusses with management and the independent registered public accounting firm, before filing with the SEC, the
annual audited financial statements and quarterly financial statements. The audit committee also:

• assists the board’s oversight of:

◦

the integrity of our financial statements and system of internal controls;

the company’s compliance with legal and regulatory requirements and the code of conduct;

discussions with management regarding the company’s earnings releases and guidance;

the independent registered public accounting firm’s qualifications and independence;

the appointment, compensation, retention, and oversight of the work of the independent registered public accounting firm;

the performance of our internal audit function and independent registered public accounting firm; and

◦ management of risk in the audit committee’s areas of responsibility, including cybersecurity, financial reporting, legal and regulatory

compliance, and internal controls.

• arranges for the preparation of and approves the report that SEC rules require we include in our annual proxy statement. See the section

entitled “Audit Committee Report” for further information.

Compensation Committee

Met Seven Times in 2022

During 2022, the compensation committee met seven times. The compensation committee consists entirely of independent directors within
the meaning of the company’s corporate governance guidelines and the NYSE listing standards and who meet the definitions of non-
employee directors for purposes of Rule 16-b under the Exchange Act. Current members of the compensation committee are Karen B. Fagg,
chair, German Carmona Alvarez, Thomas Everist, and Patricia L. Moss.

The compensation committee is governed by a written charter and assists the board of directors in fulfilling its responsibilities relating to the
company’s compensation policies and programs. It has direct responsibility for determining compensation for our Section 16 officers and for
overseeing the company’s management of compensation risk in its areas of responsibility. In determining the long-term incentive component
of CEO compensation, the compensation committee may consider, among others, the company’s performance and relative stockholder
return, the value of similar incentive awards given to CEOs at comparable companies and the awards given to the company’s CEO in past
years. The compensation committee also reviews and recommends any changes to director compensation policies to the board of directors.
The authority and responsibility of the compensation committee is outlined in the compensation committee’s charter.

The compensation committee uses analysis and recommendations from outside consultants, the chief executive officer, and the human
resources department in making its compensation decisions. The chief executive officer, the chief human resources officer, and the general
counsel regularly attend compensation committee meetings. The committee meets in executive session as needed. The processes and
procedures for consideration and determination of compensation of the Section 16 officers as well as the role of our executive officers are
discussed in the “Compensation Discussion and Analysis.”

The compensation committee has sole authority to retain compensation consultants, legal counsel, or other advisers to assist in its duties.
The committee is directly responsible for the appointment, compensation, and oversight of the work of such advisers. The compensation
committee retained an independent compensation consultant, Meridian Compensation Partners, LLC (Meridian), to conduct a competitive
analysis on executive compensation for 2022 and an analysis of CEO pay and performance. Prior to retaining an adviser, the compensation
committee considered relevant factors to ensure the adviser’s independence from management. Annually the compensation committee
conducts a potential conflicts of interest assessment raised by the work of any compensation consultant and how such conflicts, if any,
should be addressed. The compensation committee requested and received information from Meridian to assist in its potential conflicts of
interest assessment. Based on its review and analysis, the compensation committee determined in 2022 that Meridian was independent
from management. Meridian does not provide any services other than consultation services to the compensation committee on executive and
director compensation matters. Meridian reports directly to the compensation committee and not to management. Meridian participated in
executive sessions with the compensation committee without members of management present.

The board of directors determines compensation for our non-employee directors based upon recommendations from the compensation
committee. In 2022, the compensation committee retained Meridian to conduct an analysis of the company’s compensation for non-
employee directors.

33 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Environmental and Sustainability Committee

Met Five Times in 2022

The environmental and sustainability committee met five times during 2022. The committee is governed by a written charter and consists
entirely of independent directors within the meaning of the company’s corporate governance guidelines and the listing standards of the
NYSE. The current members of the committee are Patricia L. Moss, chair, Karen B. Fagg, David M. Sparby, and Chenxi Wang.

The environmental and sustainability committee oversees and provides recommendations to the board with respect to the company’s
policies, strategies, public policy positions, programs, and performance related to environmental, workplace health, safety, human capital,
and other social sustainability matters that fundamentally affect the company’s business interests and long-term viability. The
environmental and sustainability committee:

• reviews significant risks and exposures regarding current and emerging environmental and social sustainability matters, including climate

change risks, and discusses with management and oversees actions taken by the company in response to such risks and exposures;

• reviews the company’s environmental and social sustainability strategies, goals, commitments, policies, and performance;

• reviews human capital management related to the company’s operations, including employee recruitment and retention, training,

wellness, gender pay equity, diversity, and inclusion;

• reviews any fatality, serious injury, or illness involving an employee, customer, contractor, or third-party occurring in connection with the

company’s operations;

• reviews any material noncompliance by the company with environmental, health, and safety laws and regulations;

• reviews the company’s efforts to integrate social, environmental, and economic principles, including climate change, greenhouse gas

emissions management, energy, water and waste management, product and service quality, reliability, customer care and satisfaction,
public perception, and company reputation with and into the company’s strategy and operations;

• reviews the company’s communication strategy and significant public disclosures relating to environmental and social sustainability

matters;

• considers and advises the compensation committee on the company’s performance with respect to incentive compensation metrics

relating to environmental and social sustainability matters;

• reports to, advises, and makes recommendations to the board on environmental and social sustainability matters affecting the company;

and

• reviews stockholder proposals related to environmental and social sustainability matters.

Additional Governance Features

Board and Committee Evaluations
Our corporate governance guidelines provide that the board of directors, in coordination with the nominating and governance committee,
will annually review and evaluate the performance and functioning of the board and its committees. The self-evaluations are intended
to facilitate a candid assessment and discussion by the board and each committee of its effectiveness as a group in fulfilling its
responsibilities, its performance as measured against the corporate governance guidelines, and areas for improvement. The board and
committee members are provided with a questionnaire and the results were anonymously aggregated and provided to the board and each
committee. The results of the evaluations are reviewed and discussed in executive sessions of the committees and the board of directors.
For more detail on our board evaluation process, see “Board Evaluations and Process for Selecting Directors” in the section entitled “Board
of Directors.”

Executive Sessions of the Independent Directors
The non-employee directors meet in executive session at each regularly scheduled quarterly board of directors meeting. The chair of the
board presides at the executive session of the non-employee directors.

Director Resignation Upon Change of Job Responsibility
Our corporate governance guidelines require a director to tender his or her resignation after a material change in job responsibility. In 2022,
no directors submitted resignations under this requirement.

MDU Resources Group, Inc. Proxy Statement 34

Proxy Statement

Majority Voting in Uncontested Director Elections
Our corporate governance guidelines require that in uncontested elections (those where the number of nominees does not exceed the
number of directors to be elected), director nominees must receive the affirmative vote of a majority of the votes cast to be elected to our
board of directors. Contested director elections (those where the number of director nominees exceeds the number of directors to be
elected) are governed by a plurality of the vote of shares present in person or represented by proxy at the meeting.

The board has adopted a director resignation policy for incumbent directors in uncontested elections. Any proposed nominee for re-election
as a director shall, before he or she is nominated to serve on the board, tender to the board his or her irrevocable resignation that will be
effective, in an uncontested election of directors only, upon (i) such nominee’s receipt of a greater number of votes “against” election than
votes “for” election at our annual meeting of stockholders; and (ii) acceptance of such resignation by the board of directors.

Director Overboarding Policy
Our bylaws and corporate governance guidelines state that a director may not serve on more than two other public company boards.
Currently, all of our directors are in compliance with this policy.

Board Refreshment
Recognizing the importance of board composition and refreshment for effective oversight, the nominating and governance committee
annually considers the composition and needs of the board of directors, reviews potential candidates, and recommends to the board
nominees for appointment or election. The nominating and governance committee and the board are committed to identifying individuals
with diverse backgrounds whose skills and experiences will enable them to make meaningful contributions to shaping the company’s
business strategy and priorities. To further board refreshment efforts, the nominating and governance committee engaged an independent
global search firm in 2021 to assist with identifying, evaluating and recruiting a diverse pool of potential director candidates. As part of its
consideration of director succession, the nominating and governance committee from time to time reviews, including when considering
potential candidates, the appropriate skills and characteristics required of board members. The board considers diversity of skills, expertise,
race, ethnicity, gender, age, education, geography, cultural background, and professional experiences in evaluating board candidates for
expected contributions to an effective board. Independent directors may not serve on the board beyond the next annual meeting of
stockholders after attaining the age of 76. Given the breadth of our businesses, we believe the mandatory retirement age allows us to benefit
from experienced directors, with industry expertise, company institutional knowledge and historical perspective, stability, and comfort with
challenging company management, while maintaining our ability to refresh the board through the addition of new members. Mr. Sparby and
Mr. Ryan joined the board in 2018; Ms. Wang joined the board in 2019; Ms. Rosenthal joined the board in 2021; and Mr. Carmona Alvarez
joined in 2022. On January 24, 2023, the company entered into the Cooperation Agreement with Corvex Management LP, pursuant to
which Corvex Management LP partner, James H. Gemmel, was appointed as a non-voting board observer and, subject to FERC approval, to
the board of directors. For further details on the Cooperation Agreement, see the section entitled “Corporate Governance.”

Our corporate governance guidelines include our policy on consideration of director candidates recommended to us. We will consider
candidates that our stockholders recommend in the same manner we consider other nominees. Stockholders who wish to recommend a
director candidate may submit recommendations, along with the information set forth in the guidelines, to the nominating and governance
committee chair in care of the secretary at MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650.

Stockholders who wish to nominate persons for election to our board at an annual meeting of stockholders must follow the applicable
procedures set forth in Section 2.08 or 2.10 of our bylaws. Our bylaws are available on our website. See “Stockholder Proposals, Director
Nominations, and Other Items of Business for 2023 Annual Meeting” in the section entitled “Information about the Annual Meeting” for
further details.

Prohibitions on Hedging/Pledging Company Stock
The director compensation policy prohibits directors from hedging their ownership of common stock, pledging company stock as collateral
for a loan, or holding company stock in an account that is subject to a margin call. The executive compensation policy prohibits executives
from hedging their ownership of common stock, pledging company stock as collateral for a loan, or holding company stock in an account
that is subject to a margin call.

Code of Conduct
We have a code of conduct and ethics, which we refer to as the Leading With Integrity Guide. It applies to all directors, officers, and
employees. The Leading With Integrity Guide defines our values, our culture, and our commitments to stakeholders while setting
expectations of employee conduct for legal and ethical compliance. We also have a Vendor Code of Conduct setting forth our expectations of
vendors including ethical business practices, workplace safety, environmental stewardship, and compliance with applicable laws and
regulations. Our Vendor Code of Conduct is available on our company website, which is not part of this Proxy Statement and is not
incorporated by reference into this Proxy Statement.

35 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

We intend to satisfy our disclosure obligations regarding amendments to, or waivers of, any provision of the code of conduct that applies to
our principal executive officer, principal financial officer, and principal accounting officer, and that relates to any element of the code of
ethics definition in Regulation S-K, Item 406(b), and waivers of the code of conduct for our directors or executive officers, as required by
NYSE listing standards, by posting such information on our website.

Proxy Access
Our bylaws allow stockholders to nominate directors for inclusion in our Proxy Statement subject to the following parameters:

Ownership Threshold:

3% of outstanding shares of our common stock

Nominating Group Size:

Up to 20 stockholders may combine to reach the 3% ownership threshold

Holding Period:

Continuously for three years

Number of Nominees:

The greater of two nominees or 20% of our board

We believe these proxy access parameters reflect a well-designed and balanced approach to proxy access that mitigates the risk of abuse
and protects the interests of all of our stockholders. Stockholders who wish to nominate directors for inclusion in our Proxy Statement in
accordance with proxy access must follow the procedures in Section 2.10 of our bylaws. See “Stockholder Proposals, Director Nominations,
and Other Items of Business for 2023 Annual Meeting.”

Cybersecurity Oversight
The audit committee reviewed reports and received presentations at each of its regular quarterly meetings in 2022 concerning cybersecurity-
related issues including information security, technology risks, and risk mitigation programs. All members of the board of directors received
copies of reports and were present during the presentations. In 2014, the board established a Cyber Risk Oversight Committee (CYROC)
consisting of the company’s chief information officer and chief financial officer as well as financial, information technology, and other
leaders from the company’s business segments. The CYROC provides management and the audit committee with analyses, appraisals,
recommendations, and pertinent information concerning cyber defense of the company’s electronic information, information technology, and
operation technology systems. The company has implemented a cybersecurity training and compliance program to facilitate initial and
continuing education for employees who have contact or potential contact with the company’s data. External reviews are conducted to
assess company information security programs and practices, including incident management, service continuity, and information security
compliance programs. The company has not had an indication of a material cybersecurity breach and has not incurred any expenses,
penalties, or settlements arising from a material cybersecurity breach. The company maintains a cyber liability insurance policy providing
insurance coverage within the policy limits for liability losses and business interruption events arising from a material cybersecurity breach.
The audit committee receives periodic briefings concerning cybersecurity, information security, technology risks, and risk mitigation
programs.

Corporate Governance Materials

Stockholders can see our bylaws, corporate governance guidelines, board committee charters, and Leading With Integrity Guide on our
website. The information on our website is not part of this Proxy Statement and is not incorporated by reference as part of this Proxy
Statement.

Corporate Governance Materials

Website

• Bylaws

investor.mdu.com/governance/governance-documents

• Corporate Governance Guidelines

investor.mdu.com/governance/governance-documents

• Board Committee Charters for the Audit, Compensation,
Nominating and Governance, and Environmental and
Sustainability Committees

investor.mdu.com/governance/governance-documents

• Leading With Integrity Guide

www.mdu.com/about-us/integrity

Related Person Transaction Disclosure

The board of directors’ policy for the review of related person transactions is contained in our corporate governance guidelines. The policy
requires the audit committee to review any proposed transaction, arrangement or relationship, or series thereof:

• in which the company was or will be a participant;

MDU Resources Group, Inc. Proxy Statement 36

Proxy Statement

• the amount involved exceeds $120,000; and

• a related person had or will have a direct or indirect material interest.

Prior to the company entering into a related person transaction that would be required to be disclosed under the SEC rules, the audit
committee will, after a reasonable prior review and consideration of the material facts and circumstances, make a determination or
recommendation to the board and appropriate officers of the company with respect to the transactions as the audit committee deems
appropriate. The committee will prohibit any such related person transaction if it determines it to be inconsistent with the best interests of
the company and its stockholders.

Related persons are directors, director nominees, executive officers, holders of 5% or more of our voting stock, and their immediate family
members. Related persons are required promptly to report to our general counsel all proposed or existing related person transactions in
which they are involved.

We had no related person transactions in 2022.

Cooperation Agreement
On January 24, 2023, the company entered into the Cooperation Agreement with Keith A. Meister and Corvex Management LP (Mr. Meister
and Corvex Management LP, together with their respective affiliates, the Corvex Group).

Pursuant to the Cooperation Agreement, the company agreed, among other things, to appoint Corvex Management LP partner James H.
Gemmel to the board of directors, subject to the approval of the Federal Energy Regulatory Commission under the Federal Power Act (FERC
Approval). The Cooperation Agreement also provides that, prior to the receipt of the FERC Approval, Mr. Gemmel would be appointed as a
non-voting board observer of the board of directors, effective immediately following the execution of the Cooperation Agreement on January
24, 2023, which he was on January 24, 2023.

Under the terms of the Cooperation Agreement, if FERC Approval had been obtained on or before the date that is fifteen (15) business days
prior to the date on which the company expected to mail its proxy statement relating to the 2023 annual meeting of stockholders, then (i)
immediately following the date of the FERC Approval, the size of the board of directors would have been increased by one director and Mr.
Gemmel would have been appointed to the board of directors for a term expiring at the 2023 annual meeting and (ii) the company would
nominate Mr. Gemmel for re-election at the 2023 annual meeting for a term expiring at the 2024 annual meeting of stockholders. The
FERC Approval was not obtained prior to the 2023 proxy mailing deadline. If the FERC Approval is obtained after the 2023 proxy deadline,
then, immediately after the later of the date the FERC Approval is received and the completion of the 2023 annual meeting, the size of the
board of directors will be increased by one director and Mr. Gemmel will be appointed to the board of directors for a term expiring at the
2024 annual meeting. Upon Mr. Gemmel’s appointment to the board of directors, Mr. Gemmel will cease to be a non-voting board observer.

Pursuant to the Cooperation Agreement, the Corvex Group has agreed to abide by certain customary standstill restrictions, voting
commitments, and other provisions. In addition, the Cooperation Agreement provides for customary director replacement procedures in the
event Mr. Gemmel ceases to serve as a director or non-voting board observer under certain circumstances as specified in the Cooperation
Agreement. Furthermore, in connection with Mr. Gemmel’s appointment, Corvex Management LP and Mr. Meister also entered into a
customary confidentiality agreement with respect to the company’s information.

The Cooperation Agreement also provides that Mr. Gemmel (or his replacement pursuant to the Cooperation Agreement) will resign from the
board of directors effective upon the earliest of the following (Resignation Event): (i) the second business day following such time as the
Corvex Group ceases to hold a “net long position” (as defined in the Cooperation Agreement) of at least 8,100,000 shares of the company’s
common stock; (ii) the later of each of (a) the closing of the company’s previously announced distribution of the equity of Knife River
Corporation to the company’s stockholders and/or the closing of the sale, distribution or other disposal (in one or a series of transactions) of
any such shares not so distributed, in each case, such that the company and any subsidiary thereof, no longer holds, directly or indirectly,
any equity interest or any other securities in Knife River Corporation, and (b) the closing of the sale, distribution or other complete
disposition of 100% of MDU Construction Services Group, Inc. or its business (in one or a series of transactions), such that the company
and any subsidiary thereof, no longer holds any interest in the business of MDU Construction Services Group, Inc.; (iii) the date of the 2024
annual meeting, unless the board of directors has determined to nominate Mr. Gemmel (or his replacement pursuant to the Cooperation
Agreement) for election at the 2024 annual meeting; and (iv) the material breach by the Corvex Group or Mr. Gemmel (or his replacement
pursuant to the Cooperation Agreement) of the confidentiality agreement or certain provisions of the Cooperation Agreement.

The Cooperation Agreement will terminate on the earlier of (i) the date that Mr. Gemmel (or his replacement pursuant to the Cooperation
Agreement) no longer serves as a non-voting board observer or a director and (ii) the occurrence of a Resignation Event.

37 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

COMPENSATION OF NON-EMPLOYEE DIRECTORS

Director Compensation for 2022

MDU Resources’ non-employee directors are compensated for their service according to the MDU Resources Group Inc. Director
Compensation Policy. Only one company employee, David L. Goodin, the company’s president and chief executive officer, serves as a
director. Mr. Goodin receives no additional compensation for his service on the board. Director compensation is reviewed annually by the
compensation committee. The committee’s independent compensation consultant provided an analysis of the company’s director
compensation for 2022. The analysis included research on market trends in director compensation as well as a review of director
compensation practices of companies in our compensation benchmarking peer group. The independent compensation consultant, Meridian,
prepared a report on director compensation which indicated the company’s average annual cash and equity compensation for the company’s
non-employee directors was below the 50th percentile of the company’s peer group. The compensation committee and board concurred with
the independent compensation consultant’s recommendations and adjusted the annual compensation of non-executive directors effective
June 1, 2022 as follows:

Base Cash Retainer

Additional Cash Retainers:

Non-Executive Chair

Audit Committee Chair

Compensation Committee Chair

Nominating and Governance Committee Chair

Environmental and Sustainability Committee Chair
Annual Stock Grant1 - Directors (other than Non-Executive Chair)
Annual Stock Grant2 - Non-Executive Chair

Prior to June 1, 2022

Effective June 1, 2022

$100,000

$110,000

112,500

20,000

15,000

140,000

165,000

125,000

20,000

15,000

150,000

175,000

1 The annual stock grant is a grant of shares of company common stock equal in value to $150,000.
2 The annual stock grant is a grant of shares of company common stock equal in value to $175,000.

The annual stock grant for non-executive directors is for the director’s service provided during the calendar year. The payment occurs in
November each year following the regularly scheduled board of directors meeting. Directors serving less than a full year receive a prorated
stock payment based on the number of months served in the applicable calendar year.

There are no meeting fees paid to the directors.

MDU Resources Group, Inc. Proxy Statement 38

Proxy Statement

The following table outlines the compensation paid to our non-employee directors for 2022.

Name
German Carmona Alvarez3

Thomas Everist

Karen B. Fagg

Dennis W. Johnson

Patricia L. Moss

Dale S. Rosenthal

Edward A. Ryan

David M. Sparby

Chenxi Wang

Fees Earned or
Paid in Cash
($)

18,333

105,833

120,833

225,625

120,833

105,833

120,833

125,833

105,833

Stock
Awards
($)1

25,000

150,000

175,000

150,000

All Other
Compensation
($)2

5,103

3,703

5,103

2,603

103

1,603

5,853

103

Total
($)

43,342

260,936

274,536

405,728

273,436

255,936

272,436

281,686

255,936

1 Directors receive an annual payment of $150,000 in company common stock, except the non-executive chair who receives $175,000 in company
common stock, under the MDU Resources Group, Inc. Non-Employee Director Long-Term Incentive Compensation Plan. Directors serving less than
a full year receive a prorated stock payment based on the number of months served. All stock payments are measured in accordance with generally
accepted accounting principles for stock-based compensation in Accounting Standards Codification Topic 718. The grant date fair value is based
on the purchase price of our common stock on the grant date of November 21, 2022, which was $30.64 per share. The amount paid in cash for
fractional shares is included in the amount reported in the stock awards column to this table.

2 Includes group life insurance premiums and charitable donations made on behalf of the director as applicable. Amounts for life insurance

premiums reflect prorated amounts for directors serving less than a full year based on the number of months served.

Mr. Carmona Alvarez was elected to the board on November 17, 2022. The fees earned and stock award reflected above are prorated for his
service during 2022.

Other Compensation
In addition to liability insurance, we maintain group life insurance in the amount of $100,000 on each non-employee director for the
benefit of their beneficiaries during the time they serve on the board. The annual cost per director is $103.20. Directors who contribute to
the company’s Good Government Fund may designate up to four charities to receive donations from the company, depending on the amount
of the director’s contribution to the Good Government Fund. Directors are reimbursed for all reasonable travel expenses, including spousal
expenses in connection with attendance at meetings of the board and its committees. Perquisites, if any, were below the disclosure
threshold in 2022.

Deferral of Compensation
Directors may defer all or any portion of the annual cash retainer and any other cash compensation paid for service as a director pursuant to
the Deferred Compensation Plan for Directors. Deferred amounts are held as phantom stock with dividend accruals and are paid out in cash
over a five-year period after the director leaves the board. For directors who participated in the post-retirement income plan for directors
before its termination in May 2001, the net present value of each director’s benefit was calculated and converted into phantom stock which
will be paid pursuant to the Deferred Compensation Plan for Directors.

Stock Ownership Policy
Our director stock ownership policy contained in our corporate governance guidelines requires each director to beneficially own our common
stock equal in value to five times the director’s annual cash base retainer. Shares acquired through purchases on the open market and
received through our Non-Employee Director Long-Term Incentive Compensation Plan are considered in ownership calculations as well as
other beneficial ownership of our common stock by a spouse or other immediate family member residing in the director’s household. A
director is allowed five years commencing January 1 of the year following the year of the director’s initial election to the board to meet the
requirements. The level of common stock ownership is monitored with an annual report made to the compensation committee of the board.
All directors are in compliance with the stock ownership policy or are within the first five years of their election to the board. For further
details on our director’s stock ownership, see the section entitled “Security Ownership.”

39 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

SECURITY OWNERSHIP

Security Ownership Table

The table below sets forth the number of shares of our common stock that each director, each named executive officer, and all directors and
executive officers as a group owned beneficially as of February 28, 2023. Unless otherwise indicated, each person has sole investment and
voting power (or share such power with his or her spouse) of the shares noted.

Name1

German Carmona Alvarez

David C. Barney

Thomas Everist

Karen B. Fagg

David L. Goodin

Dennis W. Johnson

Nicole A. Kivisto

Patricia L. Moss

Dale S. Rosenthal

Edward A. Ryan

David M. Sparby

Jeffrey S. Thiede

Jason L. Vollmer

Chenxi Wang

All directors and executive officers as a group (19 in number)

Shares of
Common Stock
Beneficially Owned

Percent
of Class

816
107,887 2,3

667,152

92,827

385,045 2

128,338 4

112,061 2,5

92,212

8,116

36,719

35,455

126,972 2

71,095 2

17,505
2,060,498 2,6

1.0 %

* Less than one percent of the class. Percent of class is calculated based on 203,623,893 outstanding shares as of February 28, 2023.

The table includes the ownership of all current directors, named executive officers, and other executive officers of the company without naming
them.

2 Includes full shares allocated to the officer’s account in our 401(k) retirement plan.
3 The total includes 687 shares owned by Mr. Barney’s spouse.
4 Mr. Johnson disclaims all beneficial ownership of the 163 shares owned by his spouse.
5 The total includes 531 shares owned by Ms. Kivisto’s spouse.
6 Includes shares owned by a director’s or executive’s spouse regardless of whether the director or executive claims beneficial ownership.

Hedging Policy

The company’s Director Compensation Policy and its Executive Compensation Policy prohibit our directors and executives from hedging their
ownership of company stock. The Director Compensation Policy applies to all directors who are not full-time employees of the company. The
Executive Compensation Policy applies to the executives of the company designated as an officer for purposes of Section 16 of the
Securities Exchange Act of 1934 as well as all other executives of the company and its subsidiaries who participate in its Long-Term
Performance-Based Incentive Plan and its Executive Incentive Compensation Plan. Under the policies, directors and executives are
prohibited from engaging in transactions that allow them to own stock technically but without the full benefits and risks of such ownership,
including, but 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 or executive to benefit from the devaluation
of the company’s stock.

MDU Resources Group, Inc. Proxy Statement 40

Proxy Statement

The company policies also prohibit directors, executives, and related persons from holding company stock in a margin account, with certain
exceptions, or pledging company securities as collateral for a loan. 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. “Related person” means an
executive officer’s or director’s spouse, minor child, and any person (other than a tenant or domestic employee) sharing the household of a
director or executive officer as well as any entities over which a director or executive officer exercises control.

Greater Than 5% Beneficial Owners

Based solely on filings with the SEC, the table below shows information regarding the beneficial ownership of more than 5% of the
outstanding shares of our common stock.

Title of Class

Common Stock

Name and Address
of Beneficial Owner

The Vanguard Group

100 Vanguard Blvd.

Malvern, PA 19355

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055

State Street Corporation

State Street Financial Center

One Lincoln Street

Boston, MA 02111

Amount and Nature
of Beneficial Ownership

22,021,300 1

Percent
of Class

10.83%

18,827,655 2

9.30%

16,216,240 3

7.97%

1 Based solely on the Schedule 13G, Amendment No. 11, filed on February 9, 2023, The Vanguard Group reported sole dispositive power
with respect to 21,738,805 shares, shared dispositive power with respect to 282,495 shares, and shared voting power with respect to
104,218 shares.

2 Based solely on the Schedule 13G, Amendment No. 14, filed on January 24, 2023, BlackRock, Inc. reported sole voting power with

respect to 18,214,136 shares and sole dispositive power with respect to 18,827,655 shares as the parent holding company or control
person of BlackRock Life Limited; BlackRock Advisors, LLC; Aperio Group, LLC; BlackRock (Netherlands) B.V.; BlackRock Fund
Advisors; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock
Financial Management, Inc.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock
Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock (Luxembourg) S.A., BlackRock
Investment Management (Australia) Limited; BlackRock Advisors (UK) Limited; and BlackRock Fund Managers Ltd.

3 Based solely on the Schedule 13G, filed on February 10, 2023, State Street Corporation reported shared voting power with respect to

15,823,579 shares and shared dispositive power with respect to 16,216,240 shares as the parent holding company or control person of
SSGA Funds Management, Inc.; State Street Global Advisors, Limited; State Street Global Advisors, LTD; State Street Global Advisors
Europe Limited; State Street Global Advisors Asia, Limited; and State Street Global Advisors Trust Company.

Delinquent Section 16(a) Reports

Section 16 of the Securities Exchange Act of 1934, as amended, requires officers, directors, and holders of more than 10% of our common
stock to file reports of their trading in our equity securities with the SEC. Based solely on a review of Forms 3, 4, and 5, and any
amendments to these forms furnished to us during and with respect to 2022, or written representation that no Form 5 was required, all
such reports were timely filed, except for a Form 4 for David L. Goodin, David C. Barney, Stephanie A. Barth, Trevor J. Hastings, Anne M.
Jones, Nicole A. Kivisto, Karl A. Liepitz, Margaret (Peggy) A. Link, Jeffrey S. Thiede, and Jason L. Vollmer in February 2022 related to the
award of restricted stock units that vest on December 31, 2024.

41 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

EXECUTIVE COMPENSATION

ITEM 2. ADVISORY VOTE TO APPROVE THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE THE
COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS

In accordance with Section 14A of the Securities Exchange Act of 1934 and Rule 14a-21(b), we are asking our stockholders to indicate, on
an advisory basis, whether future advisory votes to approve the compensation paid to our named executive officers should be held every year,
every two years, or every three years. This proposal is also known as a “say-on-frequency” proposal.

Our board of directors has determined that our stockholders should have the opportunity to vote on the compensation of our named
executive officers every year. The board of directors believes that giving our stockholders the right to cast an advisory vote every year on the
compensation of our named executive officers is a good corporate governance practice and is in the best interests of our stockholders.
Annual advisory votes provide the highest level of accountability and direct communication with our stockholders.

The board has discussed and carefully considered the alternatives regarding the frequency of future advisory votes to approve executive
compensation in an effort to determine the approach that would best serve the company and its stockholders. Our board has considered
several factors supporting an annual vote, including:

• An annual say-on-pay vote is consistent with past practice, as we have been conducting an annual vote since 2011.

• An annual say-on-pay vote provides us with immediate and direct input from our stockholders on our compensation principles and

practices as disclosed in the proxy statement every year.

• An annual say-on-pay vote provides frequent feedback from our stockholders, which is consistent with our efforts to seek input from our

stockholders regarding corporate governance and our compensation philosophy.

• The lack of an annual say-on-pay vote might make it more difficult for us to understand the outcome of a stockholder vote as to whether
the stockholder vote pertains to the compensation disclosed in the current year proxy statement or pay practices over the previous year or
two years. As a result, a frequency other than annual might make it more difficult for the board to understand and respond appropriately
to the message being communicated by our stockholders.

• Our stockholders voted to recommend an annual say-on-pay vote at our 2017 annual meeting of stockholders.

By voting on this Item 2, stockholders are not approving or disapproving the board of directors’ recommendation, but rather are indicating
whether they prefer an advisory vote on named executive officer compensation be held every year, every two years, or every three years.
Stockholders may also abstain from voting.

Although the board of directors intends to carefully consider the voting results of this proposal, it is an advisory vote and the results will not
be binding on the board of directors or the company, and the board of directors may decide that it is in the best interests of our stockholders
and the company to hold an advisory vote on executive compensation more or less frequently than the option selected by our stockholders.
In accordance with Section 14A of the Exchange Act, the next “say-on-frequency” vote will be held no later than the annual meeting of the
stockholders in 2029.

The board of directors recommends that an advisory vote on compensation paid

to our named executive officers be held every year.

The frequency of every year, every two years, or every three years that receives the most votes of our common stock present in person or
represented by proxy at the meeting and entitled to vote on the proposal will be the frequency for the advisory vote on executive
compensation that has been recommended by our stockholders. Abstentions will not count as votes for or against any frequency. Broker non-
votes are not counted as voting power present and, therefore, are not counted in the vote.

MDU Resources Group, Inc. Proxy Statement 42

Proxy Statement

ITEM 3. ADVISORY VOTE TO APPROVE THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE
OFFICERS

In accordance with Section 14A of the Securities Exchange Act of 1934 and Rule 14a-21(a), we are asking our stockholders to approve, in
an advisory vote, the compensation of our named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation
S-K. As discussed in the Compensation Discussion and Analysis, the compensation committee and board of directors believe the current
executive compensation program directly links compensation of the named executive officers to our financial performance and aligns the
interests of the named executive officers with those of our stockholders. The compensation committee and board of directors also believe
the executive compensation program provides the named executive officers with a balanced compensation package that includes an
appropriate base salary along with competitive annual and long-term incentive compensation targets. These incentive programs are designed
to reward the named executive officers on both an annual and long-term basis if they attain specified goals.

Our overall compensation program and philosophy for 2022 was built on a foundation of these guiding principles:

• we pay for performance, with over 58% of our 2022 total target direct compensation for the named executive officers in the form of

performance-based incentive compensation;

• we review competitive compensation data for the named executive officers, to the extent available, and incorporate internal equity in the

final determination of target compensation levels;

• we align executive compensation and performance by using annual performance incentives based on criteria that are important to

stockholder value, including earnings, earnings per share, and earnings before interest, taxes, depreciation, and amortization (EBITDA);
and

• we align executive compensation and performance by using long-term performance incentives based on total stockholder return relative to

our peer group and financial measures important to company growth.

We are asking our stockholders to indicate their approval of our named executive officer compensation as disclosed in this Proxy Statement,
including the Compensation Discussion and Analysis, the executive compensation tables, and narrative discussion. This vote is not intended
to address any specific item of compensation, but rather the overall compensation of our named executive officers for 2022. Accordingly,
the following resolution is submitted for stockholder vote at the 2023 annual meeting of stockholders:

“RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to Item 402 of
Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion of this Proxy
Statement, is hereby approved.”

As this is an advisory vote, the results will not be binding on the company, the board of directors, or the compensation committee and will
not require us to take any action. The final decision on the compensation of the named executive officers remains with the compensation
committee and the board of directors, although the board and compensation committee will consider the outcome of this vote when making
future compensation decisions.

The board of directors recommends a vote “for” the approval, on a non-binding

advisory basis, of the compensation of the company’s named executive officers,

as disclosed in this Proxy Statement.

Approval of the compensation of the named executive officers requires the affirmative vote of a majority of the common stock present in
person or represented by proxy at the meeting and entitled to vote on the proposal. Abstentions will count as votes against this proposal.
Broker non-vote shares are not entitled to vote on this proposal and, therefore, are not counted in the vote.

43 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

INFORMATION CONCERNING EXECUTIVE OFFICERS

Information concerning the executive officers, including their ages as of December 31, 2022, present corporate positions, and business
experience during the past five years, is as follows:

Name

David L. Goodin

Age

Stephanie A. Barth

Brian R. Gray

Trevor J. Hastings

Anne M. Jones

Nicole A. Kivisto

Karl A. Liepitz

Margaret (Peggy) A. Link

Jeffrey S. Thiede

Jason L. Vollmer

Present Corporate Position and Business Experience

Mr. Goodin was elected president and chief executive officer of the company and a director
effective January 4, 2013. For more information about Mr. Goodin, see the section entitled
“Item 1. Election of Directors.”

Ms. Barth was elected vice president, chief accounting officer and controller of the company
effective September 30, 2017. Prior to that, she was controller of the company effective
May 30, 2016, and served as vice president, treasurer and chief accounting officer of WBI
Energy, Inc. effective January 1, 2015, and controller effective September 30, 2013.

Mr. Gray was elected president and chief executive officer of Knife River Corporation effective
March 1, 2023. Prior to that, he was president of Knife River Corporation effective January 1,
2023, and region president of Knife River Corporation-Northwest effective January 11, 2012.

Mr. Hastings was elected president and chief executive officer of WBI Energy, Inc. effective
October 16, 2017. Prior to that, he was vice president-business development and operations
support of Knife River Corporation effective January 11, 2012.

Ms. Jones was elected vice president and chief human resources officer effective
November 11, 2021. Prior to that, she was vice president-human resources of the company,
vice president-human resources, customer service, and safety at Montana-Dakota Utilities Co.,
Great Plains Natural Gas Co., Cascade Natural Gas Corporation, and Intermountain Gas
Company effective July 1, 2013, and director of human resources for Montana-Dakota Utilities
Co. and Great Plains Natural Gas Co. effective June 2008.

Ms. Kivisto was elected president and chief executive officer of Montana-Dakota Utilities Co.,
Cascade Natural Gas Corporation, and Intermountain Gas Company effective January 9, 2015.
Prior to that, she was vice president of operations for Montana-Dakota Utilities Co. and Great
Plains Natural Gas Co. effective January 3, 2014, and vice president, controller and chief
accounting officer for the company effective February 17, 2010.

Mr. Liepitz was elected vice president, general counsel and secretary effective February 6,
2021. Prior to that, he was assistant general counsel and assistant secretary effective
January 1, 2017, and senior attorney and assistant secretary effective January 9, 2016. He
held legal positions of increasing responsibility with the company since August 2003.

Ms. Link was elected vice president and chief information officer effective December 1, 2017.
Prior to that, she was chief information officer effective January 1, 2016, assistant vice
president-technology and cybersecurity officer effective January 1, 2015, and director shared
IT services effective June 2, 2009.

Mr. Thiede was elected president and chief executive officer of MDU Construction Services
Group, Inc. effective April 30, 2013, and president effective January 1, 2012.

Mr. Vollmer was named vice president and chief financial officer effective November 23, 2020.
Prior to that, he was vice president, chief financial officer and treasurer effective
September 30, 2017, vice president, chief accounting officer and treasurer effective
March 19, 2016, treasurer and director of cash and risk management effective November 29,
2014, and manager of treasury services and risk management effective June 30, 2014.

On August 4, 2022, the company announced its intention to separate its indirect, wholly owned subsidiary, Knife River Corporation, from
the company. The separation is expected to be effected as a tax-free spinoff to the company’s stockholders. If the spin-off transaction is
completed, the company has announced that it expects Mr. Hastings and Mr. Liepitz to become officers of Knife River Corporation, in which
case they will resign from the company at the time of the spinoff.

MDU Resources Group, Inc. Proxy Statement 44

Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Discussion and Analysis describes how our named executive officers were compensated for 2022 and how their 2022
compensation aligns with our pay-for-performance philosophy. It also describes the oversight of the compensation committee and the
rationale and processes used to determine the 2022 compensation of our named executive officers including the objectives and specific
elements of our compensation program.

The Compensation Discussion and Analysis contains statements regarding corporate performance targets and goals. The targets and goals
are disclosed in the limited context of our compensation programs and should not be understood to be statements of management’s
expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.

Our Named Executive Officers for 2022 were:

David L. Goodin

President and Chief Executive Officer (CEO)

Jason L. Vollmer
David C. Barney1

Vice President and Chief Financial Officer (CFO)

Former President and Chief Executive Officer - Construction Materials and Contracting Segment

Jeffrey S. Thiede

President and Chief Executive Officer - Construction Services Segment

Nicole A. Kivisto

President and Chief Executive Officer - Electric and Natural Gas Distribution Segments

1 On February 16, 2023, the company announced that Mr. Barney would cease serving in his position as chief executive officer of Knife River Corporation, the
company’s construction materials and contracting segment, effective March 1, 2023.

Executive Summary

Compensation Committee Responsibilities and Objectives
The compensation committee is responsible for designing and approving our executive compensation program and setting compensation
opportunities for our named executive officers. The objectives of our executive compensation program for executive officers are to:

• recruit, motivate, reward, and retain high performing executive talent required to create superior stockholder value;

• reward executives for short-term performance as well as for growth in enterprise value over the long-term;

• ensure effective utilization and development of talent by working in concert with other management processes - for example, performance

appraisal, succession planning, and management development;

• help ensure that compensation programs do not encourage or reward excessive or imprudent risk taking; and

• provide a competitive package relative to industry-specific and general industry comparisons and internal equity, as appropriate.

The above executive compensation objectives outlined in our executive compensation policy are directly linked to our business strategy to
ensure officers are focused on elements that drive our business success and create stockholder value.

45 MDU Resources Group, Inc. Proxy Statement

Pay for Performance
To ensure management’s interests are aligned with those of our stockholders and the performance of the company, the majority of the CEO’s
and the other named executive officers’ compensation is dependent on the achievement of company performance targets. The charts below
show the 2022 pay mix for the CEO and average 2022 pay mix of the other named executive officers, including base salary and the annual
and long-term incentives at target.

Proxy Statement

Annual Base Salary
We provide our executive officers with base salary at a sufficient level to attract and retain executives with the knowledge, skills, and
abilities necessary to successfully execute their job responsibilities. Consistent with our compensation philosophy of linking pay to
performance, our executives receive a relatively smaller percentage of their overall target compensation in the form of base salary. In
establishing base salaries, the compensation committee considers each executive’s individual performance, the scope and complexities of
their responsibilities, internal equity, and whether the base salary is competitive as measured against the base salaries of similarly situated
executives in our compensation peer group and market compensation data.

Annual Cash Incentive Awards
We linked our 2022 annual cash incentive awards for our executive officers to performance by rewarding achievement of financial
performance measures and ensuring our executive officers are focused and accountable for our growth and profitability. Each executive was
assigned a target annual incentive award based on a percentage of the executive’s base salary. The actual annual cash incentive realized
was determined by multiplying the target award by the payout percentage associated with the achievement of the executive’s performance
measures.

The annual cash incentive award for corporate executives (including our CEO and CFO) was based solely on the company’s overall earnings
per share (EPS) as adjusted and as described under the “Annual Cash Incentives” section in this Compensation Discussion and Analysis.
This incentivizes the corporate executives to assist the business segments in their success and further links executive pay with the
performance of the company.

Eighty percent of the annual cash incentive award for our business segment executives was based on specific business segment financial
performance measures selected by the compensation committee. The other 20% of the business segment executives’ annual incentive
award was based on the achievement of overall company EPS as adjusted and as described under the “Annual Cash Incentives” section in
this Compensation Discussion and Analysis. These measures incentivize our business segment executives to focus on the success and
performance of their individual business segments while keeping the overall financial success of the company in mind.

In February 2022, the compensation committee approved the DEI modifier as part of the 2022 annual cash incentive award program for
executive officers. The DEI modifier is based upon the company’s achievement of certain initiatives to attract, retain, and develop a diverse
and inclusive workforce. It includes a focus on representation of diverse employees in executive succession plans, outreach efforts to attract
diverse candidates for open positions, implementing enhanced diversity, equity, and inclusion training as well as mentoring for new
employees. The DEI modifier also includes the development of enhanced internal employee data dashboards to further support the
company’s efforts to attract, retain, and develop a diverse and inclusive workforce.

MDU Resources Group, Inc. Proxy Statement 46

Proxy Statement

The 2022 DEI modifier provides executives with the opportunity to attain up to an additional 5% of their annual incentive target based on
the achievement of the DEI initiatives as determined by the compensation committee. The compensation committee may also deduct up to
5% of the executives’ annual incentives target if the compensation committee determines insufficient progress is made toward achieving the
DEI initiatives.

As shown in the following chart, the percentage payout of the annual incentive target realized by our CEO compared to earnings per share
from continuing operations for the last five years demonstrates the alignment between our financial performance and realized annual cash
incentive compensation.

The percent of target paid for years 2018 through 2020 was based on adding each business segment’s results weighted by its average
invested capital compared to the company’s total average invested capital. The percent of target paid for 2021 and 2022 was solely based on
the company’s EPS. In addition to the 51.7% payout received for achievement of the 2022 EPS performance measure, our CEO received an
additional 5% of his annual incentive target based on the achievement of goals associated with the DEI modifier.

See the “Annual Cash Incentives” section within this Compensation Discussion and Analysis for further details on our company’s annual
cash incentive program.

47 MDU Resources Group, Inc. Proxy Statement

% of Target PaidEPSCEOAnnual Incentive Payout98.0%163.2%151.5%56.1%51.7%CEO % of Target PaidEPS (from continuing operations)201820192020202120220%60%120%180%$0.00$0.50$1.00$1.50$2.00$2.50$3.00Proxy Statement

Long-Term Equity-Based Incentive Awards
In February 2022, the compensation committee and the board approved grants of performance shares and restricted stock units which are
eligible to vest into company stock, plus dividend equivalents, at the end of 2024. The performance shares, which comprise 75% of the
award, will vest based on the achievement of two equally weighted performance measures, namely the company’s total stockholder return
(TSR) relative to a group of peer companies established for long-term incentive purposes and earnings growth as defined below over the
three-year performance period. The restricted stock units, which comprise 25% of the award, enhance alignment with stockholders and
serve as a retention tool. The restricted stock units will vest at the end of 2024, as long as the executive remains continuously employed
with the company.

The long-term incentive granted in 2020 by the compensation committee and approved by the board in the form of performance shares
vested at the end of 2022. Performance measures associated with the 2020-2022 performance period included earnings from continuing
operations growth, earnings before interest, taxes, depreciation, and amortization (EBITDA) from continuing operations growth, and TSR
relative to our peer group. Earnings growth and EBITDA growth were adjusted as described in the “Vesting of 2020-2022 Performance
Share Awards” section within this Compensation Discussion and Analysis. These performance measures were selected to align pay and long-
term performance goals.

TSR Ranking

50th

Percentile

Target Ranking = 12th out of 22
Weighting = 50%

Weighted Vesting = 50.0%

Long-Term Performance Measures
for the 2020-2022 Performance Period

Earnings Growth

4.3%

Compound Annual
Growth Rate

Target Growth = 6.5%
Weighting = 25%

Weighted Vesting = 12.4%

Total Vesting of 91.7%

EBITDA Growth

7.1%

Compound Annual
Growth Rate

Target Growth = 6.5%
Weighting = 25%

Weighted Vesting = 29.3%

See the “Long-Term Incentives” section within this Compensation Discussion and Analysis for further details on the company’s long-term
incentive program.

With the majority of our executive officers’ compensation dependent on the achievement of robust performance measures set in advance by
the compensation committee, we believe there is substantial alignment between executive pay and the company’s performance.

Stockholder Advisory Vote (“Say on Pay”)
At our 2022 annual meeting of stockholders, 95.7% of the votes cast on the “Say on Pay” proposal approved the compensation of our
named executive officers. The compensation committee viewed the 2022 vote as an expression of the stockholders’ general satisfaction with
the company’s executive compensation programs. The compensation committee reviewed the 2022 vote on “Say on Pay” and supports
including performance based incentives.

MDU Resources Group, Inc. Proxy Statement 48

Proxy Statement

Compensation Practices
Our practices and policies ensure alignment between the interests of our stockholders and our executives as well as effective compensation
governance.

What We Do

þ Pay for Performance - Annual incentive and the performance share award portion of the long-term incentive are tied to performance

measures set by the compensation committee and comprise the largest portion of executive compensation.

þ Independent Compensation Committee - All members of the compensation committee meet the independence standards under the

New York Stock Exchange listing standards and the Securities and Exchange Commission rules.

þ Independent Compensation Consultant - The compensation committee retains an independent compensation consultant to evaluate

executive compensation plans and practices.

þ Long-Term Equity Incentive - 2022 long-term incentive awards may be earned at the end of a three-year period. Payment of

þ Balanced Mix of Pay Components - The target compensation mix represents a balance of annual cash and long-term equity-based

compensation.

þ Annual Compensation Risk Analysis - Risks related to our compensation programs are regularly analyzed through an annual

compensation risk assessment.

What We Do Not Do

payments upon termination or a change of control of the company.

unvested share awards.

ý Tax Gross-Ups - Executives do not receive tax gross-ups on their compensation.

49 MDU Resources Group, Inc. Proxy Statement

2022 Compensation Framework

Compensation Decision Process for 2022
The compensation committee’s process for making executive compensation decisions for 2022 is depicted in the graphic below.

Proxy Statement

Compensation Policies and Practices as They Relate to Risk Management
The company completed an annual risk assessment of our 2022 compensation programs and concluded that our compensation policies and
practices do not create risks which could have a material adverse effect on the company. After review and discussion of the assessment with
the general counsel, chief human resources officer, and the chief executive officer, the company identified the following practices designed
to prevent excessive risk taking:

• Business management and governance practices:

◦

the use of human capital management systems and processes to attract, recruit, train, develop and retain employees to achieve short
and long-term objectives;

risk management is a specific performance competency included in the annual performance assessment of executives;

◦ board oversight on capital expenditure and operating plans promotes careful consideration of financial assumptions;

◦ board approval on business acquisitions above a specific dollar amount or on any transaction involving the exchange of company

common stock;

◦ employee integrity training programs and anonymous reporting systems;

◦ quarterly risk assessment reports at audit committee meetings; and

◦ prohibitions on holding company stock in an account that is subject to a margin call, pledging company stock as collateral for a loan,

and hedging of company stock by executive officers and directors.

• Executive compensation practices:

◦ active compensation committee review of all executive compensation programs as well as comparison of company performance to its

peer group;

◦ use of independent consultants to assist in establishing pay targets and compensation structure.

◦

initial determination of a position’s salary grade to be at or near the 50th percentile of base salaries paid to similar positions at peer
group companies and/or relevant industry companies;

MDU Resources Group, Inc. Proxy Statement 50

Proxy Statement

◦ consideration of peer group and/or relevant industry practices to establish appropriate target compensation;

◦ a balanced compensation mix of base salary as well as annual and long-term incentives tied primarily to the company’s financial and

stock performance;

◦ use of interpolation for annual and long-term incentive awards to avoid payout cliffs;

◦ compensation committee negative discretion to adjust any annual incentive award payment downward;

◦ use of caps on annual incentive awards with a combined maximum of 200% of target for MDU Resources executives and the regulated

energy delivery businesses and a combined maximum of 240% of target for construction materials and services businesses;

◦ use of caps on long-term incentive stock grant awards with a maximum of 200% of target;

◦ ability to clawback incentive payments in the event of a financial restatement;

◦ use of performance shares and restricted stock units, rather than stock options or stock appreciation rights, as an equity component of

incentive compensation;

◦ use of performance shares for 75% of the long-term incentive award opportunity with relative total stockholder return and earnings

growth performance measures;

◦ use of restricted stock units for 25% of the long-term incentive award opportunity to serve as a retention tool;

◦ use of three-year performance periods for performance shares and restricted stock units to discourage short-term risk-taking;

◦ substantive annual incentive goals measured primarily by earnings per share for all Section 16 officers in addition to segment earnings

or segment EBITDA for business segment presidents, which are measures important to stockholders and encourage balanced
performance;

◦

inclusion of a DEI modifier tied to the achievement of specific diversity, equity and inclusion initiatives;

◦ use of financial performance metrics that are readily monitored and reviewed;

◦

regular review of companies in the compensation and long-term incentive peer groups to ensure appropriateness and industry match;

◦ stock ownership requirements for board members and for executives participating in the MDU Resources Long-Term Performance-

Based Incentive Plan; and

◦ mandatory holding periods of net after-tax company stock awards to executives until stock ownership requirements are achieved and

mandatory holding periods for 50% of any net after-tax shares of stock earned under the long-term incentive awards until the earlier of
(1) the end of the two-year period commencing on the date any stock earned under such award is issued, and (2) the executive’s
termination of employment.

Components of Compensation
Our executive compensation program is designed to promote sustained long-term profitability and create stockholder value. The components
of our executive officers’ compensation are selected to drive financial and operational results as well as align the executive officer’s interests
with those of our stockholders. Pay components and performance measures are considered by the compensation committee as fundamental
measures of successful company performance and long-term value creation. The components of our 2022 executive compensation included:

51 MDU Resources Group, Inc. Proxy Statement

Component

Purpose

How Determined

How it Links to Performance

Proxy Statement

Base Salary

Provides sufficient, regularly paid
income to attract and retain executives
with the knowledge, skills, and
abilities necessary to successfully
execute their job responsibilities.

Annual Cash
Incentive

Provides an opportunity to earn annual
incentive compensation based on the
achievement of financial and operating
results important to the success of the
company.

Performance
Shares

Provides an opportunity to earn long-
term equity compensation based on
the achievement of performance
measures aimed at long-term value
creation and the company’s strategic
objectives.

Time-Vesting
Restricted
Stock Units

Provides an opportunity to earn long-
term equity compensation through
continued service through the vesting
period.

Base salary is a means to attract and
retain talented executives capable of
driving success and performance.

Annual incentive performance
measures are tied to the achievement
of financial and DEI goals aimed to
drive the success of the company and
the individual business segments.

Fosters ownership in company stock
and aligns the executive’s interests
with those of stockholders in
increasing long-term stockholder
value.

Fosters continued leadership in the
company to achieve company
objectives through retention of key
executives as well as aligning the
executive’s interests with those of
stockholders in increasing long-term
stockholder value.

Base salaries are recommended by the
CEO for executives other than the CEO
position to the compensation committee
using analysis provided by the
independent compensation consultant to
target compensation within range of the
50th percentile using peer company and
salary survey data. The compensation
committee determines the base salary of
the CEO based on input from the
independent compensation consultant.

The annual cash incentive target is a
percentage of base salary for the given
executive position established by the
compensation committee. Actual
payment of the incentive is determined
based on the achievement of
performance measures and goals
approved by the compensation
committee.

Performance share awards represent
75% of an executive’s long-term
incentive award. The CEO recommends
the target award amount for executives
other than the CEO position to the
compensation committee based on
analysis provided by the independent
compensation consultant. The
compensation committee determines the
target award for the CEO after
consideration of input by the
independent compensation consultant.
Vesting of the award occurs at the end of
a three-year period based on the
achievement of performance measures
established by the compensation
committee.

Time-vesting restricted stock units
represent 25% of an executive’s long-
term incentive award. The CEO
recommends the target award amount for
executives other than the CEO position
to the compensation committee based
on analysis provided by the independent
compensation consultant. The
compensation committee determines the
target award for the CEO after
consideration of input by the
independent compensation consultant.
Vesting of the award occurs at the end of
a three-year period as long as the
executive remains employed with the
company through the vesting period.

MDU Resources Group, Inc. Proxy Statement 52

Proxy Statement

Allocation of Total Target Compensation for 2022
Total target compensation consists of base salary plus target annual and long-term incentive compensation. Incentive compensation, which
consists of annual cash incentive and long-term incentive awards vesting after three years, comprises the largest portion of our named
executive officers’ total target compensation because:

• equity awards align the interests of the named executive officers with those of stockholders by making a significant portion of their target

compensation contingent upon results beneficial to stockholders;

• our named executive officers are in positions of authority to drive results, and therefore bear high levels of responsibility for our corporate

performance;

• variable compensation helps ensure focus on the goals that are aligned with overall company strategy; and

• incentive compensation is at risk and dependent upon company performance and the satisfaction of performance objectives.

The compensation committee generally allocates a higher percentage of total target compensation to the target long-term incentive than to
the target annual incentive for our higher level executives because they are in a better position to influence the company’s long-term
performance. The long-term incentive awards are paid in company common stock. These awards, combined with our stock retention
requirements and our stock ownership policy, promote ownership of our stock by the executive officers. As a result, the compensation
committee believes the executive officers, as stockholders, will be motivated to deliver long-term value to all stockholders.

Peer Groups
The compensation committee reviews the peer companies used for compensation analysis of executive positions and the company’s relative
total stockholder return performance periodically to assess their ongoing relevance and credibility.

Compensation Benchmarking Peer Group

The compensation committee’s independent compensation consultant aids in the selection of appropriate peer companies for our
compensation benchmarking peer group by evaluating potential peer companies in the construction and engineering, construction materials,
utility and other related industries which are similar in size in terms of revenues and market capitalization. In 2022, the independent
compensation consultant proposed and the compensation committee approved the removal of Jacobs Engineering Group, Inc. due to its
increase in revenues and continued growth expectations from the compensation benchmarking peer group. MYR Group Inc. was
recommended as an addition to the peer group based on its industry and comparable size in terms of revenues.

For review of compensation of the CEO and CFO positions, the independent compensation consultant used market data from 21 peer
companies, shown in bold in the table below. For review of compensation of all other executive officer positions, the independent
compensation consultant used compensation data from additional companies in Willis Towers Watson’s 2021 General Industry Executive
Compensation Survey.

53 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Companies used for compensation analysis included:

2022 Compensation Peer Companies

Alcoa Corporation

Eastman Chemical Company

Pinnacle West Capital Corporation

Allegheny Technologies Incorporated

Edison International

Portland General Electric Company

Alliant Energy Corporation

Ameren Corporation

EMCOR Group, Inc.

Entergy Corporation

PPL Corporation

Public Service Enterprise Group Incorporated

Atmos Energy Corporation

Evergy Inc.

Quanta Services, Inc.

Avery Dennison Corporation

Eversource Energy

Scotts Miracle-Gro Company

Avient Corporation

Granite Construction Incorporated

Sealed Air Corporation

Axalta Coating Systems LTD.

Graphic Packaging Holding Company

Sonoco Products Company

Ball Corporation

H.B. Fuller Company

Southwest Gas Holdings, Inc.

Berry Global Group, Inc.

KBR, Inc.

Spire Inc.

Black Hills Corporation

Cabot Corporation

Celanese Corporation

Kinross Gold Corporation

Summit Materials, Inc.

Martin Marietta Materials, Inc.

MasTec, Inc.

CenterPoint Energy, Inc.

The Mosaic Company

CF Industries Holdings, Inc.

MYR Group, Inc.

UGI Corporation

Valvoline Inc.

Vulcan Materials Company

WEC Energy Group, Inc.

The Chemours Company

CMS Energy Corporation

Crown Holdings, Inc.

Dycom Industries, Inc.

Newmont Corporation

Westlake Chemical Corporation

NiSource Inc.

OGE Energy Corp.

ONE Gas, Inc.

Worthington Industries, Inc.

Xcel Energy Inc.

Companies shown in bold are the companies used for compensation analysis of the CEO and CFO positions and are considered our compensation
benchmarking peer group.

Total Stockholder Return Performance Peer Group

To determine relative total stockholder return performance in conjunction with our 2022-2024 Performance Share Award, the independent
compensation consultant recommended, and the compensation committee approved, using a peer group of 46 select companies within the
utility, materials and construction and engineering industries from the S&P MidCap 400 Index as it is a stable, robust group of companies
reflective of our company’s size, value, and risk profile. During 2022, two out of the 46 companies were removed from the S&P MidCap 400
index due to a change in their market capitalization. Accordingly, relative total stockholder return was calculated based on the 44 remaining
in the peer group as of December 31, 2022.

2022 Compensation for Our Named Executive Officers

2022 Base Salary and Incentive Targets
At its November 2021 meeting, the compensation committee approved the 2022 base salaries as well as the target annual and long-term
incentive compensation for the named executive officers. At its February 2022 meeting, the compensation committee approved the annual
and long-term incentive performance measures and goals for our named executive officers. In determining base salaries, target annual cash
incentives, target long-term equity incentives, and total target compensation for our named executive officers, the compensation committee
received and considered company and individual performance, market and peer data, responsibilities, experience, tenure in position,
internal equity, and input and recommendations from the CEO, and the independent compensation consultant. The following information
relates to each named executive officer’s 2022 base salary, target annual cash incentive, target long-term equity incentive, and total target
compensation:

MDU Resources Group, Inc. Proxy Statement 54

Proxy Statement

David L. Goodin

Base Salary

Target Annual Cash Incentive Opportunity

Target Long-Term Equity Incentive Opportunity

Total Target Compensation

2022
($)

Compensation Component
as a % of Base Salary

1,044,000

1,305,000

3,200,000

5,549,000

125%

307%

The compensation committee considered information provided in Meridian’s August 2021 compensation
study showing Mr. Goodin's base salary, total cash compensation, and long-term incentives were below the
median of the compensation peer group. Based on input from Meridian to move Mr. Goodin’s compensation
closer to the market median, the compensation committee increased Mr. Goodin’s base salary by 4.4% and
maintained his 2022 annual incentive target at 125% of his base salary. The compensation committee set
Mr. Goodin’s long-term incentive target at $3,200,000, which is an increase from 280% to 307% of his
base salary based on input from Meridian to more closely align his long-term incentive with the market
median for his position.

Jason L. Vollmer

Base Salary

Target Annual Cash Incentive Opportunity

Target Long-Term Equity Incentive Opportunity

Total Target Compensation

2022
($)

530,000

397,500

848,000

1,775,500

Compensation Component
as a % of Base Salary

75%

160%

The compensation committee considered information provided in Meridian’s August 2021 compensation
study showing Mr. Vollmer’s base salary was below the market median based on peer group and
compensation survey data. To move Mr. Vollmer closer to the market median, the CEO recommended and
the compensation committee approved a base salary increase of 8.2% for Mr. Vollmer in 2022. The
compensation committee maintained Mr. Vollmer’s target annual cash incentive opportunity at 75% of base
salary and increased his long-term incentive target from 150% to 160% of his base salary to more closely
align with the market median for his position.

David C. Barney

Base Salary

Target Annual Cash Incentive Opportunity

Target Long-Term Equity Incentive Opportunity

Total Target Compensation

2022
($)

535,000

401,250

856,000

1,792,250

Compensation Component
as a % of Base Salary

75%

160%

The compensation committee considered information provided in Meridian’s August 2021 compensation
study in their review of the recommendation made by the CEO concerning Mr. Barney’s compensation. Mr.
Barney received a 4.4% increase in base salary for 2022. The compensation committee maintained
Mr. Barney’s target annual cash incentive opportunity at 75% of his base salary and increased his long-term
incentive target from 150% to 160% of his base salary to more closely align with the market median for his
position.

55 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Jeffrey S. Thiede

Base Salary

Target Annual Cash Incentive Opportunity

Target Long-Term Equity Incentive Opportunity

Total Target Compensation

2022
($)

530,000

397,500

848,000

1,775,500

Compensation Component
as a % of Base Salary

75%

160%

The compensation committee considered information provided in Meridian’s August 2021 compensation
study in their review of the recommendation made by the CEO concerning Mr. Thiede’s compensation. Mr.
Thiede received a 4.4% increase in his base salary for 2022. The compensation committee maintained
Mr. Thiede’s target annual cash incentive opportunity at 75% of his base salary and increased his long-term
incentive target from 150% to 160% of his base salary to more closely align with the market median for his
position.

Nicole A. Kivisto

Base Salary

Target Annual Cash Incentive Opportunity

Target Long-Term Equity Incentive Opportunity

Total Target Compensation

2022
($)

530,000

397,500

848,000

1,775,500

Compensation Component
as a % of Base Salary

75%

160%

The compensation committee considered information provided in Meridian’s August 2021 compensation
study in their review of the recommendation made by the CEO concerning Ms. Kivisto’s compensation. Ms.
Kivisto received a base salary increase of 4.4% for 2022. The compensation committee maintained her
target annual cash incentive opportunity at 75% of her base salary and increased her long-term incentive
target from 150% to 160% of her base salary to more closely align with the market median for her position.

Annual Cash Incentives
Business segment executives receive their annual cash incentive awards through the achievement of financial performance measures
specific to their business segment plus a performance measure tied to overall company earnings per share. Our CEO and CFO earn their
annual cash incentive award based solely on the achievement of overall company earnings per share. Through this, our business segment
executives are incentivized to primarily focus on the success and performance of their business segments while keeping the overall financial
success of the company in mind, whereas our corporate executives are incentivized to assist in the success and performance of all lines of
business.

The compensation committee selected the following financial performance measures to ensure that compensation to the executives reflects
the success of their respective business segments and the overall company.

Mr. Goodin and Mr. Vollmer

100% EPS

Mr. Barney

Mr. Thiede

Ms. Kivisto

80% Construction Materials and Contracting EBITDA

20% EPS

80% Construction Services EBITDA

20% EPS

80% Electric and Natural Gas Distribution Earnings

20% EPS

The compensation committee selected earnings per share from continuing operations as the shared financial metric as it is a key indicator
of company results and used to communicate annual performance expectations with the financial community. The earnings per share target
of $2.07 reflects our 2022 financial goal to achieve an estimated return on invested capital of 7.7%.

MDU Resources Group, Inc. Proxy Statement 56

Proxy Statement

The compensation committee selected EBITDA from continuing operations as the performance metric for the construction materials and
contracting and construction services segment presidents as it is a financial performance metric common to the construction industry and
encourages the presidents to focus on growth by excluding the impact of items such as taxes, interest, depreciation and amortization from
the performance result which are largely out of their control. The target of $331 million in EBITDA from continuing operations for the
construction materials and contracting segment and $180 million in EBITDA from continuing operations for the construction services
segment reflects the financial goal needed to achieve returns on invested capital of 9.5% and 24.1% for the construction materials and
contracting and construction services segments, respectively.

The compensation committee selected earnings from continuing operations as the performance metric for the electric and natural gas
distribution segments as regulated utilities are valued based on earnings potential and rate base. The 2022 target of $110 million reflects
the financial goal needed to achieve a return on invested capital of 4.9% and the continued investment in infrastructure and regulatory
recovery from completed and pending rate cases.

In addition to the financial performance measures, the environmental and sustainability committee approved and recommended a DEI
modifier be included as part of the executive’s 2022 annual incentive which was then approved by the compensation committee at its
February 2022 meeting. The DEI modifier is a separate performance measure, independent of the achievement of the financial performance
measures and is based on the compensation committee’s assessment of management’s progress toward the completion of the following DEI
initiatives:

• Enhance the formal succession planning process to include the review of the positions of all Section 16 officers, key executives and
business segment officers and to ensure diverse representation in terms of gender, ethnicity, individuals with disabilities and veteran
status and the development of candidates being prepared for these positions.

• Increase outreach activities and efforts aimed at attracting diverse candidates to positions within our businesses.

• Enhance new employee onboarding processes to include DEI training and formal mentoring programs.

• Implement a consistent human resources dashboard across all businesses to build baseline information and track key metrics to provide

insight into the make-up and diversity of our employee population.

The DEI modifier applies equally to all executives and adds or deducts up to 5% of the executives annual incentive target based on the
compensation committee’s assessment.

All financial performance measures are from continuing operations plus earnings or losses from any discontinued operations after December
31, 2021. To incentivize executives to make decisions that have long-term positive impact, even at the expense of short-term results, and to
prevent one-time gains and losses from having an undue impact on incentive payments, the compensation committee designed its annual
incentive measures to allow for adjustments for certain unplanned events that impact our performance targets but are not indicative of
underlying business performance. The compensation committee may approve adjustments to the financial results to remove the following
items, as applicable, from the performance measure:

• The negative effect on earnings/EBITDA from asset sales/dispositions/retirements.

• The effect on earnings/EBITDA from withdrawal liabilities relating to multiemployer pension plans.

• The effect on earnings/EBITDA from transaction costs incurred for acquisitions or mergers.

• The effect on earnings from unanticipated changes and interpretation of tax law.

The compensation committee will consider for removal the positive effect on earnings/EBITDA from assets sales/dispositions/retirements if it
determines the positive effect is not indicative of underlying business performance.

For the 2022 annual cash incentive, the compensation committee approved adjustments to the construction materials and contracting
segment EBITDA from continuing operations to remove the effect of transaction costs incurred for acquisitions and mergers. In the
calculation of EPS from continuing operations, the compensation committee approved adjustments for the effect of transaction costs
incurred for acquisitions and mergers, costs incurred associated with the company’s intent to separate the construction materials and
contracting segment pursuant to a tax-free spinoff and, costs incurred in connection with the company’s strategic review to optimize the
value of the construction services segment.

57 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

To determine the payout associated with each financial performance measure:

• Actual performance results are compared to the target performance measure which results in the percent of target achieved.

• The percent of target achieved is translated into a payout percentage of the executive’s target award opportunity using linear

interpolations for results between threshold and target as well as target and maximum.

Achievement of 100% of the target performance measure results in a payout of 100% of the target award opportunity. Results achieved
below the established threshold result in no payout. The threshold, target and maximum performance levels as well as the associated payout
opportunity are depicted in the following chart:

Measure

MDU Resources EPS*

Electric and Natural Gas Distribution Earnings

Construction Materials and Contracting EBITDA

Construction Services EBITDA

Threshold

Target

Maximum

% of Target

Payout %

Payout % % of Target

Payout %

85%

90%

75%

65%

25%

50%

25%

$2.07

100%

$110 million

100%

$331 million

100%

$180 million

100%

115%

110%

115%

200%

250%

*EPS is weighted 20% of the award for business segment presidents and 100% of the award for corporate officers.

2022 Annual Incentive Results

The 2022 performance measure results, percent of target achieved based on those results, and the associated payout percentages reflect
the company’s 2022 financial performance and are presented below:

Business Segment

MDU Resources Corporate Officers

All Business Segment Presidents

Electric and Natural Gas Distribution

Construction Materials and Contracting

Performance
Measure

Earnings per Share1

Result

$1.87

Earnings

EBITDA2

$102.2 million

$307.5 million

Percent of
Performance
Measure
Achieved

Percent
of Award
Opportunity
Payout

90.3%

93.0%

92.8%

51.7%

64.8%

78.5%

Construction Services

EBITDA

$193.4 million

107.4%

173.7%

Weighted
Award
Opportunity
Payout %

51.7%

10.3%

51.8%

62.8%

139.0%

Weight

100%

20%

80%

1 Earnings used to calculate EPS from continuing operations were adjusted to remove the effect of transaction costs incurred for acquisitions and mergers as well as
costs incurred associated with the company’s intent to separate the construction materials and contracting segment pursuant to a tax-free spinoff and the strategic
review to optimize the value of the construction services segment.

2 Construction materials and contracting segment EBITDA from continuing operations was adjusted to remove the effect of transaction costs incurred for acquisitions

and mergers.

The compensation committee further assessed management’s progress toward completing the performance measures related to the
company’s DEI initiatives, including:

• The enhancement of the succession planning process to include all executive officer positions at the corporate and business unit level

along with the identification of candidate diversity in terms of gender, ethnicity, veteran status and disability.

• Development plans were determined for all candidates identified in the succession planning process.

• Onboarding processes were enhanced to include diversity, equity and inclusion training as well as formal mentoring programs.

• A system was established to track outreach activities and efforts aimed at attracting diverse candidates to positions within the company.

• A human resources dashboard was implemented across all businesses to consistently track employment metrics and trends.

MDU Resources Group, Inc. Proxy Statement 58

Proxy Statement

Based on these accomplishments the compensation committee awarded a DEI modifier award of 5.0% of the executive’s target annual
incentive. Based on the achievement of the performance targets and the DEI modifier, the named executive officers received the following
2022 annual incentive compensation:

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

Target Annual
Incentive
($)

1,305,000

397,500

401,250

397,500

Payout Percentage on
financial measures
(%)

Annual Incentive Earned

DEI Modifier
(%)

Total payout percentage
(%)

51.7

73.1

149.3

62.1

5.0

56.7

78.1

154.3

67.1

Amount
($)

739,935

225,383

313,377

613,343

266,723

Long-Term Incentives
All of our named executive officers participated in the 2022 long-term incentive plan which consists of 75% performance shares that align
long-term compensation with the achievement of pre-determined financial performance measures and 25% time-vesting restricted stock
units that incentivize retention of our executives and alignment with the interests of our stockholders. Long-term incentive compensation
comprised 57.7% of the CEO’s 2022 total target compensation and 47.7% of the average of the other named executive officer’s total target
compensation. Stock earned under long-term incentive compensation is subject to our stock retention requirements.

Grant of 2022-2024 Long-Term Equity Incentive Awards
On February 16, 2022, the compensation committee determined the target number of performance shares and time-vesting restricted stock
units to be granted to each named executive officer for the 2022-2024 vesting period by dividing the executive’s target long-term award
amount by the average of the closing prices of our stock from January 1 through January 22, 2022, which was $30.47 per share. Based on
this price, the compensation committee awarded 75% of the target long-term incentive grant as performance shares and 25% of the target
long-term incentive grant as time-vesting restricted stock units as shown below:

Name

Base Salary
($)

David L. Goodin

1,044,000

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

530,000

535,000

530,000

Target
Long-Term
Incentive of
Base Salary
(%)

307

160

Long-Term
Incentive
Target
($)

3,200,000

848,000

856,000

848,000

Total Target
Long-Term
Incentive Shares
(#)

75%
Performance
Shares
(#)

25%
Time-Vesting
Restricted Stock
Units
(#)

105,021

27,830

28,093

27,830

78,766

20,873

21,070

20,873

26,255

6,957

7,023

6,957

The performance share portion of the grant may vest at the end of a three-year period between 0% and 200%. The determination of vesting
is based on the achievement of two separate performance measures each making up 50% of the award:

• Total stockholder return relative to that of a group of peer companies selected from the S&P 400 MidCap Index is the measure to align

with the company's performance relative to our peers; and

• Compound annual growth rate in earnings from continuing operations is the measure to encourage continued growth of the company.

Earnings used to calculate earnings growth from continuing operations for the 2022 awards may be adjusted, as such adjustments are
approved by the compensation committee, to remove:

• the effect on earnings from losses/impairments on asset sales/dispositions/retirements;

• the effect on earnings from withdrawal liabilities relating to multiemployer pension plans;

• the effect on earnings from costs incurred for acquisitions or mergers; and

• the effect on earnings from unanticipated tax law changes.

59 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Vesting of performance shares and associated dividend equivalents is predicated on achievement of established levels associated with each
performance measure. Threshold, target and maximum payouts as a percentage of target performance for the 2022 measures are:

The Company’s Relative
TSR Percentile Rank

The Company’s Earnings
Growth Rate as a
Percentage of Target

Vesting Percentage
of Award Target

Maximum

Target

Threshold

75th or higher

153.8% of target or higher

50th

25th

Target

46.2% of target

Below threshold

Less than 25th

less than 46.2% of target

200%

100%

20%

We do not disclose the earnings growth rate performance measure target until payout as such disclosure could result in competitive harm.
Vesting for performance falling between the intervals is interpolated.

The time-vesting restricted stock units represent 25% of the long-term incentive opportunity and will vest on December 31, 2024, as long
as the executive remains continuously employed with the company.

Vesting of 2020-2022 Performance Share Awards
For the 2020-2022 performance period, the long-term incentive program consisted solely of performance shares as the compensation
committee did not adopt the use of time-vesting restricted stock units until 2021. The performance criteria used for vesting of the
2020-2022 performance share awards was:

• 50% based on our company’s total stockholder return as a percentile of the total stockholder return of our peer companies over the three-

year performance period;

• 25% based on EBITDA growth from continuing operations over the three-year performance period; and

• 25% based on earnings growth from continuing operations over the three-year performance period.

Performance Criteria

Relative TSR Percentile Ranking

EBITDA Growth*

Earnings Growth*

Total Weighted Payout

Target

50th

6.5%

Result

50th

7.1%

4.3%

Vesting %

Weighting

Weighted Payout

100.0%

117.1%

49.7%

50%

25%

50.0%

29.3%

12.4%

91.7%

*The 2022 EBITDA and earnings from continuing operations results used in the calculation of EBITDA growth and earnings growth were adjusted to remove the

effect of costs incurred for acquisitions and mergers as well as costs incurred related to the company’s intent to separate the construction materials and
contracting segment pursuant to a tax-free spinoff and the strategic review to optimize the value of the construction services segment.

MDU Resources Group, Inc. Proxy Statement 60

Proxy Statement

The named executive officers received the following long-term compensation awards for the 2020-2022 performance period:

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

Target
Performance
Shares
(#)

82,191

18,082

20,034

Performance
Shares
Vested
(#)

75,369

16,581

18,371

Dividend
Equivalents
($)

193,322

42,530

47,122

2023-2025 Long-Term Incentive Awards

The compensation committee did not award performance shares to the executive officers for the 2023-2025 performance period due to the
company’s pending plans to separate the construction materials and contracting segment into a standalone public company and exploring
strategic alternatives for the construction services segment in 2023. The committee awarded only time-vesting restricted stock units due to
the company’s significant strategic initiatives underway and as a means of retention for executive officers of both entities during the pending
separation process. The compensation committee intends to resume awarding performance vesting shares in 2024.

Stock Retention Requirement
The named executive officers must retain 50% of the net after-tax shares vested pursuant to the long-term incentive awards for the earlier of
two years from the date the vested shares are issued or the executive’s termination of employment. The executive officer is also required to
retain all vested share awards net of taxes if the executive has not met the stock ownership requirements under the company’s stock
ownership policy for executives.

Other Benefits

The company provides post-employment benefit plans and programs in which our named executive officers may be participants. We believe
it is important to provide post-employment benefits which approximate retirement benefits paid by other employers to executives in similar
positions. The compensation committee periodically reviews the benefits provided to maintain a market-based benefits package. Our named
executive officers participated in the following plans during 2022 which are described below:

Plans

Pension Plans

401(k) Retirement Plan

Supplemental Income Security Plan

Company Credit to Deferred
Compensation Plan

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

Yes

Pension Plans
Effective in 2006, the defined benefit pension plans were closed to new non-bargaining unit employees and as of December 31, 2009, the
defined benefit plans were frozen. For further details regarding the company’s pension plans, refer to the section entitled “Pension Benefits
for 2022.”

401(k) Retirement Plan
The named executive officers as well as employees working a minimum of 1,000 hours per year are eligible to participate in the 401(k)
retirement plan (401(k) plan) and defer annual income up to the Internal Revenue Service (IRS) limit. The named executive officers receive
a company match up to 3% depending on their elected deferral rate. Contributions and the company match are invested in various funds
based on the employee’s election including company common stock.

In 2010, the company began offering increased company contributions to our 401(k) plan in lieu of pension plan contributions. For non-
bargaining unit employees hired after 2006 or employees who were not previously participants in the pension plan, the added retirement
contribution is 5% of plan eligible compensation. For non-bargaining unit employees hired prior to 2006 who were participants in the
pension plan, the added retirement contributions are based on the employee’s age as of December 31, 2009. The retirement contribution is

61 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

11.5% for Mr. Goodin, 9.0% for Ms. Kivisto, 7.0% for Mr. Vollmer, and 5.0% for Messrs. Barney and Thiede. These amounts may be
reduced in accordance with the provisions of the 401(k) plan to ensure compliance with IRS limits.

Supplemental Income Security Plan
We offered certain key managers and executives benefits under a nonqualified retirement plan referred to as the Supplemental Income
Security Plan (SISP). The SISP provides participants with additional retirement income and/or death benefits payable for 15 years. Effective
February 11, 2016, the SISP was amended to exclude new participants to the plan and freeze current benefit levels for existing
participants. For further details regarding the company’s SISP, refer to the section entitled “Pension Benefits for 2022.” Named executive
officers participating in the SISP are Messrs. Goodin and Barney and Ms. Kivisto.

The following table reflects the SISP benefits as of December 31, 2022 available to our named executive officers:

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

SISP Benefits

Annual Death Benefit
($)

Annual Retirement Benefit
($)

552,960

n/a

262,464

n/a

157,728

276,480

n/a

131,232

n/a

78,864

MDU Resources Group, Inc. Deferred Compensation Plan
The company adopted the MDU Resources Group, Inc. Deferred Compensation Plan (DCP) effective January 1, 2021, which provides a
select group of management and other highly compensated employees the opportunity to defer compensation for retirement and other
financial purposes. Participants in the plan may defer a portion of their salary and/or annual incentive. The compensation committee, upon
recommendation from the CEO, may approve company contributions for select participants which vest over a three-year period. Company
contributions recognize the participant’s contributions to the company and serve as a retention tool. After satisfying the vesting
requirements, distribution will be made in accordance with the terms of the plan. For further details regarding the company’s DCP, refer to
the section entitled “Nonqualified Deferred Compensation for 2022.”

For 2022, the compensation committee selected and approved company contributions of $79,500 to Mr. Vollmer, $150,000 to Mr. Barney,
and $100,000 to Mr. Thiede. The contributions awarded to Messrs. Vollmer, Barney, and Thiede represent 15.0%, 28.0%, and 18.9% of
their base salaries, respectively.

Employment and Severance Agreements
We typically do not have employment or severance agreements with our executives entitling them to specific payments upon termination of
employment or a change of control of the company. The compensation committee generally considers providing severance benefits on a
case-by-case basis. Post-employment or change of control benefits available to our executives are addressed within our incentive and
retirement plans. Refer to the section entitled “Potential Payments upon Termination or Change of Control.”

In connection with the strategic review intended to optimize the value of the construction services segment, in February 2023 the company
and MDU Construction Services Group, Inc. entered into a retention agreement with Jeffrey S. Thiede, the current president and chief
executive officer of MDU Construction Services Group, Inc., to provide inducement to remain with MDU Construction Services Group, Inc.
through the completion of the review and any resulting transaction involving MDU Construction Services Group, Inc. The agreement provides
for, among other things, subject to the terms and conditions set forth in the agreement, continuation of Mr. Thiede’s then-effective base
salary, entitlement to incentive compensation, vesting of company credits to his deferred compensation account, a retention bonus equal to
$1,100,000 to be paid within fifteen (15) days after the closing of any transaction, and accelerated vesting of outstanding equity awards as
set forth in the agreement. The term of the agreement is until the earlier of the closing of any transaction and December 31, 2023.

In connection with the proposed separation of Knife River Corporation, in February 2023 the company entered into an offer letter with
David C. Barney, the former president and chief executive officer of Knife River Corporation, regarding the non-executive position of senior
advisor to support the transition of his duties as president and chief executive officer of Knife River Corporation to his successor. The letter
agreement provides for, among other things, subject to the terms and conditions set forth in the offer letter, continuation of his 2023 base
salary, annual and long-term incentives, and benefits through his retirement on January 3, 2024.

MDU Resources Group, Inc. Proxy Statement 62

Proxy Statement

Compensation Governance

Impact of Tax and Accounting Treatment
The compensation committee may consider the impact of tax or accounting treatment in determining compensation. The compensation
committee did not make any adjustments to the 2022 compensation program to address the impact of tax or accounting treatment. The
compensation committee may also consider the accounting and cash flow implications of various forms of executive compensation. We
expense salaries and annual incentive compensation as earned. For our equity awards, we record the accounting expense in accordance with
Accounting Standards Codification Topic 718, which is generally expensed over the vesting period.

Stock Ownership Requirements
Executives participating in our Long-Term Performance-Based Incentive Plan are required within five years of appointment or promotion into
an executive level position to beneficially own our common stock equal to a multiple of their base salary as outlined in the stock ownership
policy. In May 2021, the ownership multiple for our CEO was increased from four times to six times base salary. Stock owned through our
401(k) plan or by a spouse is considered in ownership calculations as well as unvested restricted stock units. The level of stock ownership
compared to the ownership requirement is determined based on the closing sale price of our stock on the last trading day of the year and
base salary as of December 31 of the same year. The table shows the named executive officers’ holdings as a multiple of their base salary.

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

Ownership Policy Multiple of
Base Salary Within 5 Years

Actual Holdings as a
Multiple of Base Salary1

Ownership Requirement
Must Be Met By:

11.4

4.3

6.4

7.4

6.6

01/01/2018

01/01/2023

01/01/2019

01/01/2020

1 Includes performance share awards earned net of taxes for the 2020-2022 performance period and unvested restricted stock units granted in
February 2021 and 2022.

Incentive Award Clawback Policy

Our Long-Term Performance-Based Incentive Plan and EICP include provisions commonly referred to as a clawback policy. The
compensation committee may, or shall if required, take action to recover incentive-based compensation from specific executives in the event
the company is required to restate its financial statements due to material noncompliance with any financial reporting requirements under
the securities laws.

Policy Regarding Hedging Stock Ownership
Our executive compensation policy prohibits executive officers, which includes our named executive officers, from hedging their ownership
of company common stock. Executives may not enter into transactions that allow the executive to benefit from devaluation of our stock or
otherwise own stock technically but without the full benefits and risks of such ownership. See the section entitled “Security Ownership” for
our policy on margin accounts and pledging of our stock.

COMPENSATION COMMITTEE REPORT

The compensation committee is primarily responsible for reviewing, approving, and overseeing the company’s compensation plans and
practices and works with management and the committee’s independent compensation consultant to develop the company executive
compensation programs. The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by
Regulation S-K, Item 402(b), with management. Based on the review and discussions referred to in the preceding sentence, the
compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in our Proxy
Statement on Schedule 14A.

Karen B. Fagg, Chair
German Carmona Alvarez
Thomas Everist
Patricia L. Moss

63 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

EXECUTIVE COMPENSATION TABLES

Summary Compensation Table for 2022

Name and
Principal Position
(a)

David L. Goodin

Year
(b)

Salary
($)
(c)

Stock
Awards
($)
(e)1

2022 1,044,000

3,247,775

President and CEO

2021 1,000,000

3,222,639

Non-Equity
Incentive Plan
Compensation
($)
(g)

739,935

701,250

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
(h)2

All Other
Compensation
($)
(i)3

Total
($)
(j)

33,340

65,571

192,238

5,257,289

221,007

5,210,467

2020

960,000

2,974,497

1,818,000

484,134

186,779

6,423,410

Jason L. Vollmer

2022

530,000

860,649

Vice President and CFO

2021

490,000

845,942

2020

440,000

654,388

225,383

206,168

499,950

—

150,957

1,766,989

122,163

1,664,273

6,880

105,928

1,707,146

David C. Barney4

2022

535,000

868,777

313,377

Former President and CEO of

2021

512,500

Knife River Corporation

2020

487,000

884,789

725,030

310,191

804,646

—

214,491

1,931,645

219,420

1,926,900

86,980

220,062

2,323,718

Jeffrey S. Thiede

President and CEO of

MDU Construction

Services Group, Inc.

2022

530,000

860,649

613,343

2021

507,500

2020

487,000

876,148

725,030

293,462

852,128

—

166,470

2,170,462

171,822

1,848,932

170,362

2,234,520

Nicole A. Kivisto

2022

530,000

860,649

President and CEO of

2021

507,500

876,148

Montana-Dakota Utilities Co.,

2020

487,000

725,030

266,723

332,666

436,839

1,294

2,645

78,795

1,737,461

83,272

1,802,231

184,058

73,374

1,906,301

Cascade Natural Gas Corporation,

and Intermountain Gas Company

1 Amounts in this column represent the aggregate grant date fair value of performance share awards at target calculated in accordance with
generally accepted accounting principles for stock-based compensation in Accounting Standards Codification Topic 718. This column was
prepared assuming none of the awards were or will be forfeited. The amounts were calculated as described in Note 13 of our audited financial
statements in our Annual Report on Form 10-K for the year ended December 31, 2022. For 2022, the aggregate grant date fair value of
outstanding performance share awards assuming the highest level of payout would be as follows:

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

Aggregate Grant Date Fair
Value at Highest Payout
($)

5,767,500

1,528,381

1,542,806

1,528,381

MDU Resources Group, Inc. Proxy Statement 64

Proxy Statement

2 Amounts shown for 2022 represent the change in the actuarial present value for the named executive officers’ accumulated benefits
under the pension plan, SISP, and Excess SISP, collectively referred to as the “accumulated pension change,” plus above-market
earnings on deferred annual incentives as of December 31, 2022. Where the change in accumulated pension benefits is negative,
executive compensation rules require the disclosure of the negative amount by footnote but note the negative amount should not be
reflected in the sum reported in column (h) of the table.

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

Accumulated Pension Change
($)

Above Market Earnings
($)

(1,048,574)

(14,814)

(262,364)

—

(417,732)

33,340

—

1,294

3 All Other Compensation for 2022 is comprised of:

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

401(k) Plan
($)a

Nonqualified Deferred
Compensation Plan
($)b

Life Insurance
Premium
($)

Matching Charitable
Contributions
($)

Dividend
Equivalents
($)c

Total
($)

44,189

30,500

24,400

36,600

—

79,500

150,000

100,000

—

774

3,600

143,675

192,238

3,600

36,583

150,957

1,200

38,117

214,491

3,475

37,821

166,470

3,600

37,821

78,795

Represents company contributions to the 401(k) plan, which includes matching contributions and retirement contributions associated with the
frozen pension plans as of December 31, 2009.

b Represents company contribution amounts to the MDU Resources Group, Inc. Deferred Compensation Plan (DCP) which are approved by the
compensation committee and the board of directors. The purpose of the plan is to recognize outstanding performance coupled with enhanced
retention as the DCP requires a vesting period. For further information, see the section entitled “Nonqualified Deferred Compensation for 2022.”

c Represents accrued dividend equivalents for 2022 on the 2022-2024, 2021-2023, and 2020-2022 performance share awards associated with
financial performance measures and restricted stock units. The 2022-2024 and 2021-2023 performance share awards are presented at target,
and the 2020-2022 performance share awards are presented based on the actual achievement of the performance measures.

4 On February 16, 2023, the company announced that Mr. Barney would cease serving in his position as chief executive officer of Knife

River Corporation, the company’s construction materials and contracting segment, effective as of March 1, 2023.

65 MDU Resources Group, Inc. Proxy Statement

Grants of Plan-Based Awards in 2022

Estimated Future
Payouts Under Non-Equity
Incentive Plan Awards

Estimated Future
Payouts Under Equity
Incentive Plan Awards

Name
(a)

Grant
Date
(b)

Threshold
($)
(c)

Target
($)
(d)

Maximum
($)
(e)

Threshold
(#)
(f)

Target
(#)
(g)

Maximum
(#)
(h)

Proxy Statement

All Other
Stock Awards:
Number of
Shares of
Stock or Units
(#)
(i)

Grant Date
Fair Value of
Stock and
Option Awards
($)
(l)

David L. Goodin

2/17/2022

Jason L. Vollmer

2/17/2022

David C. Barney

2/17/2022

Jeffrey S. Thiede

2/17/2022

Nicole A. Kivisto

2/17/2022

326,250

1,305,000

2,610,000

99,375

397,500

795,000

100,313

401,250

963,000

99,375

397,500

954,000

178,875

397,500

795,000

15,753

78,766

157,532

2,519,724

26,255

728,051

4,174

20,873

41,746

667,732

6,957

192,918

4,214

21,070

42,140

674,029

7,023

194,748

4,174

20,873

41,746

667,732

6,957

192,918

4,174

20,873

41,746

667,732

6,957

192,918

1 Annual incentive for 2022 granted pursuant to the MDU Resources Group, Inc. Executive Incentive Compensation Plan.
2 Performance shares for the 2022-2024 performance period granted pursuant to the MDU Resources Group, Inc. Long-Term Performance-Based

Incentive Plan.

3 Restricted Stock Units for the 2022-2024 period granted pursuant to the MDU Resources Group, Inc. Long-Term Performance-Based Incentive

Plan.

Narrative Discussion Relating to the Summary Compensation Table
and Grants of Plan-Based Awards Table

Annual Incentive
The compensation committee recommended the 2022 annual cash incentive award for our named executive officers and the board approved
these opportunities at its meeting on February 17, 2022. The awards at threshold, target, and maximum are reflected in columns (c), (d),
and (e), respectively, of the Grants of Plan-Based Awards Table. The actual amount paid with respect to 2022 performance is reflected in
column (g) of the Summary Compensation Table.

As described in the “Annual Cash Incentives” section of the “Compensation Discussion and Analysis,” payment of annual cash incentive
awards is dependent upon achievement of performance measures; actual payout may range from 0% to 200% of the target except for the
construction materials and contracting and construction services segments which may range from 0% to 240%. The DEI modifier adds or
deducts up to 5% of the executives’ annual incentive target based on the compensation committee’s assessment.

All our named executive officers were awarded their annual cash incentives pursuant to the MDU Resources Group, Inc. Executive Incentive
Compensation Plan. Under the Executive Incentive Compensation Plan, executives who retire during the year at or after age 65 remain
eligible to receive a prorated award, but executives who terminate employment for other reasons are not eligible for an award. The
compensation committee generally does not modify the performance measures; however, if in years of unusually adverse or favorable
external conditions or other unforeseen significant factors beyond the control of management, the compensation committee may modify the
performance measures. In determining the 2022 annual incentive awards, the compensation committee approved adjustments to earnings
from continuing operations of $612,000 after-tax for costs incurred associated with mergers and acquisitions at the construction materials
and contracting segment and $12.7 million after-tax for costs incurred in connection with the company’s intent to separate the construction
materials and contracting segment pursuant to a tax-free spinoff and the strategic review to optimize the value of the construction services
segment. The compensation committee has full discretion to determine the extent to which goals have been achieved, the payment level,

MDU Resources Group, Inc. Proxy Statement 66

Proxy Statement

and whether to adjust payment of awards downward based upon individual performance. For further discussion of the specific 2022
incentive plan performance measures and results, see the “Annual Cash Incentives” section in the “Compensation Discussion and
Analysis.”

Long-Term Incentive
The compensation committee recommended long-term incentive awards for the named executive officers in the form of 75% performance
shares and 25% time-vesting restricted stock units, and the board approved the awards at its meeting on February 17, 2022. The portion of
the long-term incentive associated with performance shares are presented as the number of performance shares at threshold, target, and
maximum in columns (f), (g), and (h) of the Grants of Plan-Based Awards Table. The value of the long-term performance-based incentive
based on the aggregate grant date fair value and is included in the amount recorded in column (e) of the Summary Compensation Table and
column (l) of the Grant of Plan-Based Awards Table.

Depending on the achievement of the performance measures associated with our 2022-2024 performance period measured as of December
31, 2024, executives will receive from 0% to 200% of the target performance share awards in February 2025. We also will pay dividend
equivalents in cash on the number of shares actually vested for the performance period. The dividend equivalents will be paid in February
2025 if and to the extent they vest and at the same time as the performance share awards are settled.

The portion of the long-term incentive associated with time-vesting restricted stock units are presented as the number of units in column (i)
of the Grants of Plan-Based Awards Table. The value of the time-vesting restricted stock units is based on the aggregate grant date value
and is included in the amount recorded in column (e) of the Summary Compensation Table and column (l) of the Grant of Plan-Based
Awards Table.

The 2022-2024 time-vesting restricted stock units will vest on December 31, 2024, if the executives remain employed with the company
through the vesting date. Settlement of the restricted stock units and payment of dividend equivalents will occur in February 2025.

Salary and Bonus in Proportion to Total Compensation
The following table shows the proportion of salary and bonus to total compensation as presented in the Summary Compensation Table.
Bonuses for purposes of this table and the Summary Compensation Table refer to discretionary payments to executive officers outside of our
executive incentive plans as described above. No bonuses were paid to the executive officers in 2022.

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

Salary
($)

1,044,000

530,000

535,000

530,000

Bonus
($)

—

Total
Compensation
($)

Salary and Bonus
as a % of
Total Compensation

5,257,289

1,766,989

1,931,645

2,170,462

1,737,461

19.9%

30.0%

27.7%

24.4%

30.5%

67 MDU Resources Group, Inc. Proxy Statement

Outstanding Equity Awards at Fiscal Year-End 2022

Proxy Statement

Stock Awards

Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
($)
(h)2

Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)
(i)3

1,576,800

238,106

415,870

427,278

423,182

59,207

62,286

61,882

Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
($)
(j)2

7,224,136

1,796,340

1,889,757

1,877,500

Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)
(g)1

51,971

13,707

14,083

13,948

Name
(a)

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

1 Below is the breakdown by year of the outstanding restricted stock unit awards:

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

2020-2022 Award

2021-2023 Award

2022-2024 Award

(#)

n/a

(#)

25,716

6,750

7,060

6,991

(#)

26,255

6,957

7,023

6,957

Total

(#)

51,971

13,707

14,083

13,948

2 Value based on the number of performance shares and restricted stock units reflected in columns (g) and (i) multiplied by $30.34, the year-end

per share closing stock price for 2022.

3 Below is a breakdown by year of the outstanding performance share awards:

Name

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

2020-2022 Award

2021-2023 Award

2022-2024 Award

(#)

82,191

18,082

20,034

(#)

77,149

20,252

21,182

20,975

(#)

78,766

20,873

21,070

20,873

Total

(#)

238,106

59,207

62,286

61,882

Performance shares for the 2020 award are shown at the target level (100%) based on results for the 2020-2022 performance period being
between threshold and target.

Performance shares for the 2021 award are shown at the target level (100%) based on results for the first two years of the 2021-2023
performance period being between threshold and target.

Performance shares for the 2022 award are shown at the target level (100%) based on results for the first year of the 2022-2024 performance
period being between threshold and target.

While for purposes of the Outstanding Equity Awards at Fiscal Year-End 2022 table, the number of shares and value shown for the
2020-2022 performance period is at 100% of target, the actual results for the performance period certified by the compensation committee
and settled on February 16, 2023, was 91.7% of target. For further information, see the “Long-Term Incentives” section of the
“Compensation Discussion and Analysis.”

MDU Resources Group, Inc. Proxy Statement 68

Proxy Statement

Option Exercises and Stock Vested During 2022

Name
(a)

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Stock Awards

Number of Shares
Acquired on Vesting
(#)
(d)1

133,980

26,795

32,656

Value Realized
on Vesting
($)
(e)2

4,467,563

893,479

1,088,914

Nicole A. Kivisto
1 Reflects performance shares for the 2019-2021 performance period ended December 31, 2021, which were settled February 17, 2022.

32,656

1,088,914

2 Reflects the value of vested performance shares based on the closing stock price of $30.84 per share upon the vesting of stock on

December 31, 2021 and the dividend equivalents paid on the vested shares.

Pension Benefits for 2022

Name
(a)

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Plan Name
(b)

Pension

Basic SISP
Excess SISP 2

Pension
Basic SISP 2
Excess SISP 2
Pension 2

Basic SISP
Excess SISP 2
Pension 2
Basic SISP 2
Excess SISP 2

Nicole A. Kivisto

Pension

Basic SISP
Excess SISP 2

Number of Years
Credited Service
(#)
(c)1

Present Value of
Accumulated Benefit
($)
(d)

n/a

1,060,191

2,431,755

34,871

18,862

—

1,401,382

—

192,573

387,572

—

1 Years of credited service related to the pension plan reflects the years of participation in the plan as of December 31, 2009, when the pension

plan was frozen. Years of credited service related to the Basic SISP reflects the years toward full vesting of the benefit which is 10 years. Years of
credited service related to Excess SISP reflects the same number of credited years of service as the pension plan.

2 Messrs. Barney and Thiede do not participate in the pension plans. Messrs. Vollmer and Thiede do not participate in the SISP. Mr. Goodin is the

only named executive officer eligible to participate in the Excess SISP.

69 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The amounts shown for the pension plan, Basic SISP, and Excess SISP represent the actuarial present values of the executives’
accumulated benefits accrued as of December 31, 2022, calculated using:

• a 4.97% discount rate for the Basic SISP and Excess SISP;

• a 5.04% discount rate for the pension plan;

• the Society of Actuaries Pri-2012 Total Dataset Mortality with Scale MP-2021 (post commencement only); and

• no recognition of pre-retirement mortality.

The actuary assumed a retirement age of 60 for the pension, Basic SISP, and Excess SISP benefits and assumed retirement benefits
commence at age 60 for the pension and Excess SISP and age 65 for Basic SISP benefits.

Pension Plan
The MDU Resources Group, Inc. Pension Plan for Non-Bargaining Unit Employees (pension plan) applies to employees hired before 2006
and was amended to cease benefit accruals as of December 31, 2009. The benefits under the pension plan are based on a participant’s
average annual salary over the 60 consecutive month period where the participant received the highest annual salary between 1999 and
2009. Benefits are paid as straight life annuities for single participants and as actuarially reduced annuities with a survivor benefit for
married participants unless they choose otherwise.

Supplemental Income Security Plan
The Supplemental Income Security Plan (SISP), a nonqualified defined benefit retirement plan, was offered to select key managers and
executives. SISP benefits are determined by reference to levels defined within the plan. Our compensation committee, after receiving
recommendations from our CEO, determined each participant’s level within the plan. On February 11, 2016, the SISP was amended to
exclude new participants to the plan and freeze current benefit levels for existing participants.

Basic SISP Benefits
Basic SISP is intended to augment the retirement income provided under the pension plans and are payable to the participant or their
beneficiary for a period of 15 years. The Basic SISP benefits are subject to a vesting schedule where participants are 100% vested after ten
years of participation in the plan.

Participants can elect to receive the Basic SISP as:

• monthly retirement benefits only;

• monthly death benefits paid to a beneficiary only; or

• a combination of retirement and death benefits, where each benefit is reduced proportionately.

Regardless of the election, if the participant dies before the SISP retirement benefit commences, only the SISP death benefit is provided.

Excess SISP Benefits
Excess SISP is an additional retirement benefit relating to Internal Revenue Code limitations on retirement benefits provided under the
pension plans. Excess SISP benefits are equal to the difference between the monthly retirement benefits that would have been payable to
the participant under the pension plans absent the limitations under the Internal Revenue Code and the actual benefits payable to the
participant under the pension plans. Participants are only eligible for the Excess SISP benefits if the participant is fully vested under the
pension plan, their employment terminates prior to age 65, and benefits under the pension plan are reduced due to limitations under the
Internal Revenue Code on plan compensation.

In 2009, the SISP was amended to limit eligibility for the Excess SISP benefit. Mr. Goodin is the only named executive officer eligible for
the Excess SISP benefit. Benefits generally commence six months after the participant’s employment terminates and continue to age 65 or
until the death of the participant, if prior to age 65.

Both Basic and Excess SISP benefits are forfeited if the participant’s employment is terminated for cause.

MDU Resources Group, Inc. Proxy Statement 70

Proxy Statement

Nonqualified Deferred Compensation for 2022

Deferred Annual Incentive Compensation
Executives participating in the Executive Incentive Compensation Plan could elect to defer up to 100% of their annual incentive awards
which would accrue interest at a rate determined each year based on an average of the Treasury High Quality Market Corporate Bond Yield
Curve for the last business day of each month for the twelve month period from October to September. The interest rate in effect for 2022
was 3.06%. Payment of deferred amounts is in accordance with the participant’s election either as lump sum or in monthly installments not
to exceed 120 months, following termination of employment or beginning in the fifth year following the year the award was earned. In the
event of a change of control, all amounts deferred would immediately become payable. For purposes of deferred annual incentive
compensation, a change of control is defined as:

• an acquisition during a 12-month period of 30% or more of the total voting power of our stock;

• an acquisition of our stock that, together with stock already held by the acquirer, constitutes more than 50% of the total fair market value

or total voting power of our stock;

• replacement of a majority of the members of our board of directors during any 12-month period by directors whose appointment or

election is not endorsed by a majority of the members of our board of directors; or

• acquisition of our assets having a gross fair market value at least equal to 40% of the gross fair market value of all of our assets.

The deferred compensation provision of the Executive Incentive Compensation Plan was frozen to new contributions effective January 1,
2021.

Nonqualified Defined Contribution Plan
The company adopted the Nonqualified Defined Contribution Plan, effective January 1, 2012, to provide deferred compensation for a select
group of employees. Company contributions to participant accounts were approved by the compensation committee and constitute an
unsecured promise of the company to make such payments. Participant accounts capture the hypothetical investment experience based on
the participant’s elections. Participants may select from a group of investment options including fixed income, balance/asset allocation, and
various equity offerings. Contributions made prior to 2017 vest four years after each contribution while contributions made in and after
2017 vest ratably over a three-year period in accordance with the terms of the plan. Participants may elect to receive their vested
contributions and investment earnings either in a lump sum or in annual installments over a period of years upon separation from service
with the company. Plan benefits become fully vested if the participant dies while actively employed. Benefits are forfeited if the
participant’s employment is terminated for cause. The Nonqualified Defined Contribution Plan was frozen to new participants and
contributions effective January 1, 2021.

MDU Resources Group, Inc. Deferred Compensation Plan
The company adopted the MDU Resources Group, Inc. Deferred Compensation Plan, effective January 1, 2021, to replace the option to
defer annual incentive payments available under the Executive Incentive Compensation Plan and company contributions to participants’
accounts through the Nonqualified Defined Contribution Plan. Under the MDU Resources Group, Inc. Deferred Compensation Plan,
participants can defer up to 80% of base salary and up to 100% of their annual incentive payment. The company provides discretionary
credits to select individuals recommended by the CEO and approved by the compensation committee, similar to the prior Nonqualified
Defined Contribution Plan. Participants are 100% vested in their contributions of salary and/or annual incentive but vesting of discretionary
employer credits occurs ratably over three years. Participants can establish one or more retirement or in-service accounts which capture the
hypothetical investment experience based on a suite of investment options similar to the Nonqualified Defined Contribution Plan.
Participants may elect to receive their vested contributions and investment earnings either in a lump sum or in annual installments over a
period of years upon a qualifying distribution event. Plan benefits become fully vested if the participant dies or becomes disabled while
actively employed. Benefits are forfeited if the participant’s employment is terminated for cause.

71 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The table below includes individual deferrals of salary and/or annual incentive and company contributions made during 2022 under the
MDU Resources Group, Inc. Deferred Compensation Plan. Aggregate earnings and the balance represent the combined participant earnings
and participant balances under all three nonqualified plans.

Name
(a)

David L. Goodin

Jason L. Vollmer

David C. Barney

Jeffrey S. Thiede

Nicole A. Kivisto

Executive
Contributions in
Last FY
($)
(b)

Registrant
Contributions in
Last FY
($)
(c)

Aggregate
Earnings in
Last FY
($)
(d)

Aggregate
Withdrawals/
Distributions
($)
(e)

—

31,239

—

118,713

79,500

150,000

100,000

(70,817)

(130,673)

(216,555)

—

4,607

—

Aggregate
Balance at
Last FYE
($)
(f)

3,939,330

344,408 1
1,032,190 2
1,258,225 3

152,862

1 Mr. Vollmer deferred 6% of his base salary and received company credit of $79,500 under the MDU Resources Group, Inc. Deferred Compensation Plan
(DCP) for 2022. Mr. Vollmer’s balance also includes employer contributions of $49,000 to the DCP for 2021 and $44,000, $40,000, $35,000, and
$22,550 for 2020, 2019, 2018, and 2017, respectively to the Nonqualified Defined Contribution Plan. Each of these amounts are reported in column (i)
of the Summary Compensation Table for its respective year, where applicable.

2 Mr. Barney received $150,000 under the MDU Resources Group, Inc. Deferred Compensation Plan for 2022. Mr. Barney’s balance also includes

contributions of $150,000 to the DCP for 2021 and contributions of $150,000 to the Nonqualified Defined Contribution Plan for each of 2020, 2019,
2018, and 2017. Each of these amounts are reported in column (i) of the Summary Compensation Table for its respective year, where applicable.

3 Mr. Thiede received $100,000 under the MDU Resources Group, Inc. Deferred Compensation Plan for 2022. Mr. Thiede’s balance also includes

contributions of $100,000 to the DCP for 2021 and contributions of $100, 000 to the Nonqualified Defined Contribution Plan for each of 2020, 2019,
2018, 2017, and 2016; $150,000 for 2015; $75,000 for 2014; and $33,000 for 2013. Each of these amounts were reported in column (i) of the
Summary Compensation Table in the Proxy Statement for its respective year, where applicable.

MDU Resources Group, Inc. Proxy Statement 72

Proxy Statement

Potential Payments upon Termination or Change of Control

The Potential Payments upon Termination or Change of Control Table shows the payments and benefits our named executive officers would
receive in connection with a variety of employment termination scenarios or upon a change of control. The scenarios include:

• Voluntary or Not for Cause Termination;

• Death;

• Disability;

• Change of Control with Termination; and

• Change of Control without Termination.

For the named executive officers, the information assumes the terminations or the change of control occurred on December 31, 2022.

The table excludes compensation and benefits our named executive officers would earn during their employment with us whether or not a
termination or change of control event had occurred. The tables also do not include benefits under plans or arrangements generally available
to all salaried employees and that do not discriminate in favor of the named executive officers, such as benefits under our qualified defined
benefit pension plan (for employees hired before 2006), accrued vacation pay, continuation of health care benefits, and life insurance
benefits. The tables also do not include deferred compensation under our Executive Incentive Compensation Plan, Nonqualified Defined
Contribution Plan, or MDU Resources Group, Inc. Deferred Compensation Plan. These amounts are shown and explained in the
“Nonqualified Deferred Compensation for 2022” Table.

Compensation
We typically do not have employment or severance agreements with our executives entitling them to specific payments upon termination of
employment or a change of control of the company. The compensation committee generally considers providing severance benefits on a
case-by-case basis. Any post-employment or change of control benefits available to our executives are addressed within our incentive and
retirement plans. Because severance payments are discretionary, no amounts are presented in the tables.

All our named executive officers were granted their 2022 annual incentive award under the Executive Incentive Compensation Plan (EICP)
which has no change of control provision in regards to annual incentive compensation other than for deferred compensation. The EICP
requires participants to remain employed with the company through the service year to be eligible for a payout unless otherwise determined
by the compensation committee for executive officers or employment termination after age 65. All our scenarios assume a termination or
change in control event on December 31st. In these scenarios, the named executive officers would be considered employed for the entire
performance period and would be eligible to receive their annual incentive award based on the level that the performance measures were
achieved. Therefore, no amounts are shown for annual incentives in the tables for our named executive officers, as they would be eligible to
receive their annual incentive award with or without a termination or change of control on December 31, 2022.

All named executive officers received their equity share awards under the Long-Term Performance-Based Incentive Plan (LTIP) which
consist of performance share awards for the 2020-2022, 2021-2023 and 2022-2024 vesting periods and restricted stock units for the
2021-2023 and 2022-2024 vesting periods.

Upon a change of control (with or without termination), is defined in the LTIP as:

• the acquisition by an individual, entity, or group of 20% or more of our outstanding common stock;

• a majority of our board of directors whose election or nomination was not approved by a majority of the incumbent board members;

• consummation of a merger or similar transaction or sale of all or substantially all of our assets, unless our stockholders immediately prior
to the transaction beneficially own more than 60% of the outstanding common stock and voting power of the resulting corporation in
substantially the same proportions as before the merger, no person owns 20% or more of the resulting corporation’s outstanding common
stock or voting power except for any such ownership that existed before the merger and at least a majority of the board of the resulting
corporation is comprised of our directors; or

• stockholder approval of our liquidation or dissolution.

As a result, in the case of a change of control (with or without termination) both performance share awards and restricted stock unit awards
would be deemed fully earned and vest at their target levels for the named executive officers.

73 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

For our performance share awards, if a participant terminates employment for any reason other than a change of control or prior to reaching
age 55 with 10 years of service, their performance share awards are forfeited. If a participant terminates employment for any reason other
than for cause after reaching age 55 and completing 10 years of service, performance share awards are prorated as follows:

• termination of employment during the first year of the vesting period = equity share awards are forfeited;

• termination of employment during the second year of the vesting period = equity share awards earned are prorated based on the number

of months employed during the vesting period; and

• termination of employment during the third year of the vesting period = full amount of any equity share awards earned are received.

Under the scenarios of voluntary or not for cause termination, disability or death, Messrs. Goodin, Barney, and Thiede would receive
performance shares as they have each reached age 55 and have 10 or more years of service. The number of performance shares received
would be based on the following:

• 2020-2022 performance shares would vest based on the achievement of the performance measure for the period ended December 31,

2022, which was 91.7%;

• 2021-2023 performance shares would be prorated at 24 out of 36 months (2/3) of the vesting period and vest based on the actual
achievement of the performance measure for the period ended December 31, 2023. For purposes of the Potential Payments upon
Termination or Change of Control Table, the performance achievement for the performance period is shown at target; and

• 2022-2024 performance shares would be forfeited.

Neither Ms. Kivisto nor Mr. Vollmer have reached age 55; therefore, they are not eligible for vesting of performance shares in the event of
their termination, death or disability.

Our restricted stock unit award agreement provides that restricted stock unit share awards are forfeited if the participant’s employment
terminates for situations other than death, disability or before the participant has reached age 55 with 10 years of service. If a participant’s
employment terminates after reaching age 55 and completing 10 years of service, restricted stock unit share awards are prorated as follows:

• termination of employment during the first year of the vesting period = restricted stock unit awards are forfeited;

• termination of employment during the second year of the vesting period = restricted stock unit awards earned are prorated based on the

number of months employed during the vesting period; and

• termination of employment during the third year of the vesting period = full amount of any restricted stock unit awards earned are

received.

In situations of death or disability, the restricted stock unit awards earned would be prorated based on the number of full months of
employment completed prior to death or disability during the vesting period.

For 2022, our awards include restricted stock units for the 2021-2023 and 2022-2024 vesting periods. In the case of voluntary or not for
cause termination, Messrs. Goodin, Barney and Thiede would forfeit their 2022-2024, restricted stock units but receive their 2021-2023
restricted stock units based on a proration of 24 out of 36 months (2/3). Since neither Ms. Kivisto or Mr. Vollmer have reached age 55, in
the case of voluntary or not for cause termination, they would forfeit their 2021-2023 and 2022-2024 restricted stock unit awards.

In the case of termination due to death or disability, all our named executive officers would receive 1/3 of the granted shares associated
with the 2022-2024 award based on 12 out of 36 months of the vesting period and 2/3 of the granted shares associated with the
2021-2023 award based on 24 out of 36 months of the vesting period.

For purposes of calculating the performance share and restricted stock unit award value shown in the Potential Payments upon Termination
or Change of Control Table, the number of vesting shares was multiplied by the average of the high and low stock price for the last market
day of the year, which was December 31, 2022. Dividend equivalents based on the number of vesting shares are also included in the
amounts presented.

MDU Resources Group, Inc. Proxy Statement 74

Proxy Statement

Benefits

Supplemental Income Security Plan
As described in the “Pension Benefits for 2022” section, the Basic SISP provides benefit payments for 15 years commencing at the latter
of retirement or age 65. Of the named executive officers, only Messrs. Goodin, Barney, and Ms. Kivisto participate in the Basic SISP
benefits and are 100% vested in their benefit.

Under all scenarios except death and change of control without termination, the payment represents the present value of the vested Basic
SISP benefit as of December 31, 2022, using the monthly retirement benefit shown in the table below and a discount rate of 4.97%. In the
event of death, Messrs. Goodin, Barney, and Ms. Kivisto’s beneficiaries would receive monthly death benefit payments for 15 years. The
Potential Payments upon Termination or Change of Control Table shows the present value calculations of the monthly death benefit using
the 4.97% discount rate.

David L. Goodin

David C. Barney

Nicole A. Kivisto

Monthly SISP Retirement Payment
($)

Monthly SISP Death Payment
($)

23,040

10,936

6,572

46,080

21,872

13,144

Because the plan requires a participant to be no longer actively employed by the company in order to be eligible for payments, we do not
show benefits for the change of control without a termination scenario.

Mr. Goodin is the only named executive officer eligible for the Excess SISP. Benefits generally commence six months after the participant’s
employment terminates and continue to age 65 or until the death of the participant, if prior to age 65. As explained in the “Pension
Benefits for 2022”, Excess SISP benefits are equal to the difference between the monthly retirement benefits that would have been payable
to the participant under the pension plans absent the limitations under the Internal Revenue Code and the actual benefits payable to the
participant under the pension plans. Under all scenarios except death or change of control without termination, the payment represents the
present value of the monthly Excess SISP benefit discounted using a rate of 4.97%

Disability
We provide disability benefits to some of our salaried employees equal to 60% of their base salary, subject to a salary limit of $200,000 for
officers and $100,000 for other salaried employees. For all eligible employees, disability payments continue until as follows:

Age When Disabled

Benefits Payable

Prior to age 60

Ages 60 to 64

Ages 65-67

Age 68 and over

To age 65

60 months

To age 70

24 months

Disability benefits are reduced for amounts paid as retirement benefits which include pension and SISP benefits. The disability payments in
the Potential Payments upon Termination or Change of Control Table reflect the present value of the disability benefits attributable to the
additional $100,000 of base salary recognized for executives under our disability program, subject to the 60% limitation, after reduction for
amounts that would be paid as retirement benefits. For Messrs. Goodin and Vollmer and Ms. Kivisto, who participate in the pension plan,
the amount represents the present value of the disability benefit after reduction for retirement benefits using a discount rate of 5.04%.
Because Messrs. Goodin and Barney’s retirement benefits are greater than the disability benefit, the amount shown is zero. For Mr. Thiede,
who does not participate in the pension plan, the amount represents the present value of the disability benefit without reduction for
retirement benefits using the discount rate of 4.97%, which is considered a reasonable rate for purposes of the calculation.

75 MDU Resources Group, Inc. Proxy Statement

Potential Payments upon Termination or Change of Control Table

Executive Benefits and Payments upon
Termination or Change of Control

Voluntary or
Not for
Cause
Termination
($)

Death
($)

Disability
($)

Change of
Control
(With
Termination)
($)

Change of
Control
(Without
Termination)
($)

Proxy Statement

David L. Goodin

Compensation:

Performance Shares

Restricted Stock Units

Benefits and Perquisites:

Basic SISP

Excess SISP

SISP Death Benefits

Disability Benefits

Total

Jason L. Vollmer

Compensation:

Performance Shares

Restricted Stock Units

Benefits and Perquisites:

Disability Benefits

Total

David C. Barney1
Compensation:

Performance Shares

Restricted Stock Units

Benefits and Perquisites:

Basic SISP

SISP Death Benefits

Disability Benefits

Total

Jeffrey S. Thiede

Compensation:

Performance Shares

Restricted Stock Units

Benefits and Perquisites:

Disability Benefits

Total

Nicole A. Kivisto

Compensation:

Performance Shares

Restricted Stock Units

Benefits and Perquisites:

Basic SISP

SISP Death Benefits

Disability Benefits

Total

4,131,375

7,640,916

550,065

823,390

1,645,042

2,423,837

34,074

—

2,423,837

34,074

—

5,862,771

—

7,139,351

10,817,536

7,412,676

11,743,869

9,285,958

—

1,896,909

216,805

433,841

—

726,427

—

216,805

943,232

2,330,750

1,057,846

1,997,160

151,024

224,134

445,848

1,391,390

—

1,391,390

—

2,782,780

—

2,600,260

4,064,760

2,673,370

3,834,398

2,443,008

1,053,418

1,984,366

149,548

221,971

441,573

—

266,245

—

1,202,966

1,275,389

1,541,634

2,425,939

—

1,984,366

221,971

441,573

384,441

—

384,441

—

1,672,315

—

532,912

—

384,441

1,894,286

1,139,324

2,810,380

2,425,939

MDU Resources Group, Inc. Proxy Statement 76

Proxy Statement

CEO Pay Ratio Disclosure

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we
are providing information regarding the relationship of the annual total compensation of David L. Goodin, our president and chief executive
officer, to the annual total compensation of our median employee.

Our employee workforce fluctuates during the year largely depending on the seasonality, number, and size of construction project activity
conducted by our businesses. Approximately 59% of our employee workforce is employed under union bargained labor contracts which
define compensation and benefits for participants which may include payments made by the company associated with employee
participation in union benefit and pension plans.

We identified the median employee by examining the 2022 taxable wage information for all individuals on the company’s payroll records as
of December 31, 2022, excluding Mr. Goodin. All of the company’s employees are located in the United States. We made no adjustments to
annualize compensation for individuals employed for only part of the year. We selected taxable wages as reported to the IRS on Form W-2
for 2022 to identify the median employee as it includes substantially all of the compensation for our median employee and provided a
reasonably efficient and cost-effective manner for the identification of the median employee. Our median employee works for a subsidiary of
our construction materials and contracting segment with compensation consisting of wages, bonus, company 401(k) matching contributions
and profit sharing, life insurance premiums, car allowance, and per diem.

Once identified, we categorized the median employee’s compensation using the same methodology as the compensation components
reported in the Summary Compensation Table. For 2022, the total annual compensation of Mr. Goodin as reported in the Summary
Compensation Table included in this Proxy Statement was $5,257,289, and the total annual compensation of our median employee was
$96,652. Based on this information, the 2022 ratio of annual total compensation of Mr. Goodin to the median employee was 54 to 1.

Pay Versus Performance

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we
are providing information regarding the Compensation Actually Paid (CAP), as defined by SEC rules, to our executives versus company
financial performance. The CAP amounts shown in the table below do not reflect the actual amount of compensation earned by or paid to
our executives during the applicable year.

Summary
Compensation
Table Total
Compensation for
Principal
Executive Officer
(PEO)2
($)

Year1

Compensation
Actually Paid to
PEO3
($)

Average
Summary
Compensation
Table Total
Compensation for
Non-PEO Named
Executive
Officers4
($)

Average
Compensation
Actually Paid to
non-PEO Named
Executive
Officers5
($)

Value of initial fixed $100
investment based on:

Total
Stockholder
Return6
($)

Peer Group Total
Stockholder
Return7
($)

Net Income8
(in thousands)
($)

2022

5,257,289

5,644,274

1,901,639

1,998,863

111.98

123.90

367,489

2021

5,210,467

7,143,972

1,810,584

2,273,834

2020

6,423,410

5,664,783

2,042,921

1,901,274

110.37

91.69

128.00

101.04

378,131

390,205

Company
Selected
Measure -
Earnings per
Share9
($)

1.81

1.87

1.95

1 Our PEO for years 2020, 2021 and 2022 was David L. Goodin. Our non-PEO named executive officers (NEO) for 2020, 2021 and 2022 were

Jason L. Vollmer, David C. Barney, Jeffrey S. Thiede and Nicole A. Kivisto.

2 Represents Mr. Goodin’s total compensation as shown in the Summary Compensation Table (SCT) for 2020, 2021 and 2022.

3 To arrive at CAP for Mr. Goodin, total compensation as reported in the SCT was adjusted for the following:

77 MDU Resources Group, Inc. Proxy Statement

SCT Total Compensation for the PEO

less: Reported Value of Stock Awards in the SCTa

plus: Stock Award Adjustmentsa,b

less: Change in Actuarial Present Value of Defined Benefit and Pension Plans as
Reported in the SCT

plus: Aggregate Service Cost and Prior Service Costs on Defined Benefit and Pension
Plans

Proxy Statement

2022

2021

2020

5,257,289

5,210,467

6,423,410

3,247,775

3,222,639

2,974,497

3,634,760

5,156,144

2,651,451

—

435,581

—

CAP for the PEO
a Equity compensation grant date fair value for awards with a market condition performance measure are determined by Monte Carlo simulation. The

7,143,972

5,644,274

5,664,783

blended volatility term structure ranges are comprised of 50 percent historical volatility and 50 percent implied volatility. Risk-free interest rates were
based on U.S. Treasury security rates in effect as of the grant date. Year-end fair values for awards with a market condition performance measure were
determined using the same assumptions. Equity compensation grant date and year-end fair value for time-vesting awards and awards with financial
performance measures were determined by the closing stock price on the date of grant or year-end, as applicable.

b Stock Award Adjustments in determining CAP

Year-end Fair Value
of Equity Awards
Granted in the Year
which are Unvested

Year-over-Year
Change in Fair Value
of Equity Awards
Granted in Prior
Years that are
Unvested

Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the
Year

Year-over-Year
Change in Fair
Value of Equity
Award Granted in
Prior Years that
Vested in the
Year

Prior Year-end Fair
Value of Equity
Awards that Failed
to Meet Vesting
Conditions in the
Year

Value of Dividends
or Other Earnings
Paid on Equity
Awards not
Otherwise Reflected
in Fair Value or
Total Compensation

Total Equity Award
Adjustments

3,665,234

(198,017)

3,586,652

(90,005)

2,402,446

(557,760)

—

167,543

1,659,497

806,765

—

3,634,760

5,156,144

2,651,451

Year

2022

2021

2020

4 Represents the average total compensation of our non-PEO named executive officers as shown in the SCT for 2020, 2021 and 2022.

5 To arrive at the Average CAP for our non-PEO named executive officers, total compensation as reported in the SCT was adjusted for the

following:

Average of SCT Total Compensation for Non-PEO Named Executive Officers

1,901,639

1,810,584

2,042,921

less: Reported Value of Stock Awards in the SCTa

plus: Stock Award Adjustmentsa,b

less: Change in Actuarial Present Value of Defined Benefit and Pension Plans as
Reported in the SCT

plus: Aggregate Service Cost and Prior Service Costs on Defined Benefit and
Pension Plans

862,681

870,757

959,905

1,334,007

—

707,370

634,637

68,914

—

2022

2021

2020

Average CAP for the Non-PEO Named Executive Officers
1,901,274
a Equity compensation grant date fair value for awards with a market condition performance measure are determined by Monte Carlo simulation. The
blended volatility term structure ranges are comprised of 50 percent historical volatility and 50 percent implied volatility. Risk-free interest rates
were based on U.S. Treasury security rates in effect as of the grant date. Year-end fair values for awards with a market condition performance
measure were determined using the same assumptions. Equity compensation grant date and year-end fair value for time-vesting awards and awards
with financial performance measures were determined by the closing stock price on the date of grant or year-end, as applicable.

2,273,834

1,998,863

b Stock Award Adjustments in determining CAP

Year-over-Year
Change in Fair Value
of Equity Awards
Granted in Prior
Years that are
Unvested

Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the
Year

Year-over-Year
Change in Fair
Value of Equity
Award Granted in
Prior Years that
Vested in the
Year

Prior Year-end Fair
Value of Equity
Awards that Failed
to Meet Vesting
Conditions in the
Year

Value of Dividends
or Other Earnings
Paid on Equity
Awards not
Otherwise Reflected
in Fair Value or
Total Compensation

Year-end Fair Value
of Equity Awards
Granted in the Year
which are Unvested

Total Equity Award
Adjustments

973,569

969,113

(53,505)

(21,403)

571,330

(129,852)

—

39,841

386,297

193,159

—

959,905

1,334,007

634,637

Year

2022

2021

2020

6 Represents value of $100 invested in company stock on December 31, 2019 as of December 31, 2020, December 31, 2021 and December 31,

2022 assuming dividends are reinvested in company stock at the frequency paid.

Represents the value of $100 invested in the compensation peer group company stock on December 31, 2019 as of December 31.2020,

MDU Resources Group, Inc. Proxy Statement 78

Proxy Statement

December 31, 2021 and December 31, 2022 assuming dividends are reinvested in the compensation peer group stock at the frequency paid.
Returns of each peer group company are weighted according to the peer group company’s market capitalization at the beginning of the period.
Our compensation benchmarking peer group companies for 2020, 2021 and 2022 included:

2020

2021

2022

Alliant Energy

Ameren Corporation

Alliant Energy

Ameren Corporation

Alliant Energy

Ameren Corporation

Atmos Energy Corporation

Black Hills Corporation

CMS Energy Corporation

Dycom Industries, Inc.

EMCOR Group, Inc.

Evergy, Inc.

Black Hills Corporation

CMS Energy Corporation

Dycom Industries, Inc.

EMCOR Group, Inc.

Evergy, Inc.

Granite Construction Incorporated

Jacobs Engineering Group Inc.

Jacobs Engineering Group Inc.*

KRB, Inc.

Martin Marietta Materials, Inc.

MasTec, Inc.

NiSource Inc.

MasTec, Inc.

NiSource Inc.

MYR Group, Inc.*

NiSource Inc.

Pinnacle West Capital Corporation

Portland General Electric Company

Quanta Services, Inc.

Southwest Gas Holdings, Inc.

Summit Materials, Inc.

Vulcan Materials Company

WEC Energy Group, Inc.

* Jacobs Engineering Group, Inc. was replaced with MYR Group Inc. in 2022 due to size. Total stockholder return for the peer group

companies for 12/31/2020, 12/31/2021 and 12/31/2022 were as follows

Peer group with Jacobs Engineering Group Inc.

Peer group with MYR Group, Inc.

100.00 $

101.04 $

100.01 $

128.00 $

126.85 $

124.22

123.90

12/31/2019

12/31/2020

12/31/2021

12/31/2022

8 Represents GAAP Net Income reported for the company in 2020, 2021 and 2022.

9 Earnings per share (EPS) is the performance measure shared by the PEO and non-PEO named executive officers in the annual incentive program.

EPS results represent 100% of the PEO and CFO’s annual incentive and 20% of the remaining non-PEO named executive officers annual
incentive.

2022 Most Important Financial Measures
The financial performance measures identified as the most important measures used by the company to link PEO and non-PEO named
executive officer 2022 CAP to company performance are listed below in unranked order each of which is described in more detail in the
“Compensation Discussion and Analysis”.

Performance Metrics Most Closely Linked to CAP for 2022

Earnings per Share

Earnings Growth from Continuing Operations

Relative Total Stockholder Return

Descriptions of the Information Presented in the Pay Versus Performance Table
We are providing the following graphics to illustrate the relationship between our PEO CAP and our non-PEO named executive officers’ CAP
as a group and company performance, as set forth and described in and under the “Pay Versus Performance” table, including the company’s
cumulative total stockholder return (TSR), net income and EPS. In addition, we are providing a graphic to illustrate the relationship
between the company’s cumulative TSR and our compensation benchmarking peer group’s cumulative TSR.

79 MDU Resources Group, Inc. Proxy Statement

CAP vs. TSR
Our TSR is a reflection of our stock price and dividends paid over a period of time and is important to stockholders as it measures the
performance of an investment in our company stock in the marketplace. The following charts depicts the PEO and average non-PEO named
executive officer CAP compared to the value of $100 invested in company and peer company stock on December 31, 2019 as of December
31, 2020, December 31, 2021 and December 31, 2022 assuming dividends are reinvested in company stock at the frequency paid.

Proxy Statement

CAP vs. Net Income
The following charts depicts the PEO and average non-PEO NEO CAP compared to the company’s net income for 2020, 2021 and 2022.

CAP vs. EPS
The following charts depicts the PEO and average non-PEO named executive officer CAP compared to the company’s EPS for 2020, 2021
and 2022.

MDU Resources Group, Inc. Proxy Statement 80

Compensation Actually Paid(in thousands)Total Stockholder ReturnCompensation Actually Paid vs Total Stockholder ReturnPEO CAPAverage Non-PEO NEO CAPTSRPeer TSR12/31/2012/31/2112/31/22$0$2,500$5,000$7,500$0$50$100$150Compensation Actually Paid(in thousands)Net Income(in millions)Compensation Actually Paid vs. Net IncomePEO CAPAverage Non-PEO NEO CAPNet Income12/31/2012/31/2112/31/22$0$2,500$5,000$7,500$0$100$200$300$400$500Compensation Actually Paid(in thousands)EPSCompensation Actually Paid vs. EPSPEO CAPAverage Non-PEO NEO CAPEPS12/31/2012/31/2112/31/22$0$2,500$5,000$7,500$0.00$0.50$1.00$1.50$2.00$2.50Proxy Statement

AUDIT MATTERS

ITEM 4: RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2023

The audit committee at its February 2023 meeting appointed Deloitte & Touche LLP as our independent registered public accounting firm
for fiscal year 2023. The board of directors concurred with the audit committee’s decision. Deloitte & Touche LLP has served as our
independent registered public accounting firm since fiscal year 2002.

Although your ratification vote will not affect the appointment or retention of Deloitte & Touche LLP for 2023, the audit committee will
consider your vote in determining its appointment of our independent registered public accounting firm for the next fiscal year. The audit
committee, in appointing our independent registered public accounting firm, reserves the right, in its sole discretion, to change an
appointment at any time during a fiscal year if it determines that such a change would be in our best interests.

A representative of Deloitte & Touche LLP will be present at the annual meeting and will be available to respond to appropriate questions.
We do not anticipate that the representative will make a prepared statement at the annual meeting; however, he or she will be free to do so
if he or she chooses.

The board of directors recommends a vote “for” the ratification of the
appointment of Deloitte & Touche LLP as our independent registered
public accounting firm for fiscal year 2023.

Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2023 requires the
affirmative vote of a majority of our common stock present in person or represented by proxy at the annual meeting and entitled to vote on
the proposal. Abstentions will count as votes against this proposal.

Annual Evaluation and Selection of Deloitte & Touche LLP

The audit committee annually evaluates the performance of its independent registered public accounting firm, including the senior audit
engagement team, and determines whether to re-engage the current independent accounting firm or consider other firms. Factors
considered by the audit committee in deciding whether to retain the current independent accounting firm include:

• Deloitte & Touche LLP’s capabilities considering the complexity of our business and the resulting demands placed on Deloitte & Touche

LLP in terms of technical expertise and knowledge of our industry and business;

• the quality and candor of Deloitte & Touche LLP’s communications with the audit committee and management;

• Deloitte & Touche LLP’s independence;

• the quality and efficiency of the services provided by Deloitte & Touche LLP, including input from management on Deloitte & Touche
LLP’s performance and how effectively Deloitte & Touche LLP demonstrated its independent judgment, objectivity, and professional
skepticism;

• the workload capacity and resources of Deloitte & Touche LLP’s senior audit engagement team;

• external data on audit quality and performance, including recent Public Company Accounting Oversight Board reports on Deloitte &

Touche LLP and its peer firms; and

• the appropriateness of Deloitte & Touche LLP’s fees, tenure as our independent auditor, including the benefits of a longer tenure, and the

controls and processes in place that help ensure Deloitte & Touche LLP’s continued independence.

81 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Based on this evaluation, the audit committee and the board believe that retaining Deloitte & Touche LLP to serve as our independent
registered public accounting firm for the fiscal year ending December 31, 2023, is in the best interests of our company and its
stockholders.

In accordance with rules applicable to mandatory partner rotation, Deloitte & Touche LLP’s lead engagement partner for our audit was
changed in 2022. The audit committee oversees the process for, and ultimately approves, the selection of the lead engagement partner.

Audit Fees and Non-Audit Fees

The following table summarizes the aggregate fees that our independent registered public accounting firm, Deloitte & Touche LLP, billed or
is expected to bill us for professional services rendered for 2021 and 2022:

Audit Fees 1

Audit-Related Fees
Tax Fees

All Other Fees
Total Fees 3

2021

2022

$ 2,910,640

3,160,291

—

$ 1,319,159 2

—

$ 2,910,640

4,479,450

Ratio of Tax and All Other Fees to Audit and Audit-Related Fees

0 %

1 Audit fees for 2021 and 2022 consisted of fees for the annual audit of our consolidated financial statements and internal control over financial
reporting, statutory and regulatory audits, reviews of quarterly financial statements, comfort letters in connection with securities offerings, and
other filings with the SEC.

2 Fees for Knife River Corporation audit in connection with the company’s intent to separate Knife River Corporation pursuant to a tax-free spinoff,

and other filings with the SEC.

3 Total fees reported above include out-of-pocket expenses related to the services provided of $100,000 for 2021 and $181,026 for 2022.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent
Registered Public Accounting Firm

The audit committee pre-approved all services Deloitte & Touche LLP performed in 2022 in accordance with the pre-approval policy and
procedures the audit committee adopted in 2003. This policy is designed to achieve the continued independence of Deloitte & Touche LLP
and to assist in our compliance with Sections 201 and 202 of the Sarbanes-Oxley Act of 2002 and related rules of the SEC.

The policy defines the permitted services in each of the audit, audit-related, tax, and all other services categories, as well as prohibited
services. The pre-approval policy requires management to submit annually for approval to the audit committee a service plan describing the
scope of work and anticipated cost associated with each category of service. At each regular audit committee meeting, management reports
on services performed by Deloitte & Touche LLP and the fees paid or accrued through the end of the quarter preceding the meeting.
Management may submit requests for additional permitted services before the next scheduled audit committee meeting to the designated
member of the audit committee, currently David M. Sparby, for approval. The designated member updates the audit committee at the next
regularly scheduled meeting regarding any services approved during the interim period. At each regular audit committee meeting,
management may submit to the audit committee for approval a supplement to the service plan containing any request for additional
permitted services.

In addition, prior to approving any request for audit-related, tax, or all other services of more than $50,000, Deloitte & Touche LLP are
required to provide a statement setting forth the reasons why rendering of the proposed services does not compromise Deloitte & Touche
LLP’s independence. This description and statement by Deloitte & Touche LLP may be incorporated into the service plan or included as an
exhibit thereto or may be delivered in a separate written statement.

MDU Resources Group, Inc. Proxy Statement 82

Proxy Statement

AUDIT COMMITTEE REPORT

The audit committee assists the board in fulfilling its oversight responsibilities and serves as a communication link among the board,
management, the independent auditors, and the internal auditors. The audit committee (a) assists the board’s oversight of (i) the integrity of
the company’s financial reporting process and system of internal controls, (ii) the company’s compliance with legal and regulatory
requirements and the code of conduct, (iii) the independent auditors’ qualifications and independence, (iv) the performance of the
company’s internal audit function and independent auditors, and (v) the company’s management of risks in the audit committee’s areas of
responsibility; (b) arranges for the preparation of and approves the report that SEC rules require be included in the company’s annual proxy
statement; and (c) is also responsible for the appointment, compensation, retention, and oversight of the independent auditors including
pre-approval of all audit and non-audit services by the independent auditors. The audit committee acts under a written charter which it
reviews at least annually and a copy of which is available on our website.

Management has primary responsibility for the company’s financial statements and the reporting process, including the systems of internal
control over financial reporting. The independent auditors are responsible for performing an independent audit of the company’s
consolidated financial statements, issuing an opinion on the conformity of those audited financial statements with generally accepted
accounting principles, and assessing the effectiveness of the company’s internal controls over financial reporting. The audit committee
oversees the company’s financial reporting process and internal controls on behalf of the board.

In performing its oversight responsibilities in connection with our financial statements for the year ended December 31, 2022, the audit
committee:

• reviewed and discussed the audited financial statements with management;

• discussed with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company

Accounting Oversight Board and the SEC; and

• received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent auditors’ communications with the audit committee concerning independence and
discussed with the independent auditors their independence.

Based on the review and discussions referred to above, the audit committee recommended to the board of directors, and the board of
directors has approved, that the audited financial statements be included in our Annual Report on Form 10-K for the year ended
December 31, 2022, for filing with the SEC. The audit committee has appointed Deloitte & Touche LLP as the company’s independent
auditors for 2023. Stockholder ratification of this appointment is included as Item 4 in these proxy materials.

David M. Sparby, Chair

Dale S. Rosenthal

Edward A. Ryan

Chenxi Wang

83 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

INFORMATION ABOUT THE ANNUAL MEETING

Who Can Vote?

Stockholders of record at the close of business on March 10, 2023, are entitled to vote each share they owned
on that date on each matter presented at the meeting and any adjournment(s) thereof. As of March 10, 2023,
we had 203,623,893 shares of common stock outstanding each entitled to one vote per share.

Distribution of Our
Proxy Materials
Using Notice and
Access

We distributed proxy materials to certain of our stockholders via the Internet under the SEC’s “Notice and
Access” rules to reduce our costs and decrease the environmental impact of our proxy materials. Using this
method of distribution, on or about March 24, 2023, we mailed a Notice Regarding the Availability of Proxy
Materials (Notice) that contains basic information about our 2023 annual meeting and instructions on how to
view all proxy materials, and vote electronically, on the Internet. If you received the Notice and prefer to receive
a paper copy of the proxy materials, follow the instructions in the Notice for making this request and the
materials will be sent promptly to you via your preferred method.

How to Vote

You are encouraged to vote in advance of the meeting using one of the following voting methods, even if you are
planning to attend the 2023 Annual Meeting of Stockholders.

Registered Stockholders: Stockholders of record who hold their shares directly with our stock registrar can vote
any one of four ways:

instructions.

: By Internet: Go to the website shown on the Notice or Proxy Card, if you received one, and follow the
) By Telephone: Call the telephone number shown on the Notice or Proxy Card, if you received one, and

follow the instructions given by the voice prompts.

Voting via the Internet or by telephone authorizes the named proxies to vote your shares in the same
manner as if you marked, signed, dated, and returned the Proxy Card by mail. Your voting instructions may
be transmitted up until 11:59 p.m. Eastern Time on May 8, 2023.

* By Mail: If you received a paper copy of the Proxy Statement, Annual Report, and Proxy Card, mark, sign,

date, and return the Proxy Card in the postage-paid envelope provided.

In Person: Attend the annual meeting, or send a personal representative with an appropriate proxy, to vote
by ballot at the meeting.

Beneficial Stockholders: Stockholders whose shares are held beneficially in the name of a bank, broker, or other
holder of record (sometimes referred to as holding shares “in street name”), will receive voting instructions from
said bank, broker, or other holder of record. If you wish to vote in person at the meeting, you must obtain a legal
proxy from your bank, broker, or other holder of record of your shares and present it at the meeting.

See discussion below regarding the MDU Resources Group, Inc. 401(k) Plan for voting instructions for shares held
under our 401(k) plan.

You may change your vote at any time before the proxy is exercised.

Registered Stockholders:

• If you voted by mail: you may revoke your proxy by executing and delivering a timely and valid later dated

proxy, by voting by ballot at the meeting, or by giving written notice of revocation to the corporate secretary.

• If you voted via the Internet or by telephone: you may change your vote with a timely and valid later Internet

or telephone vote, as the case may be, or by voting by ballot at the meeting.

• Attendance at the meeting will not have the effect of revoking a proxy unless (1) you give proper written

notice of revocation to the corporate secretary before the proxy is exercised, or (2) you vote by ballot at the
meeting.

Beneficial Stockholders: Follow the specific directions provided by your bank, broker, or other holder of record to
change or revoke any voting instructions you have already provided. Alternatively, you may vote your shares by
ballot at the meeting if you obtain a legal proxy from your bank, broker, or other holder of record and present it
at the meeting.

Revoking Your
Proxy or Changing
Your Vote

MDU Resources Group, Inc. Proxy Statement 84

Proxy Statement

Discretionary
Voting Authority

If you complete and submit your proxy voting instructions, the individuals named as proxies will follow your
instructions. If you are a stockholder of record and you submit proxy voting instructions but do not direct how to
vote on each item, the individuals named as proxies will vote as the board recommends on each proposal. The
individuals named as proxies will vote on any other matters properly presented at the annual meeting in
accordance with their discretion. Our bylaws set forth requirements for advance notice of any nominations or
agenda items to be brought up for voting at the annual meeting, and we have not received timely notice of any
such matters, other than the items from the board of directors described in this Proxy Statement.

Voting Standards

A majority of outstanding shares of stock entitled to vote must be present in person or represented by proxy to
hold the meeting. Abstentions and broker non-votes are counted for purposes of determining whether a quorum
is present at the annual meeting.

If you are a beneficial holder and do not provide specific voting instruction to your broker, the organization that
holds your shares will not be authorized to vote your shares, which would result in broker non-votes, on proposals
other than the ratification of the selection of our independent registered public accounting firm for 2023.

The following chart describes the proposals to be considered at the annual meeting, the vote required to elect
directors and to adopt each other proposal, and the manner in which votes will be counted:

Voting
Options

For,
against,
or abstain
on each
nominee

Vote Required to Adopt the Proposal

A nominee for director will be
elected if the votes cast for such
nominee exceed the votes cast
against such nominee.

1 year,
2 years,
3 years, or
abstain

The frequency that receives the
most votes will be deemed the
frequency recommended by our
stockholders

Effect of
Abstentions

Effect of “Broker
Non-Votes”

No effect

Item
No.

Proposal

Election of Directors

Advisory Vote to Approve
the Frequency of Future
Advisory Votes to
Approve the
Compensation Paid to
the Company’s Named
Executive Officers

Advisory Vote to Approve
the Compensation Paid
to the Company’s Named
Executive Officers

For,
against,
or abstain

The affirmative vote of a majority
of the shares of common stock
represented at the annual meeting
and entitled to vote thereon

Same
effect as
votes
against

No effect

For,
against,
or abstain

The affirmative vote of a majority
of the shares of common stock
represented at the annual meeting
and entitled to vote thereon

Same
effect as
votes
against

Brokers have
discretion to
vote

4 Ratification of the

Appointment of Deloitte
& Touche LLP as the
Company’s Independent
Registered Public
Accounting Firm for
2023

Proxy Solicitation

The board of directors is furnishing proxy materials to solicit proxies for use at the Annual Meeting of
Stockholders on May 9, 2023, and any adjournment(s) thereof. Proxies are solicited principally by mail, but
directors, officers, and employees of MDU Resources Group, Inc. or its subsidiaries may solicit proxies
personally, by telephone, or by electronic media, without compensation other than their regular compensation.
Okapi Partners, LLC, additionally will solicit proxies for approximately $9,500 plus out-of-pocket expenses. We
will pay the cost of soliciting proxies and will reimburse brokers and others for forwarding proxy materials to
stockholders.

85 MDU Resources Group, Inc. Proxy Statement

Electronic Delivery
of Proxy Statement
and Annual Report
Documents

For stockholders receiving proxy materials by mail, you can elect to receive an email in the future that will
provide electronic links to these documents. Opting to receive your proxy materials online will save the company
the cost of producing and mailing documents to your home or business and will also give you an electronic link
to the proxy voting site.

Proxy Statement

• Registered Stockholders: If you vote on the Internet, simply follow the prompts for enrolling in the electronic

proxy delivery service. You may also enroll in the electronic proxy delivery service at any time in the future by
going directly to http://enroll.icsdelivery.com/mdu to request electronic delivery. You may revoke an electronic
delivery election at this site at any time.

• Beneficial Stockholders: If you hold your shares in a brokerage account, you may also have the opportunity to
receive copies of the proxy materials electronically. You may enroll in the electronic proxy delivery service at
any time by going directly to http://enroll.icsdelivery.com/mdu to request electronic delivery. You may also
revoke an electronic delivery election at this site at any time. In addition, you may also check the information
provided in the proxy materials mailed to you by your bank or broker regarding the availability of this service
or contact your bank or broker to request electronic delivery.

In accordance with a Notice sent to eligible stockholders who share a single address, we are sending only one
Annual Report to Stockholders and one Proxy Statement to that address unless we received instructions to the
contrary from any stockholder at that address. This practice, known as “householding,” is designed to reduce our
printing and postage costs. However, if a stockholder of record wishes to receive a separate Annual Report to
Stockholders and Proxy Statement in the future, he or she may contact the Office of the Treasurer at MDU
Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650, Telephone Number: (701) 530-1000.
Eligible stockholders of record who receive multiple copies of our Annual Report to Stockholders and Proxy
Statement can request householding by contacting us in the same manner. Stockholders who own shares through
a bank, broker, or other nominee can request householding by contacting the nominee.

We will promptly deliver, upon written or oral request, a separate copy of the Annual Report to Stockholders and
Proxy Statement to a stockholder at a shared address to which a single copy of the document was delivered.

This Proxy Statement is being used to solicit voting instructions from participants in the MDU Resources Group,
Inc. 401(k) Plan with respect to shares of our common stock that are held by the trustee of the plan for the
benefit of plan participants. If you are a plan participant and also own other shares as a registered stockholder or
beneficial owner, you will separately receive a Notice or proxy materials to vote those other shares you hold
outside of the MDU Resources Group, Inc. 401(k) Plan. If you are a plan participant, you must instruct the plan
trustee to vote your shares by utilizing one of the methods described on the voting instruction form that you
receive in connection with shares held in the plan. If you do not give voting instructions, the trustee generally
will vote the shares allocated to your personal account in accordance with the recommendations of the board of
directors. Your voting instructions may be transmitted up until 11:59 p.m. Eastern Time on May 4, 2023.

Householding of
Proxy Materials

MDU Resources
Group, Inc.
401(k) Plan

Annual Meeting
Admission and
Guidelines

Admission: All stockholders as of the record date of March 10, 2023, are cordially invited to attend the annual
meeting. You must request an admission ticket to attend. If you are a stockholder of record and plan to attend the
meeting, please contact MDU Resources by email at CorporateSecretary@mduresources.com or by telephone at
701-530-1010 to request an admission ticket. A ticket will be sent to you by mail.

If your shares are held beneficially in the name of a bank, broker, or other holder of record, and you plan to
attend the annual meeting, you will need to submit a written request for an admission ticket by mail to:
Investor Relations, MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506 or email at
CorporateSecretary@mduresources.com. The request must include proof of stock ownership as of March 10,
2023, such as a bank or brokerage firm account statement or a legal proxy from the bank, broker, or other holder
of record confirming ownership. A ticket will be sent to you by mail.

Requests for admission tickets must be received no later than May 2, 2023. You must present your admission
ticket and state-issued photo identification, such as a driver’s license, to gain admittance to the meeting.

Guidelines: The use of cameras or sound recording equipment is prohibited except by the media or those
employed by the company to provide a record of the proceedings. The use of cell phones and other personal
communication devices is also prohibited during the meeting. All devices must be turned off or muted. No
firearms or weapons, banners, packages, or signs will be allowed in the meeting room. MDU Resources Group,
Inc. reserves the right to inspect all items, including handbags and briefcases, that enter the meeting room.

MDU Resources Group, Inc. Proxy Statement 86

Proxy Statement

Conduct of the
Meeting

Neither the board of directors nor management intends to bring before the meeting any business other than the
matters referred to in the Notice of Annual Meeting and this Proxy Statement. We have not been informed that any
other matter will be presented at the meeting by others. However, if any other matters are properly brought before
the annual meeting, or any adjournment(s) thereof, your proxies include discretionary authority for the persons
named in the proxy to vote or act on such matters in their discretion.

Stockholder
Proposals, Director
Nominations, and
Other Items of
Business for 2024
Annual Meeting

Stockholder Proposals for Inclusion in Next Year’s Proxy Statement: To be included in the proxy materials for our
2024 annual meeting, a stockholder proposal must be received by the corporate secretary no later than
November 24, 2023, unless the date of the 2024 annual meeting is more than 30 days before or after May 9,
2024, in which case the proposal must be received a reasonable time before we begin to print and mail our proxy
materials. The proposal must also comply with all applicable requirements of Rule 14a-8 under the Securities
Exchange Act of 1934.

Director Nominations From Stockholders for Inclusion in Next Year’s Proxy Statement: If a stockholder or group of
stockholders wishes to nominate one or more director candidates to be included in our proxy statement for the
2024 annual meeting through our proxy access bylaw provision, we must receive proper written notice of the
nomination not later than 120 days or earlier than 150 days before the anniversary date that the definitive proxy
statement was first released to stockholders in connection with the annual meeting, or between October 26,
2023 and November 24, 2023. In the event that the 2024 annual meeting is more than 30 days before or after
May 9, 2024, the notice must be delivered no earlier than the 150th day prior to such meeting and no later than
the 120th day prior to such meeting or the 10th day following the date on which public announcement of the
meeting date is first made. The requirements of such notice can be found in our bylaws, a copy of which is on our
website, at https://investor.mdu.com/governance/governance-documents. In addition, Rule 14a-19 under the
Exchange Act requires additional information be included in director nomination notices, including a statement
that the stockholder intends to solicit the holders of shares representing at least 67% of the voting power of shares
entitled to vote on the election of directors. If any change occurs with respect to such stockholder’s intent to
solicit the holders of shares representing at least 67% of such voting power, such stockholder must notify us
promptly.

Director Nominations and Other Stockholder Proposals Raised From the Floor at the 2024 Annual Meeting of
Stockholders: Under our bylaws, if a stockholder intends to nominate a person as a director, or present other items
of business at an annual meeting, the stockholder must provide written notice of the director nomination or
stockholder proposal not earlier than the 120th day prior to the first anniversary of the preceding year’s annual
meeting of stockholders and not later than the close of business of the 90th day prior to the first anniversary of the
preceding year’s annual meeting of stockholders. Notice of director nominations or stockholder proposals for our
2024 annual meeting must be received between January 10, 2024 and February 9, 2024, and meet all the
requirements and contain all the information, including the completed questionnaire for director nominations,
provided by our bylaws. The requirements for such notice can be found in our bylaws, a copy of which is on our
website, at https://investor.mdu.com/governance/governance-documents.

We will make available to our stockholders to whom we furnish this Proxy Statement a copy of our Annual Report on Form 10-K, excluding exhibits,
for the year ended December 31, 2022, which is required to be filed with the SEC. You may obtain a copy, without charge, upon written or oral
request to the Office of the Treasurer of MDU Resources Group, Inc., 1200 West Century Avenue, Mailing Address: P.O. Box 5650, Bismarck, North
Dakota 58506-5650, Telephone Number: (701) 530-1000. You may also access our Annual Report on Form 10-K through our website at
www.mdu.com.

By order of the Board of Directors,

Karl A. Liepitz

Secretary

March 24, 2023

87 MDU Resources Group, Inc. Proxy Statement

Corporate Headquarters
Street Address:
1200 W. Century Ave.
Bismarck, ND 58503

Mailing Address:
P.O. Box 5650
Bismarck, ND 58506-5650

Telephone: 701-530-1000
Toll-Free Telephone: 866-760-4852
www.mdu.com

The company has filed as exhibits to its Annual Report on Form
10-K the CEO and CFO certifications as required by Section 302
of the Sarbanes-Oxley Act.

Common Stock
MDU Resources’ common stock is listed on the New York Stock
Exchange under the symbol MDU. The stock began trading on the
NYSE in 1948 and is included in the Standard & Poor’s MidCap
400 and the S&P High-Yield Dividend Aristocrats indices.
Average daily trading volume in 2022 was 1,295,188 shares.

Shareowner Service Plus Plan
The Shareowner Service Plus Plan provides interested investors
the opportunity to purchase shares of MDU Resources’ common
stock and to reinvest all or a percentage of dividends without
incurring brokerage commissions or service charges. The plan is
sponsored and administered by Equiniti Trust Company, transfer
agent and registrar for MDU Resources. For more information,
contact Equiniti Trust Company at 877-536-3553 or visit
www.shareowneronline.com.

2023 Key Dividend Dates

Ex-Dividend Date

Record Date

Payment Date

March 9
March 8
First Quarter
June 8
June 7
Second Quarter
September 14 October 1
September 13
Third Quarter
December 14
December 13
Fourth Quarter
Key dividend dates are subject to the discretion of the Board of Directors.

April 1
July 1

January 1, 2024

Stockholder Information

Annual Meeting
11 a.m. CDT May 9, 2023
Montana-Dakota Utilities Co. Service Center
909 Airport Road
Bismarck, North Dakota

Shareholder Information and Inquiries
Registered shareholders have electronic access to their accounts by
visiting www.shareowneronline.com. Shareowner Online allows
shareholders to view their account balance, dividend information,
reinvestment details and more. The stock transfer agent maintains
stockholder account information.

Communications regarding stock transfer requirements, lost
certificates, dividends or change of address should be directed to
the stock transfer agent.

Company information, including financial reports, is available at
www.mdu.com and investor.mdu.com.

Shareholder and Analyst Contact
Brent L. Miller
Telephone: 866-866-8919 or 701-530-1730
Email: Brent.Miller@MDUResources.com

Transfer Agent and Registrar for All Classes of Stock
Equiniti Trust Company
Stock Transfer Department
P.O. Box 64874
St. Paul, MN 55164-0874
Telephone: 877-536-3553
www.shareowneronline.com

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
50 S. Sixth St., Suite 2800
Minneapolis, MN 55402-1538

Note: This information is not given in connection with any sale or
offer for sale or offer to buy any security.

Design: MDU Resources
Printing: AFPI