SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]/X/
Filed by a Partyparty other than the Registrant [ ]/ /

Check the appropriate box:
[X]/X/ Preliminary Proxy Statement
[ ]/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
[ ]/ / Definitive Additional Materials
[ ]/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

MDU Resources Group, Inc.RESOURCES GROUP, INC.
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(Name of Registrant as Specified In Its Charter

.................................................................Charter)

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(Name of Person(s) Filing Proxy Statement)Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ]/X/ No fee required

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1)
and 0-11.

1)0-11

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
4) Proposed maximum aggregate value of transaction:
.............................................................

(1) Set0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined.

[ ]determined):

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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1)(1) Amount Previously Paid:

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MDU RESOURCES
GROUP, INC.[LOGO]
- --------------------------------------------------------------------------
400 North Fourth Street John--------------------------------------------------------------------------------
SCHUCHART BUILDING JOHN A. Schuchart
Bismarck,SCHUCHART
918 EAST DIVIDE AVENUE CHAIRMAN OF THE BOARD

MAILING ADDRESS:
P.O. BOX 5650
BISMARCK, ND 58501 Chairman &58506-5650
(701) 222-7900

Chief Executive Officer

March 7, 199415, 1999

To Our Stockholders:

You are cordially invited to attend the Annual Meeting of Stockholders to be
held on Tuesday, April 26, 1994,27, 1999, at 11:00 A.M.a.m., Central Daylight Savings Time,
at 909 Airport Road, Bismarck, North Dakota 58504. The other directorsDirectors and the
officers join me in extending this invitation.

The formal matters to be acted upon at the meeting are described in the
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. I would like to note for
your special attention that the Board of Directors has recommended that the
holders of Common Stock of the Company approve two proposals to amend the
Certificate of Incorporation. First, Article THIRD, which states the purposes
and powers of the Company, has not been amended since the original Certificate
was filed in 1924. As was the custom in those days it is lengthy and specific.
Current law permits a general statement. The name change authorized by the
stockholders in 1985 reflects the multidimensional nature of our Company. This
amendment is consistent with the operations of our Company. Second, the first
paragraph of Article FOURTH states the number of authorized shares and the par
value of Common Stock. The proposed amendment will increase the number of
authorized shares of Common Stock from 50,000,000 to 75,000,000 and reduce the
par value of Common Stock from $5.00 per share to $3.33 per share. The increase
in the number of authorized shares will insure that the Company will be able to
raise needed capital expeditiously and economically; provide sufficient Common
Stock for use in the several investment plans of the Company; and provide an
assured source of unissued Common Stock for issuance for other corporate
purposes which may develop from time to time. The reduction in par value will
enable the Company to effect a stock split in the future without going to the
stockholders for approval, should the Board of Directors decide it is in the
best interests of the Company to do so. In
addition to the formal issues, a brief report on current matters of interest
will be presented. LuncheonLunch will be served following the meeting.

We were pleased with the response of our stockholders at the 19931998 Annual
Meeting at which 87.588.3 percent of the Common Stock was represented in person or
by proxy. We hope that participation by our stockholders in the affairs of the
Company will increase and that there will be an even greater representation at
the 19941999 meeting. If you are unable to attend the meeting but have questions or
comments on the Company's operations, we would like to hear from you.

You will notice that we again are using a letter proxy format. The letter
proxy is larger and easier to read than the former proxy card. It also provides
the convenience of voting your proxy by Touchtone telephone if you are a
stockholder of record. The instructions are on the letter proxy. Representation
of your shares at the meeting is very important and we urge
that,important. Accordingly, whether or not you now
plan to attend the meeting, we urge you to submit your proxy promptly mark,
date, signby one of
the two methods offered: (1) by marking, dating, signing, and returnreturning the
enclosed letter proxy card in the envelope provided, for that
purpose. Ifor (2) by following the
instructions and voting your proxy by Touchtone telephone by calling the toll
free telephone number on the proxy. In either event, if you do attend the
meeting, you may, if you wish, withdraw your proxy and vote in person.

I hope you will find it possible to attend the meeting.

Sincerely,

[/S/ JOHN A. SCHUCHART]

JOHN A. SCHUCHART

MDU RESOURCES GROUP, INC.
400 NORTH FOURTH STREETSCHUCHART BUILDING
918 EAST DIVIDE AVENUE
MAILING ADDRESS:
P.O. BOX 5650
BISMARCK, NORTH DAKOTA 58501
- --------------------------------------------------------------------------------ND 58506-5650
(701) 222-7900

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 1994
- --------------------------------------------------------------------------------27, 1999

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March 7, 199415, 1999

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, April 26, 1994,27, 1999, at 11:00 A.M.a.m., Central Daylight Savings Time,
for the following purposes:

(1) To elect four directorsthree Directors to three year terms;

(2) To consider and take action upon a proposal, declared advisable by
the Board of Directors of the Company, to amend Article THIRD of the
Certificate of Incorporation pertaining to the corporate purposes and powers
of the Company, all as more fully described in the accompanying Proxy
Statement dated March 7, 1994;
(3) To consider and take action upon a proposal, declared advisable by the
Board of Directors of the Company, to amend Article FOURTH of the
Certificate of Incorporation to increase the number of authorized shares
of Common Stock from 50,000,000 with a par value of $5.00 per share to
75,000,000 with a par value of $3.33 per share to
150,000,000 with a par value of $1.00, all as more fully described in
the accompanying Proxy Statement dated March 7, 1994;15, 1999; and

(4)(3) To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.

The Board of Directors has fixed the close of business on February 28, 1994,March 8, 1999, as
the record date for the determination of common stockholders who will be
entitled to notice of, and to vote at, the meeting.

All stockholders who find it convenient to do so are cordially invited and
urged to attend the meeting in person. It is requested that you either (1) mark,
date, sign, and return the accompanyingenclosed letter proxy in the enclosed return envelope to which noprovided (no
postage need be affixedis necessary if mailed in the United States.States), or (2) submit your proxy
by Touchtone telephone by calling the toll free number on the proxy. The
instructions for using your telephone are printed on the letter proxy. Your
cooperation will beis appreciated.

By order of the Board of Directors,

[/S/ LESTER H. LOBLE, II]

LESTER H. LOBLE, II
Secretary
SECRETARY

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PROXY STATEMENT

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This Proxy Statement is furnished to the holders of Common Stock of MDU
Resources Group, Inc. (Company) on behalf of the Board of Directors of the
Company in connection with the solicitation of proxies to be used in voting at
the Annual Meeting of Stockholders to be held on April 26, 1994.27, 1999. The proxy
material was first forwarded to the holders of Common Stock on March 7, 1994.15, 1999.

Stockholders of record may vote their proxies by Touchtone telephone by
calling the toll free telephone number on the proxy or they may mark, date,
sign, and return the enclosed letter proxy in the envelope provided (no postage
is necessary if mailed in the United States). If your shares are held in the
name of a bank or broker, you MAY be able to vote by telephone. Follow the
instructions you receive from your bank or broker.

Any stockholder giving a proxy may revoke it at any time prior to its use at
the meeting by filing with the Secretary either a written instrument of
revocation or a duly executed proxy bearing a later date. In addition, the
powers of a proxy holder are suspended if the person executing the proxy is
present at the meeting and informs the Secretary in open meeting that he wishes
to revoke his proxy and vote in person. Attendance at the meeting will not, in
and of itself, revoke a proxy.

The Company will bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others, for forwarding solicitation
material to beneficial owners of shares of the Common Stock of the Company. In
addition to the use of the mails, proxies may be solicited by officers and
regular employees of the Company, by personal interview, by telephone, or by
telegraph.other
electronic means. Banks, brokerage houses and other institutions, nominees, and
fiduciaries will be requested to forward the soliciting material to their
principals and to obtain authorizations for the execution of proxy cardsthe letter proxies
and will, upon request, be reimbursed for reasonable expenses incurred.
Additional solicitation of proxies will be made in the same manner under the
special engagement and direction of Georgeson & Company, Inc. at an anticipated
cost to the Company of approximately $6,000 plus out-of-pocket expenses.

VOTING SECURITIES OUTSTANDING

Only holders of record of Common Stock at the close of business on February
28, 1994,March 8,
1999, will be entitled to vote at the meeting. On such date there were
outstanding 18,984,654 shares of Common Stock. Each outstanding share of Common
Stock entitles the holder to one vote.

The Bylaws of the Company provide that a majority of the shares of Common
Stock issued and outstanding and entitled to vote in person or by proxy shall
constitute a quorum at a meeting of shareholdersstockholders of the Company. Shares of
Common Stock represented by a properly signed and returnedsubmitted proxy are considered present
for purposes of determining a quorum. A proxy may be submitted by returning a
properly signed and dated letter proxy or by following the directions for
submission using a Touchtone telephone.

Under Delaware law, if a quorum is present, the nominees for election as
directorsDirectors who receive a plurality of the votes of shares present in person or
represented by proxy and entitled to vote shall be elected as directors.Directors.
"Withheld" votes are not included in the total vote cast for a nominee for
purposes of determining whether a plurality was received and, therefore, have no
negative effect.

Under Delaware law, the proposed amendmentsamendment to the Certificate of
Incorporation requirerequires the affirmative votesvote of the holders of a majority of the
outstanding shares of Common Stock.Stock entitled to vote. Shares that are not voted
for the amendments,amendment, including abstentions orand broker non-votes, will have the
same effect as a vote against the amendments.amendment.

As of February 28, 1994,March 8, 1999, no person other than New York Life Trust Company held
of record, or, to the knowledge of the management of the Company, owned
beneficially, 5 percent or more of the outstanding shares of Common Stock of the
Company. PROPOSAL FOR AMENDMENT OF CERTIFICATE OF INCORPORATION: ARTICLE THIRD
On November 4, 1993, the Board of Directors unanimously adopted a resolution
declaring it advisable to amend Article THIRD of the Company's Certificate of
Incorporation to restate Article THIRD and to submit the
1

amendment to the stockholders for approval at the Annual Meeting. The proposed
amendment is set forth in Exhibit A to this Proxy Statement.
The current purpose and powers clause of the Certificate, which has not been
amended since the original Certificate was filed in 1924, contains three major
paragraphs and eighteen subparagraphs. Since 1924, custom, usage and the laws of
the state of Delaware have changed. Under current Delaware law, this specific
enumeration of business functions is no longer necessary, and a brief statement
of business purpose suffices. The Amendment would not restrict the Company's
current operations, would be consistent with those operations, and would
generally permit any kind of corporate activity so long as it is lawful.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Approval of the
proposed amendment to amend the purpose and powers clause requires the
affirmative vote of the holders of a majority of allNew York Life Trust Company, Norwood, MA, held approximately
percent of the outstanding Common Stock of the Company. If a choice has been specified by a stockholder by meansCompany as trustee of the
ballot on the Proxy, the sharesCompany's Tax Deferred Compensation Savings Plans. New York Life Trust Company
disclaims all beneficial ownership of Common Stock will be voted
accordingly. If no choice has been specified, the shares will be voted "FOR" the
proposal.these shares.

PROPOSAL FOR AMENDMENT OF CERTIFICATE OF INCORPORATION: ARTICLE FOURTH

As of the close of business on February 28, 1994,March 8, 1999, the authorized capital stock
of the Company consisted of 52,000,00077,000,000 shares divided into four classes, namely,
Preferred Stock, Preferred Stock A, Preference Stock, and Common Stock. The
total number of shares of such Preferred Stock authorized is 500,000 shares of
the par value of $100 per share; the total number of shares of such Preferred
Stock A authorized is 1,000,000 shares without par value; the total number of
shares of such Preference Stock authorized is 500,000 shares without par value;
and the total number of shares of Common Stock authorized is 50,000,00075,000,000 with a
par value of $5$3.33 per share. As of February 28, 1994, 18,984,654March 8, 1999, common shares were
issued with 1,029,229 shares reserved for issuance under the Dividend Reinvestment
and the Tax Deferred Compensation Savings Plans of the Company.

The Board of Directors of the Company has proposed an amendment to the
Certificate of Incorporation of the Company to increase the authorized number of
common shares from 50,000,00075,000,000 to 75,000,000150,000,000 shares and to reduce the par value
of the Common Stock from $5.00$3.33 per share to $3.33$1.00 per share. The Resolutionresolution
adopted by the Board of Directors of the Company proposing this amendment to the
Certificate of Incorporation is attached hereto as Exhibit B.A.

During 1998, the Company effected a three-for-two stock split. After giving
effect to the stock split, there were, as of March 8, 1999, only 13.5 million
authorized shares of Common Stock that were not outstanding or reserved for
issuance. The Board of Directors believes that the additional authorized common
shares may be needed to enable the Company to raise additional capital funds
expeditiously and economically for its ongoing operational needs, for issuance
in the Company's several investment plans or for possible acquisitions, stock
distributions or split, or other corporate purposes. The Board believes it
advisable to authorize additional shares to permit the issuance of shares of
Common Stock without the delay and the expense involved in obtaining stockholder
approval at the time such issuance is determined to be appropriate. The Company
would seek and obtain all necessary regulatory authority prior to the issuance
of additional shares of Common Stock.

The Board of Directors has no plan at the present time for the issuance or
use of the additional shares of Common Stock to be authorized by the amendment.
The issuance of additional shares of authorized Common Stock would be within the
discretion of the Board of Directors, without the requirement of further action
by stockholders unless such action is required by applicable law or the rules of
any stock exchange on which the Company's securities may then be listed. All
newly authorized shares would have the same rights as the presently authorized
shares, including the right to cast one vote per share and to participate in
dividends when and to the extent declared and paid. The Board of Directors
believes that the

2
reduction in par value will enable the Company to effect a stock split in the
future without further shareholderstockholder approval should economic conditions so
warrant and the Board so determine.determines.

The Board of Directors is unaware of any specific effort to obtain control
of the Company, and has no present intention of using the proposed increase in
the number of authorized shares of Common Stock as an anti-takeover device.
However, the Company's authorized but unissued capital stock could be used to
make an attempt to effect a change in control more difficult.

Decreasing the par value is not intended to have any effect on the market
value of the Common Stock.

2
Under the Company's Certificate of Incorporation, no holders of any class of
stock of the Company are entitled to any preemptive rights with respect to any
shares of the Company's capital stock.

None of the directorsDirectors or officers of the Company has any interest, direct or
indirect, in the adoption of the proposed amendment except as a holder of shares
of the Common Stock of the Company.

No financial statements are furnished in connection with this proposal as
they are not deemed material for the exercise of prudent judgment with respect
thereto.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Approval of
the proposed amendment to increase the authorized number of shares of Common
Stock and reduce the par value of Common Stock requires the affirmative vote of
the holders of a majority of all of the outstanding Common Stock of the Company.
If a choice has been specified by a stockholder by means of the ballot on the
Proxy,letter proxy, the shares of Common Stock will be voted accordingly. If no choice
has been specified, the shares will be voted "FOR" the proposal.

ELECTION OF DIRECTORS

At the meeting, fourthree Directors will be elected to serve for a term of three
years until 19972002, and until their respective successors are elected and qualify.
All of the nominees are incumbent Directors and are nominated for reelection.
Harold J. Mellen, Jr., who retired as President and Chief Executive Officer on
March 31, 1998, has decided not to stand for reelection as a Director. Mr.
Mellen served the Company with distinction for 13 years. He joined the Company
in 1985 as Vice President--Corporate Development and rose to President and Chief
Executive Officer on January 1, 1995. He served in that position until his
retirement on March 31, 1998. Unless otherwise marked onspecified when the proxy is
submitted, shares of the Common Stock represented by the proxy will be voted for
the four nominees named below. If any nominee becomes unavailable for any reason, or
if a vacancy should occur before the election (which events are not
anticipated), the shares represented by the proxy will be voted for another
person in the discretion of the persons named in the proxy. Information
concerning the nominees, including their ages, periods of service

3
as directorsDirectors, and business experience, according to information furnished to the
Company by the respective nominees, is set forth as follows:

FIRST YEAR OF
SERVICE AS
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- ----------------------------------------------------------------- --- ----------- ------------------------------------------------------------ ---------------------------------------------------------

Thomas Everist ..................... 49 1995 Mr. Everist is President and Chief Executive Officer of
(to be elected for a term expiring L. G. Everist, Inc., Sioux Falls, South Dakota, an
in 2002) aggregate production company. He is Vice President of
Spencer Quarries, Spencer, South Dakota, a rock quarry;
a Director of Standard Ready Mix, of Sioux City, Iowa;
[PHOTO] and a Director of Raven Industries, Inc., a general
manufacturer of electronics, sewn products, and
plastics, of Sioux Falls, South Dakota. He currently
serves on the Finance and Nominating Committees of the
Board of Directors.

Robert L. Nance .................... 62 1993 Mr. Nance is the majority owner, President, and Chief
(to be elected for a term expiring Executive Officer of Nance Petroleum Corporation,
in 2002) Billings, Montana, an oil and gas exploration and
production company. He is also a Director of First
Interstate Bank of Montana, Inc. He serves on the
[PHOTO] National Board of Governors and Executive Committee of
the Independent Petroleum Association of America and
serves on the Board, and is Chairman of the Petroleum
Technology Transfer Council. He currently serves on the
Finance and Nominating Committees of the Board of
Directors.

John A. Schuchart .................. 69 1976 Mr. Schuchart, Chairman of the Board, was named Chief
(to be elected for a term expiring Executive Officer in June 1980 and Chairman in May
in 2002) 1983. He retired as Chief Executive Officer on December
31, 1994. Mr. Schuchart also serves as an ex officio
Director of the subsidiaries of the Company, the
[PHOTO] Managing Committee of Montana-Dakota Utilities Co., and
the MDU Resources Foundation. Mr. Schuchart serves on
various civic and charitable organizations in Bis-
marck, North Dakota, including the Board of Regents of
the University of Mary.

Certain information concerning the remaining Directors, whose terms expire
in 2000 or in 2001, including their ages, periods of service as Directors, and
business experience, according to information furnished to the Company, is set
forth as follows:

FIRST YEAR OF
SERVICE AS
NAME AGE DIRECTOR BUSINESS EXPERIENCE
- ------------------------------------ --- ------------- ---------------------------------------------------------

San W. Orr, Jr. ........... 52.................... 57 1978 Mr. Orr is an attorney and is in the business (to be elected for a term of
of(term expiring in 2000) financial and estate management. He is three years expiring in 1997) Chairman of the
BoardsBoard and a Director of Marathon Electric Manufacturing
Corporation, MosineeWausau-Mosinee Paper
Corporation and Wausau Paper Mills Company.is Vice Chairman of the Board of M&I
[PHOTO] First American Bank. He is a Director of Wausau
Insurance Companies, MMarshall & I First American National Bank,Ilsley Corporation, and
M & I Marshall & Ilsley Bank. Mr. Orr also serves on
various civic and charitable organizations in Wisconsin
including the Board of Regents of the University of
Wisconsin System. He currently serves on the Audit and
Compensation Committees of the Board of Directors.
John A. Schuchart .......... 64 1976 Mr. Schuchart,Directors and
is Vice Chairman of the Board and Chief
(to be elected for a term of Executive Officer, was named Chief Executive
three years expiring in 1997) Officer in June 1980 andBoard.

Harry J. Pearce .................... 56 1997 Mr. Pearce is the Vice Chairman in
May 1983. Mr. Schuchart also serves as
the Chairman of the Board and a Director of Alaska Basic Industries,General
(term expiring in 2000) Motors Corporation. He is a Director of Hughes
Electronics Corporation, General Motors Acceptance
Corporation, Delphi Automotive Systems Corporation,
[PHOTO] Marriott International Inc., Anchorage Sandthe American Automobile
Manufacturers Association, the Economic Strategy
Institute, the Theodore Roosevelt Medora Foundation,
and Gravel
Company, Inc., Concrete, Inc., Fidelity
Oil Co., Fidelity Oil Holdings, Inc.,
KRC Aggregate, Inc., KRC Holdings,
Inc., Knife River Coal Mining Company,
LTM, Incorporated, Rogue Aggregates,
Inc., Williston Basin Interstate
Pipeline Company; asis a Director and the
President of Centennial Energy
Holdings, Inc., and Wibaux Gas Co.; all
being subsidiariesmember of the Company. Mr.
SchuchartUnited States Air Force Acad-
emy's Board of Visitors. He also serves on the Board of
Trustees of Howard University and is also Chairmana member of The
Northwestern Law Board of the Managing CommitteeNorthwestern University
School of Montana-Dakota
Utilities Co., a DivisionLaw. He currently serves on the Audit and
Compensation Committees of the Company.Board of Directors.

3
5

Homer A. Scott, Jr. ....... 59................ 64 1981 Mr. Scott is engaged in the banking and (to be elected for a term of ranchinghospitality
(term expiring in 2000) business in the states of Wyoming and
three years expiring in 1997) Montana. He is a
Director and Chairman of the BoardsBoard of First Interstate
BancSystem, of Montana, Inc., anda Director of First Interstate
Bank[PHOTO] Bank-Montana, and Chairman of Commerce, Sheridan,
Wyoming,the Board and a Director
of First Interstate Bank of Commerce, Billings,
Montana.Bank-Wyoming. Mr. Scott is the
principal owner, a Director and President of Sugarland
Enterprises, Inc., and the managing partner of SugarlandSugar-
land Development Company, a commercial property
development company in Sheridan, Wyoming. Mr. Scott also isSugarland
Enterprises, Inc. owns and manages four Perkins
Restaurants, a Director of Flying V Cattle CompanyHoliday Inn, and PadlockPowder Horn Ranch, Companya
housing development and a partner
in Scott Land and Livestock.golf course near Sheridan. He
currently serves on the Audit and Compensation CommitteesCommit-
tees of the Board of Directors.

Sister Thomas Welder, 53O.S.B. ....... 58 1988 Sister Welder is the President of the O.S.B. ................... University of Mary,
(term expiring in 2000) Bismarck, North Dakota. She
(to be elected for a term of is a Director of St.
Alexius Medical three years expiring in 1997) Center of Bismarck.Bismarck and Chair of its
Marketing Committee. She is a Director of the
[PHOTO] Bismarck-Mandan Development Association and is a member
and past Director of the Bismarck-Mandan Area Chamber
of Commerce. She is also a member of the North Dakota Vision 2000
Committee, the Theodore
Roosevelt Medora Foundation,Founder's Society and the Accreditation Review Council ofConsultant-
Evaluator Corps for the North Central Association of
Colleges and Schools. She currently serves on the
NominatingFinance and FinanceNominating Committees of the Board of
Directors.

Certain information concerning the remaining directors, whose terms expire
either in 1995 or in 1996, including their ages, periods of service as directors
and business experience, according to information furnished to the Company, is
set forth as follows:

Douglas C. Kane ............ 44.................... 49 1991 Mr. Kane was elected Executive Vice President, Chief
(term expiring in 2001) Administrative and Corporate Development Officer in
November 1997. He joined the Company as Executive Vice
(term expiring in 1995)
President and Chief Operating Officer in January 1991.
[PHOTO] Prior to that time he was President and Chief Executive
Officer of Knife River Coal Mining CompanyCorporation from May 1990,
President from September 1987, and previously had
served as Senior Vice President--Operations.President-- Operations. During
1998, Mr. Kane is
aserved as Director and/or officer of
Alaska Basic Industries,
Inc., Anchorage Sand and Gravel
Company, Inc., Concrete, Inc., Fidelity
Oil Co., Fidelity Oil Holdings, Inc.,
KRC Aggregate, Inc., KRC Holdings,
Inc., Knife River Coal Mining Company,
LTM, Incorporated, and Rogue
Aggregates, Inc., all beingprincipal subsidiaries of the Company. Mr. Kane
is alsoCompany and as a member
of the Managing Committee of Montana-Dakota Utilities
Co., a Division of the Company.

FIRST YEAR OF
SERVICE AS
NAME AGE DIRECTOR BUSINESS EXPERIENCE
- ------------------------------------ --- ------------- ---------------------------------------------------------

Richard L. Muus ............ 64.................... 69 1985 Mr. Muus retired in April 1989 after 35 years with
(term expiring in 1995) with the2001) Midwest Federal Savings Bank, Minot, North Dakota. At
the time of his retirement, Mr. Muus was the President
and a Director of the bank. Mr. Muus is a member and
[PHOTO] past Director and Officer of the Minot Area Chamber of
Commerce and a past Director of the Minot Area DevelopmentDevelop-
ment Corporation. He is a memberhas served as Chairman of the
Military Affairs and Diplomats
CommitteeNorth Dakota Housing Finance Agency Advisory Board, as
a Director of the ChamberFederal Home Loan Bank of Commerce.Des Moines,
and as a director of the U.S. League of Savings
Institutions. He is a member of the Board of Regents of
Minot State University and alsoUniversity. He currently serves on the
Finance Committee of St.
Joseph Hospital, Minot, North Dakota.
He currently serves on the Audit and Finance Committees of the Board of Directors.

FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- ----------------------------- --- ----------- -----------------------------------------------

John L. Olson ............. 54...................... 59 1985 Mr. Olson is President and the owner of Blue Rock Products
(term expiring in 1995) Rock Products2001) Company and of Blue Rock Distributing Company located
in Sidney, Montana, a beverage bottling and
distributing company, respectively. Mr. Olson also is
the[PHOTO] Chairman of the Board and a Director of Admiral
Beverage Corporation, Worland, Wyoming, and Ogden,
Utah; he is Chairman of the Board and Director of the
Foundation for Community Care, Sidney, Montana; hea
member of the Executive Committee of the University of
Montana Foundation; a Director of BlueCross BlueShield
of Montana; and is trustee for Blue Rock Products
Company Profit Sharing Trust.Trust, Sidney, Montana. He
currently serves on the Audit and Nomi-
natingNominating Committees
of the Board of Directors.

Joseph T. Simmons ......... 58.................. 63 1984 Mr. Simmons is professorretired in May 1997 as a Professor of Accounting and
(term expiring in 1995)2001) Accounting and Finance, University of South Dakota,
Vermillion and was Visiting Professor of Finance,
University of Warsaw, Warsaw, Poland (February -- July,(February--July
[PHOTO] 1994). Mr. Simmons is the Chairman and President of
Simmons Financial Management, Inc. and
owner of Simmons & Associates. He also serves on
the Boards of GRO/TECH and RE/SPEC and
GRO/TECH in Rapid City, South
Dakota, and Dairilean, Inc. in Sioux Falls, South
Dakota. He currently serves on the Finance Committeeand
Nominating Committees of the Board of the Board of Directors.
Harold J. Mellen, Jr. .... 59 1989Directors.

FIRST YEAR OF
SERVICE AS
NAME AGE DIRECTOR BUSINESS EXPERIENCE
- ------------------------------------ --- ------------- ---------------------------------------------------------

Martin A. White .................... 57 1998 Mr. MellenWhite joined the Company in 1985November 1991 as Vice
(term expiring in 1996)2001) President--Corporate Development and was named Senior
Vice President--Finance and
Chief Financial OfficerPresident--Corporate Development in May 1987,
Executive ViceNovember 1995.
Effective April 1, 1998, Mr. White became President and
[PHOTO] Chief Financial and Corporate Development
Officer in August 1989, and President
and Chief Corporate Development Officer
in May 1992. Mr. Mellen is a director
of General Atlantic Resources, Inc. of
Denver, Colorado, a public company of
which approximately 7.5 percent is
owned by Fidelity Oil Holdings, Inc. (a
subsidiaryExecutive Officer. He also serves as Chairman of
the Company). Mr. Mellen
serves all subsidiaries asBoard, a Director and/or an officer except Gwinner
Propane, Inc.;Officer of all
principal subsidiaries, and Prairielands Energy Marketing, Inc.
Mr. Mellen also serves as a memberChairman of the Managing
Committee of Montana-Dakota Utilities Co. Prior to
joining the Company, Mr. White was Chairman and Chief
Executive Officer of White Resources Corporation
(November 1989-- October 1991); Executive Vice
President and Chief Operating Officer of Consolidated
TVX Mining Corporation of Chile (January 1988--
November 1989); and Chairman, President, and Chief
Operating Officer of Entech Inc. (September
1986--December 1988), a
Division ofwhich comprise the Company.
Robert L. Nance .......... 57 1993 Mr. Nance is the majority owner and President
(term expiring in 1996) of Nance Petroleum Corporation, Billings,
Montana, an oil and gas exploration and
production company. He is also a
Director of First Interstate Bank of
Commerce, Billings, Montana. He is
Chairman of the Board of the Deaconess
Billings Clinic Health Organization,
Deaconess Medical Center and Billings
Clinic, all of Billings, Montana. He
currently serves on the Finance
Committee of the Board of Directors.

FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- ----------------------------- --- ----------- -----------------------------------------------

Charles L. Scofield ....... 69 1978 Mr. Scofield is the owner and Presidentnon-utility
subsidiaries of The (term expiring in 1996) Scofield Broadcasting Co., Inc. which is the
sole owner and licensee of KLPZ radio
station, Parker, Arizona. He is the
sole owner of KEYZ and KYYZ radio
stations in Williston, North Dakota. He
is a Director of the First National
Bank & Trust Company of Williston,
North Dakota, a Director of the North
Dakota Automobile Club (AAA) of Fargo,
North Dakota and the owner of a cattle
ranch in Montana. He currently serves
on the Nominating and Finance
Committees of the Board of Directors.
Stanley F. Staples, Jr. ..... 69 1984 Mr. Staples is President of Alexander
(term expiring in 1996) Properties, Inc., an investment management
firm, and of Northern Chief IronMontana Power Company. Mr. Staples also serves on the
Board of Directors of Wausau Paper
Mills Company, M & I First American
National Bank, Marathon Electric
Manufacturing Corporation, Mosinee
Paper Corporation, and Murray
Machinery, Inc. He currently serves on
the Compensation and Nominating
Committees of the Board of Directors.

Except where expressly noted, no corporation or organization named above is
a parent, subsidiary, or other affiliate of the Company.

During 1993,1998, the Board of Directors had fourfive meetings. The Board of
Directors has an Audit Committee, discussed under "Accounting and Auditing Matters," a NominatingCompensation Committee, a Finance Committee,
and a CompensationNominating Committee. All Committees are composed entirely of outside
Directors. The NominatingAudit Committee, whichestablished in 1972, meets regularly with
management, internal auditors, and representatives of the Company's independent
public accountants. The independent accountants have free access to the
Committee and the Board of Directors. During 1998, the Committee met three times
during 1993, recommendsand reviewed the scope, timing, and fees for the annual audit, other services
provided by the independent accountants, and the results of audit examinations
completed by the independent accountants. The Audit Committee reports the
results of its activities to the full Board of Directors nominees for directors and for executive officers. The
Nominating Committee will consider nominees recommended by stockholders if the
names of such nominees are submitted to the SecretaryDirectors. No member of the Company onAudit
Committee is or before November 1, 1994, forhas been an employee of the annual meeting to be held on April 25, 1995.Company. The Compensation Committee,
which met four times during 1993,1998, sets compensation levels for executive
officers and recommends to the full Board of Directors compensation for the
Directors of the Company. The Finance Committee, which met threenine times during
1993,1998, reviews corporate financial plans, policies, budgets, investments and
acquisitions, and reviews and authorizes actions necessary to issue and sell
Common Stock and debt securities of the Company. 6
The Nominating Committee, which
met three times during 1998, recommends to the full Board of Directors nominees
for Director. All incumbent Directors, except Mr. Pearce who was absent from
some meetings due to illness, attended more than 75 percent of the combined
total of the meetings of the Board and of the Committees on which the Director
served.

EXECUTIVE COMPENSATION

Shown in the Summary Compensation Table below is information concerning the annual and long-term compensation
for services in all capacities to the Company for the calendar years ending
December 31, 1993, 1992,1998, 1997, and 1991, and in the next
two Tables the option exercises and long-term incentive plan awards1996, for the last
fiscal year of those persons who were, at December 31, 1993, (i) served as the Chief
Executive Officer during 1998, and (ii) were the other four most highly
compensated executive officers of the Company at December 31, 1998 (the Named Officers)"Named
Officers"). Footnotes supplement the information contained in the Tables.

TABLE 1: SUMMARY COMPENSATION TABLETABLE(1)

LONG-TERM COMPENSATION
------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------- ----------------------------
AWARDS PAYOUTS
------------------ --------
----------------------------------- ----------------------------- -----------
(A) (B) (C) (D) (E) (F) (G) (H)
(I)
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
COMPEN- STOCK OPTIONS/ LTIP
COMPEN-
NAME AND SALARY BONUS1 SATION2 AWARD(S) SARS3 PAYOUTS SATION4BONUS(2) SATION(3) AWARDS(4) SARS(5) PAYOUTS(6)
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
($)
- ------------------------- ---- -------- -------- -------- -------- -------- -------- ------------------------------------ --------- --------- ----------- ----------- ----------- -------------- -----------

JohnMartin A. Schuchart 1993 314,000 68,432 -- 0 0 0 4,497
--Chairman of
the 1992 296,808 33,686 -- 0 28,530 0 4,364
BoardWhite 1998 254,808 54,450 54,157 122,760 43,937
--President & C.E.O. 1991 281,923 135,8951997 147,316 52,350 -- 0 0 0 4,238-- --
1996 135,856 -- -- --

Harold J. Mellen, Jr. 1993 176,995 42,328 -- 0 0 0 4,4971998 175,446 186,450 16,408 109,243 2,250 244,865
--President & C.E.O. 1997 342,735 189,150 10,581 -- -- --
(retired 3/31/98) 1996 276,373 -- -- --

Douglas C. Kane 1998 210,185 92,250 62,689 55,800 137,605
--Executive Vice President 1997 201,772 106,500 -- -- --
Chief 1992 160,334 21,600Administrative & 1996 192,281 -- 0 13,740 0 4,402-- --
Corporate Development
Officer

1991 151,691 81,000Ronald D. Tipton 1998 223,491 92,250 -- 0 0 0 4,200
Joseph R. Maichel 1993 164,837 0 -- 0 0 0 3,77749,125 142,827
--President & C.E.O. of 1992 156,409 8,5161997 200,655 115,363 -- 0 13,740 0 4,331-- --
Montana-Dakota Utilities 1996 190,000 -- -- --
Co.

1991 150,100 45,001Warren L. Robinson 1998 150,865 63,750 43,771 37,950 75,320
--Vice President, 1997 128,843 58,200 -- 0 0 0 4,238-- --
Treasurer 1996 111,937 -- -- --
& Chief Financial Officer
Lester H. Loble, II 1998 139,694 54,450 41,916 27,900 48,737
--Secretary and 1997 127,473 47,100 -- -- --
General Counsel 1996 122,592 -- -- --

(A) (I)

ALL OTHER
COMPEN-
NAME AND SATION(7)
PRINCIPAL POSITION ($)
- ---------------------------- -----------

Martin A. White 5,484
--President & C.E.O. 4,875
4,076
Harold J. Mellen, Jr. 12,947
--President & C.E.O. 6,598
(retired 3/31/98) 5,886
Douglas C. Kane 1993 131,960 35,264 -- 0 0 0 3,9444,800
--Executive Vice President 1992 125,723 20,412 -- 0 13,740 0 4,2364,750
Chief Administrative & 4,500
Corporate Development
Officer
Ronald D. Tipton 4,998
--President & C.E.O. of 4,948
Montana-Dakota Utilities 4,788
Co.
Warren L. Robinson 4,526
--Vice President, 3,865
Treasurer 2,773
& Chief OperatingFinancial Officer
1991 105,908 67,364 -- 0 0 0 2,921Lester H. Loble, II 4,191
--Secretary and 3,824
General Counsel 3,688

- ------------------------------

(1) All share amounts in the table are adjusted to reflect the Company's
three-for-two stock split on July 13, 1998.

(2) Granted pursuant to the Executive Incentive Compensation Plan.

(3) Above-market interest on deferred compensation.

(4) The restricted stock awards in the table are valued at fair market value on
the date of grant. At December 31, 1998, the Named Officers held the
following amounts of restricted stock: Mr. White--2,190 shares ($58,172);
Mr. Mellen--4,440 shares ($117,938); Mr. Kane--2,535 shares ($67,336); Mr.
Tipton--2,250 shares ($59,766); Mr. Robinson--1,770 ($47,016); and Mr.
Loble--1,695 shares ($45,023).

(5) Options granted pursuant to the 1992 KESOP for the 1998-2000 performance
cycle except for Mr. Mellen who received options as part of his Director
compensation after his retirement as CEO.

(6) Dividend equivalents paid with respect to options granted pursuant to the
1992 KESOP for the 1995-1997 performance cycle.

(7) Totals shown are the Company contributions to the Tax Deferred Compensation
Savings Plan, with the following exceptions: Mr. White's total includes
insurance premiums of $684; Mr. Mellen's total includes insurance premiums
of $462 and excess retirement benefit of $7,835; and Mr. Tipton's total
includes insurance premiums of $198.

TABLE 2: OPTION/SAR(1) GRANTS IN LAST FISCAL YEAR(2)

GRANT DATE
INDIVIDUAL GRANTS(3) VALUE
------------------------------------------------------ -------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES IN EXERCISE OR PRESENT
GRANTED FISCAL BASE PRICE EXPIRATION VALUE(4)
NAMED OFFICER (#) YEAR(%) ($/SHARE) DATE ($)
(A) (B) (C) (D) (E) (F)
--------------- ------------- ------------- ----------- ----------- -------------

Martin A. White 1993 119,352 20,700 -- 0 0 0 920
--Vice
President-- 1992 115,000 11,040 -- 0 6,130 0 0
Corporate
Development 1991 13,269 0 -- 0 0 0 0

- ------------------------------------------------------------
1 Granted pursuant to the Management Incentive Compensation Plan.
2 Perquisites and other personal benefits paid to each Named Officer
aggregate less than the minimum disclosure levels.
3 No options were granted during 1993. "SAR" is an acronym for "stock
appreciation right." The Company has no plan or program which uses stock
appreciation rights.
4 Company contributions to the Tax Deferred Compensation Savings Plan
(401(k) Plan)White................. 122,760 10.2 21.13 2/10/08 293,396
Harold J. Mellen, Jr............ 2,250 .2 23.08 6/3/08 7,673
Douglas C. Kane................. 55,800 4.6 21.13 2/10/08 133,362
Ronald D. Tipton................ 49,125 4.1 21.13 2/10/08 117,409
Warren L. Robinson.............. 37,950 3.1 21.13 2/10/08 90,701
Lester H. Loble, II............. 27,900 2.3 21.13 2/10/08 66,681

- ------------------------

(1) "SAR" is an acronym for "stock appreciation right." The Company has no plan
or program which uses stock appreciation rights.

(2) Adjusted to reflect the Company's three-for-two stock split on July 13,
1998.

(3) All options except Mr. Mellen's were granted pursuant to the 1992 Key
Employee Stock Option Plan. Mr. Mellen's options were granted as part of his
Director compensation after his retirement as CEO and vested immediately
upon grant. The options granted under the 1992 Key Employee Stock Option
Plan become exercisable automatically in nine years on February 10, 2007.
Vesting is accelerated upon change in control or upon attainment of certain
performance goals, as follows: during the three year performance cycle
(1998-2000) performance goals established for the Company by the
Compensation Committee are based on return on equity (25%), earnings per
share (25%) and total relative shareholder return (50%). Performance goals
for Montana-Dakota Utilities Co. and the utility services companies, which
are applicable to Mr. Tipton, are based on return on equity (50%) and
earnings (50%). From 50% to 100% of the options granted may become
exercisable at the end of the three year performance cycle if from 90% to
100% of the goals are met.

Dividend Equivalents granted with the options are described in Table 4.

(4) Present values were calculated using the Black-Scholes option pricing model
which has been adjusted to take dividends into account. Use of this model
should not be viewed in any way as a forecast of the future performance of
the Company's stock. The estimated present value of each stock option
granted pursuant to the 1992 Key Employee Stock Option Plan is $2.39 based
on the following inputs:

Stock Price (fair market value) at Grant (2/10/98)................. $21.13
Exercise Price..................................................... $21.13
Expected Option Term............................................... 7 Years
Stock Price Volatility............................................. 0.1625
Dividend Yield..................................................... 5.13%

The model assumes: (a) a risk-free interest rate of 4.78 percent on a U.S.
Treasury Note with a maturity date of approximately 7 years; (b) Stock Price
Volatility is calculated using a three year historical average of stock
prices from grant date; (c) Dividend Yield is calculated using the
historical dividend rate for three years from the date of grant. The option
value was not discounted to reflect any accelerated vesting of the options.
Notwithstanding the fact that these options are non-transferable, no
discount for lack of marketability was taken.

The option grants to Mr. Mellen were made pursuant to the 1997 Non-Employee
Director Long-Term Incentive Plan under assumptions similar to those for the Key
Employee Stock Option Plan except that

assumptions differing from those utilized with respect to the Key Employee Stock
Option Plan were: (a) a Stock Price at grant and Exercise Price of $23.08; (b) a
risk free interest rate of 4.87 percent; (c) Stock Price Volatility of 0.2001;
and (d) Dividend Yield of 4.94 percent. Based on these inputs, the estimated
present value of each stock option granted to Mr. Mellen is $3.41.

TABLE 3: AGGREGATED OPTION/SAR1SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR1 VALUESSAR VALUES(1)

(A) (B) (C) (D) (E)
NUMBER OF
(E)
(B)SHARES SECURITIES UNDERLYING VALUE OF UNEXERCISED,
SHARESACQUIRED ON VALUE UNEXERCISED OPTIONS IN-THE-MONEYIN-THE- MONEY OPTIONS
ACQUIRED (C)EXERCISE REALIZED AT FISCAL YEAR-END3YEAR-END(2) AT FISCAL YEAR-END
ON VALUE (#) ($) (A) EXERCISE2 REALIZED ----------------------------- -----------------------------
NAME (#) ($)
----------- --------- ------------------------ ------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------- ----------- -------- ----------- ------------- ----------- ------------------------

JohnMartin A. Schuchart.... 9,640 121,085White............... 22,652 319,271 0 28,530122,760 0 224,674667,508
Harold J. Mellen, Jr. 5,340 69,754Jr.......... 74,610 767,800 2,250(3) 0 13,7407,828 0
108,202
Joseph R. Maichel....Douglas C. Kane............... 10,000 147,500 46,343 55,800 667,518 303,413
Ronald D. Tipton.............. 49,432 666,304 0 49,125 0 267,117
Warren L. Robinson............ 17,137 179,309 7,912 37,950 112,581 206,353
Lester H. Loble, II........... 0 0 0 13,740 0 108,202
Douglas C. Kane...... 0 0 0 13,740 0 108,202
Martin A. White...... 0 0 0 6,130 0 48,274

- ------------------------------------------------------------
1 "SAR" is an acronym for "stock appreciation right." The Company has no
plan or program which uses stock appreciation rights.
2 Reflects exercise of options under the 1983 Key Employees' Stock Option
Plan. No further options have been or will be granted under this plan and
no options remain outstanding.
3 The unexercised options are options granted under the 1992 Key Employee
Stock Option Plan (none of which are exercisable at this time).14,850 27,900 211,304 151,706

- ------------------------

(1) Adjusted to reflect the Company's three-for-two stock split on July 13,
1998.

(2) Vesting is accelerated upon a change in control.

(3) Options were awarded under the 1997 Non-Employee Director Long-Term
Incentive Plan on June 3, 1998.

TABLE 4: LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEARYEAR(1)

ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED PLANS
------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F)
NUMBER OF PERFORMANCE
SHARES, OR OTHER
NUMBER OFUNITS OR PERIOD
SHARES, UNITSOTHER UNTIL
OR OTHERRIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTSNAMED OFFICER (#)1(2) OR PAYOUT ($) ($) ($)
- ----------------------- ------------------------------------------------------ ----------- ----------- ----------- --------- ------- ------------------

JohnMartin A. Schuchart...... 28,530 12/31/94 52,638 105,276 157,914White.......................... 122,760 1998-2000 147,312 294,624 441,936
Harold J. Mellen, Jr... 13,740 12/31/94 25,350 50,701 76,052
Joseph R. Maichel...... 13,740 12/31/94 25,350 50,701 76,052Jr..................... -- -- -- -- --
Douglas C. Kane........ 13,740 12/31/94 25,350 50,701 76,052
Martin A. White........ 6,130 12/31/94 11,310 22,620 33,930

- ------------------------------------------------------------
1 Dividend equivalents were granted pursuant to the 1992 Key Employee Stock
Option Plan based on the number of options granted in 1992 and held by
each Named Officer. Dividend equivalents will, if earned, entitle the
recipient to the cash amount equal to any dividend declared by the Board
of Directors on the Common Stock of the Company. Dividend equivalents may
be earned, from 0% to 150%, at the end of the three year performance cycle
(1992-1994) depending upon (1) the level of achievement of performance
goals established for the Company and Montana-Dakota Utilities Co. by the
Compensation Committee and (2) individual performance. Vesting is
accelerated upon a change in control. Dividend equivalents that are not
earned are forfeited.
The performance goals for the 1992-1994 performance cycle are based on
return on equity (25%), earnings per share (25%) and total shareholder
return (50%). Performance goals for Montana-Dakota Utilities Co., which
are applicable to Mr. Maichel, are based on regulatory return (50%) and
net income (50%)Kane.......................... 55,800 1998-2000 66,960 133,920 200,880
Ronald D. Tipton......................... 49,125 1998-2000 58,950 117,900 176,850
Warren L. Robinson....................... 37,950 1998-2000 45,540 91,080 136,620
Lester H. Loble, II...................... 27,900 1998-2000 33,480 66,960 100,440

- ------------------------

(1) Adjusted to reflect the Company's three-for-two stock split on July 13,
1998.

(2) Dividend equivalents were granted pursuant to the 1992 Key Employee Stock
Option Plan based on the number of options granted to each Named Officer
(see Table 2).

8Dividend equivalents entitle the recipient to the cash amount
equal to any dividend declared by the Board of Directors on the common stock
of the Company. The table assumes the current level of dividends. Dividend
equivalents may be earned from 0% to 150% at the end of the three year
performance cycle (1998-2000) depending upon (1) the level of achievement of
performance goals established for the Company and Montana-Dakota Utilities
Co. and the utility services companies by the Compensation Committee and (2)
individual

SALARIEDperformance. Vesting is accelerated upon a change in control. See Table 2
for a description of the goals. Dividend equivalents that are not earned are
forfeited.

TABLE 5: PENSION PLAN AND SUPPLEMENTAL INCOME SECURITY PLANTABLE

YEARS OF CREDITED SERVICE
2
----------------------------------------------------------------------
REMUNERATION1----------------------------------------------------------
REMUNERATION 15 20 25 30 35
OR MORE
- ------------------------ -------- -------- -------- ------------------------------------------------------------- ---------- ---------- ---------- ---------- ----------

$125,000...$125,000............................................. $ 77,94079,572 $ 86,66588,215 $ 95,365 $104,090 $112,790
150,000... 92,030 102,555 113,080 123,605 134,130
175,000... 106,120 118,445 130,795 143,120 155,445
200,000... 120,185 134,335 148,485 162,635 176,785
225,000... 134,275 150,225 166,200 182,150 198,100
250,000... 145,265 162,015 178,740 195,515 210,681
300,000... 162,545 179,295 196,020 212,795 227,961
400,000... 171,185 187,935 204,660 221,435 236,601
450,000... 171,185 187,935 204,660 221,435 236,601

- ------------------------------------------------------------
1 Pension benefits are determined by the step-rate formula which places
emphasis on the highest consecutive 60 months of earnings within the final
10 years of service. Benefits for single participants under the Salaried
Pension Plan are paid as straight life amounts and benefits for married
participants are paid as actuarially reduced pensions with a survivorship
benefit for spouses, unless participants choose otherwise. The Salaried
Pension Plan also permits pre-retirement survivorship benefits upon
satisfaction of certain conditions. Additionally, certain reductions are
made for employees electing early retirement.
The Internal Revenue Code places maximum limitations on the amount of
benefits that may be paid in dollars under the Salaried Pension Plan. The
Company has adopted a non-qualified Supplemental Income Security Plan
(SISP) for senior management personnel. In 1993, 81 senior management
personnel participated in the SISP including the Named Officers. Both
plans cover salary shown in column (c) of the Summary Compensation Table
and exclude bonuses and other forms of compensation.
Upon retirement and attainment of age 65, participants in the SISP may
elect a retirement benefit or a survivors' benefit with the benefits
payable monthly for a period of 15 years.
2 As of December 31, 1993, the Named Officers were credited with the
following years of service under the plans; Mr. Schuchart: Pension, 18,
SISP, 11; Mr. Maichel: Pension, 23, SISP, 11; Mr. Mellen: Pension, 8,
SISP, 8; Mr. Kane: Pension, 3, SISP, 11; and Mr. White: Pension, 2, SISP,
2.96,859 $ 105,503 $ 114,147
150,000............................................. 95,689 106,145 116,602 127,058 137,514
175,000............................................. 108,545 119,726 130,908 142,090 153,271
200,000............................................. 121,145 132,326 143,508 154,690 165,871
225,000............................................. 132,125 143,306 154,488 165,670 176,851
250,000............................................. 143,045 154,226 165,408 176,590 187,771
300,000............................................. 179,285 190,466 201,648 212,830 224,011
350,000............................................. 226,865 238,046 249,228 260,410 271,591
400,000............................................. 267,845 279,026 290,208 301,390 312,571
450,000............................................. 307,745 318,926 330,108 341,290 352,471
500,000............................................. 347,945 359,126 370,308 381,490 392,671

The Table covers the amounts payable under the Salaried Pension Plan and
non-qualified Supplemental Income Security Plan (SISP). Pension benefits are
determined by the step-rate formula which places emphasis on the highest
consecutive 60 months of earnings within the final 10 years of service. Benefits
for single participants under the Salaried Pension Plan are paid as straight
life amounts and benefits for married participants are paid as actuarially
reduced pensions with a survivorship benefit for spouses, unless participants
choose otherwise. The Salaried Pension Plan also permits preretirement
survivorship benefits upon satisfaction of certain conditions. Additionally,
certain reductions are made for employees electing early retirement.

The Internal Revenue Code places maximum limitations on the amount of
benefits that may be paid under the Salaried Pension Plan. The Company has
adopted a non-qualified SISP for senior management personnel. In 1998, 70 senior
management personnel participated in the SISP, including the Named Officers.
Both plans cover salary shown in column (c) of the Summary Compensation Table
and exclude bonuses and other forms of compensation.

Upon retirement and attainment of age 65, participants in the SISP may elect
a retirement benefit or a survivors' benefit with the benefits payable monthly
for a period of 15 years.

As of December 31, 1998, the Named Officers were credited with the following
years of service under the plans: Mr. White: Pension, 7, SISP, 7; Mr. Mellen:
Pension, 12, SISP, 12; Mr. Kane: Pension, 27, SISP, 17; Mr. Tipton: Pension, 15,
SISP, 15; Mr. Robinson: Pension 10, SISP 10; and Mr. Loble: Pension, 11, SISP,
11. The maximum years of service for benefits under the Pension Plan is 35 and
under the SISP vesting begins at 3 years and is complete after 10 years. Benefit
amounts under both plans are not subject to reduction for offset amounts.

CHANGE-OF-CONTROL ARRANGEMENTS

The Company entered into Change of Control Employment Agreements with the
Named Officers (except Mr. Mellen) in November 1998, which would become
effective for a three-year period (with automatic annual extension if the
Company does not provide nonrenewal notice at least 60 days prior to the end of
each 12-month period) only upon a change of control of the Company. If a change
of control occurs, the agreements provide for a three-year employment period
from the date they become effective, with base salary not less than the highest
amount paid within the preceding twelve months, an annual

bonus not less than the highest bonus paid within the preceding three years, and
participation in the Company's incentive, savings, retirement and welfare
benefit plans.

The agreements also provide that specified payments and benefits would be
paid in the event of involuntary termination of employment, other than for cause
or disability, at any time when the agreements are in effect. In such event,
each of the Named Officers (except Mr. Mellen) would receive payment of an
amount equal to three times his annual base pay plus three times his highest
annual bonus (as defined therein). In addition, under these agreements, each of
the officers would receive (i) an immediate pro-rated cash-out of his bonus for
the year of termination based on the highest annual bonus and (ii) an amount
equal to the excess of (a) the actuarial equivalent of the benefit under Company
qualified and nonqualified retirement plans that the executive would receive if
he continued employment with the Company for an additional three years over (b)
the actual benefit paid or payable under these plans. All benefits of each
executive officer under the Company's welfare benefit plans would continue for
at least three years. These arrangements also provide for certain gross-up
payments to compensate these executive officers for any excise taxes incurred in
connection with these benefits and reimbursement for certain outplacement
services.

For these purposes, "cause" means the Named Officer's willful and continued
failure to substantially perform his duties or willfully engaging in illegal
conduct or misconduct materially injurious to the Company, and "good reason"
includes the Company's termination of the Named Officer without cause, the
assignment to the Named Officer of duties inconsistent with his prior status and
position, certain reductions in compensation or benefits, and relocation or
increased travel obligations.

A "change of control" is defined as (i) the acquisition by a party or
certain related parties of 20% or more of the Company's voting securities; (ii)
a turnover in a majority of the Board of Directors without the approval of a
majority of the members of the Board as of November 1998; (iii) a merger or
similar transaction after which the Company's shareholders hold 60% or less of
the voting securities of the surviving entity; or (iv) the stockholders'
approval of the liquidation or dissolution of the Company.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

INTRODUCTION

Decisions on compensation for the Company's executive officers are made by
theThe Compensation Committee of the Board of Directors. The Committee was created
in 1967 and has been andDirectors is composedresponsible for
determining the compensation of the Company's executive officers. Composed
entirely of non-employee directors. In the
late part of each calendar year,Directors, the Committee reviewsmeets several times each year
to review and approves, with any
modifications it deems appropriate, the Executive Compensation Policydetermine compensation for the executive officers, including the
Chief Executive Officer.

The approved plan is
implemented the following calendar year.
EXECUTIVE COMPENSATION

POLICY
The Committee firmly believes that appropriate compensation levels succeed
in both attracting and motivating high quality employees. To implement this
philosophy, the Committee analyzes trends in compensation among comparable
companies participating in the oil and gas industry, segments of the energy and
mining industries, the peer group of companies used in the graph following this
report, and similar companies from general industry. The Committee then sets
compensation levels that it believes are competitive within the industry and
structured in a manner that rewards successful performance on the job. There are
three components of total executive compensation: base salary, annual incentive
compensation, and long-term incentive compensation.

In setting base salaries, the Committee does not use a particular formula.
In addition to the data referenced above, other factors the Committee uses in
its analysis include the executive's current salary in comparison to the
competitive industry standard as well as individual performance. Using this
system, the Committee granted to Mr. White, the President and Chief Executive
Compensation Policy is designedOfficer, a % increase in base salary. This increase took into account Mr.
White's promotion from Senior Vice President -- Corporate

Development to attractPresident and retain qualified
executive officers, to recognize above-average jobChief Executive Officer, his personal role in
achieving 1998 corporate performance, his rapid and capable assumption of his
new duties, and the successful acquisitions made during the year. During 1998,
only approximately % of Mr. White's compensation was base pay. The remainder
was performance-based. This reflects the Committee's belief in the importance of
having substantial at risk compensation to provide a direct and strong link
between Company performance and executive pay. TotalThe other Named Officers received base
salary increases averaging % in 1998.

In keeping with the Committee's belief that compensation should be directly
linked to successful performance, the Company employs both annual and long-term
incentive compensation plans. The annual incentive compensation is intended to be competitive with that paid by comparable
companies indetermined
under the regulated electric and gas utility industry and relevant
segments of the energy and mining industries.
There are four components of executive compensation:
(1) Base salary;
(2) ManagementExecutive Incentive Compensation Plan;
(3) 1992 Key Employee Stock Option Plan; and
(4) Restricted Stock Bonus Plan. 9

As indicated on page 9,The Committee makes awards
based upon the base salary componentlevel of compensation is designed
to be competitive with that paid by comparable companies. An external consultant
provides comparative surveys (Edison Electric Institute Executive Compensation
Survey, American Gas Association Top Management Survey, and Executive
Compensation Services Top Management Survey). The consultant also uses, as
appropriate, an oil and gas survey and a mining company survey for executives in
those positions. The external data from those surveys is used to develop a
market-consensus salary for each executive position. It is the policy of the
Compensation Committee to set 95% of the market-consensus salary as the market
value for the executive positions in the Company. The companies are not the same
as the peer group of companies used for the graph showing the comparison of five
year total shareholder returns, immediately following this report. The
Compensation Committee believes the Edison Electric Institute Executive
Compensation Survey, American Gas Association Top Management Survey, and
Executive Compensation Services Top Management Survey provide a broader base of
data and are commonly used in the utility industry to set executive
compensation. The Compensation Committee uses the market value of the position
together with an analysis of the value of the executive position and individual
evaluation to establish bases salaries for executive officers. To determine the
premium which should be added to the market-consensus salary used to set the
salary of the Chief Executive Officer to reflect the diversified nature of the
Company, the consultant uses a group of 12 peer companies (10 of which are the
same as those in the peer group used for the graph showing the comparison of
five year total shareholder returns, immediately following this report). These
12 companies are selected from utilities comparable to the Company. There was no
specific intent that these companies be different from the peer group. For 1994
they will be the same. This adjustment increased the value of the
market-consensus salary for the Chief Executive Officer for 1993 by 15%.
All executive officers are eligible for awards under the Company's various
incentive plans referred to above. The Compensation Committee believes that
offering incentives to executive officers will enhance the long-term performance
of the Company, promotecorporate earnings, cost efficiency, and further overall shareholder returns.
The Committee uses these plans as it deems appropriate to achieve these goals.
1993 COMPENSATION FOR EXECUTIVE OFFICERS AND CHIEF EXECUTIVE OFFICER
Compensation paid to executive officersindividual
performance. Mr. White received a total of $ (or % of the Companytargeted
amount) in 1993 was comprisedannual incentive compensation for 1998; the other Named Officers
received an average of base salary and cash awards under the Management Incentive Compensation Plan.
Additional dividend equivalents automatically accrued on options granted in 1992
to 16 executives$ , or % of the Company (including all executive officers) pursuanttargeted amount, based upon
achievement of corporate earnings and individual performance at or near the
[maximum] level.

Long-term incentive compensation serves to encourage successful strategic
management and is determined through three different vehicles: the 1992 Key
Employee Stock Option Plan, the Restricted Stock Bonus Plan, and the 1997
Executive Long-Term Incentive Plan. No awardsOptions with a three-year performance cycle
(1998-2000) and related dividend equivalents were madegranted in 19931998 under the 1992
Key Employee Stock Option Plan orto Mr. White, the Restricted Stock Bonus Plan (except
for one awardother Named Officers and
certain other executives. Since options granted in 1995 vested in full in 1997
based upon achievement of restricted stock made to one officer).
Base salary increases for executive officers during 1993 ranged from 3.1% to
5.9% and averaged 5.2%. Salary increases were a function of (1)performance goals at the Compensation
Committee's assessment of the individual performance of each executive and (2)
the current salary of each executive compared to that paid by comparable
companies as determined by the external consultant (as discussed above). A more
favorable performance appraisal permitted a larger increase. If the current
salary lagged that paid by comparable companies a larger increase was permitted.
The base salaries during 1993 averaged 85% of the market-consensus salarymaximum level for the
Company's executive positions. The Chief Executive Officer's base salary for
1993 reflected an increase of 5.9% over his 1992 base salary. This was 90% of1995-1997 performance cycle, the market-consensus salary as adjusted by the premium of 15%. The Chief
Executive Officer's achievementsCommittee granted new stock options and
his 18 years with the Company were
considered as well as his achievement of his goal during 1993 of major
acquisitions of profitable companies not subjectdividend equivalents in 1998 to rate regulation. The
Compensation Committee did not give formal weighting to the criteria used in
order to set salary increases for the executive officers or for the Chief
Executive Officer.
The Management Incentive Compensation Plan is structured so that cash
incentive awards reflect the attainment of specific annual levels of
performance. The performance measures used reflect both the shareholder's
interest (earnings) and the customer's interest (cost efficiency). Additionally,
individual performance is evaluated and appropriate adjustments to target award
levels may be made. Target award levels are a percentage of each participant's
assigned salary grade midpoint. The percentage for the Chief Executive Officer
was 35% and for the other executive officers ranged from 20% to 30%. A target
incentive fund is developed at the beginning of each plan year based upon the
aggregate target award levels of all participants. The size of the fund will
increase or decrease based upon actual Company performance in relation to the
pre-established goals. Individual awards will be greater or lesser than target
amounts based upon an assessment of individual performance. Awards can range
from 0% (less
10

than 90% of budgeted earnings per share) to 150% (more than 108% of budgeted
earnings per share) of the target amount. The annual corporate performance
targets for 1993 were based on the degree of achievement of 105% of budgeted
earnings. As a result of actual earnings exceeding threshold level of
performance, and individual performance goals being met, cash awards were made
under the plan for the year 1993 to 9 executive officers in the aggregate amount
of $265,350. The Chief Executive Officer received $68,432 for the year 1993.
This amount was a payout of 68% of the targeted award, based on the Company's
actual earnings exceeding the threshold level of performance and upon individual
performance.
The 1992 Key Employee Stock Option Plan iscontinue to motivate executives to achieve
specified long-term corporate performance goals of the Company and to encourage ownership by them of
theCompany common stockstock. The options become exercisable automatically in nine
years, but vesting may be accelerated if certain performance goals are achieved.
The number of options and dividend equivalents granted was determined based upon
a percent of the Company. It is designedsalary of each executive.

Restricted stock awards were also made in 1998 to reinforce
financialMr. White and strategic objectives,the other
Named Officers to emphasize payreward them for successful acquisitions completed by the
Company during 1998. The restricted stock serves to motivate long-term
performance and to focus executive effort on long-term sustainable value creation. This alignsalign the interests of the executives with those of
stockholders.

In 1994, the shareholder.Board of Directors adopted Stock Ownership Guidelines under
which executives are required to own Company Common Stock valued from one to
four times their annual salary.

The plan consists1998 compensation paid to the Company's executive officers qualified as
fully deductible under federal tax laws. The Committee continues to review the
impact of two elements: stock option grants and dividend equivalents.
Since options were granted in 1992 and the initial 3 year performance cycle
(1992-94) is still running, the Compensation Committee determined that it was
not necessary to grant further options in 1993 to achieve the goals stated
above. However, under the termsfederal tax laws on executive compensation, including Section 162(m)
of the 1992 option grants, dividend equivalents
automatically accrued in 1993 on these options. Dividend equivalents are accrued
based on the number of options held and are earned from 0% to 150% at the end of
each performance cycle based upon the achievement of the stated performance
goals; they are reflected in the Long Term Incentive Plan Table.
The Restricted Stock Bonus Plan provides for awards of restricted stock to
individuals when designated by the Compensation Committee as having demonstrated
superior individual performance. The awards serve as a motivator for long-term
performance and as a retention device for individuals who have demonstrated
superior performance. The executiveInternal Revenue Code, but has a stake in the company's financial
performance. Again, this aligns the interest of the executivesnot formulated any policy with those of the
shareholder. No awards have been made under this plan to executive officers of
the Company since 1988. Restrictions lapsed with respect to 1000 shares granted
to Messrs. Kane and Mellen in 1988 pursuant to the Restricted Stock Bonus Plan
after expiration of the five-year restriction period.
26% of the Chief Executive Officer's total compensation during 1993 was based
on objective annual performance criteria (through the Management Incentive
Compensation Plan) or long-term performance criteria (through the 1992 Key
Employee Stock Option Plan, reflecting dividend equivalents accrued on the 1992
option grants). An average of 22% of the total compensation of the other
executive officers was based on objective annual performance criteria (through
the Management Incentive Compensation Plan) or long-term performance criteria
(through the 1992 Key Employee Stock Option Plan, reflecting dividend
equivalents accrued on the 1992 option grants). The Committee believes that
having 26% of the compensation of Chief Executive Officer and an average of 22%
of the compensation of other executive officers' at risk is sufficient to
provide a direct and strong link between Company performance and executive pay.
regard
thereto.

San W. Orr, Jr., Chairman Harry J. Pearce, Member Homer A. Scott, Jr., Member
Chairman Stanley F. Staples, Jr., Member

11
14

MDU RESOURCES GROUP, INC.
COMPARISON OF FIVE YEAR TOTAL SHAREHOLDER RETURN1
[chart]STOCKHOLDER RETURN (1)

Total Stockholder Return Index (1993=100)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----MDU S&P 500 NEW PEER GROUP OLD PEER GROUP

MDU 100 128 124 159 180 226
S&P 500 100 132 128 166 179 197
PEER GROUP 100 128 133 175 194 213

(1) All data is indexed to December 31, 1988, for the Company, the S&P 500, and
the peer group. Total shareholder 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 is weighted according to the issuer's stock market
capitalization at the beginning of the period. The peer issuers are Black
Hills Corp., Cilcorp Inc., Equitable Resources Inc., Florida Progress
Corp., Minnesota Power & Light Company, The Montana Power Company, Oneok
Inc., Questar Corp., South Jersey Industries, Teco1993 $100.00 $100.00 $100.00 $100.00
1994 $91.00 $101.00 $91.00 $91.00
1995 $106.00 $139.00 $115.00 $113.00
1996 $129.00 $171.00 $136.00 $117.00
1997 $185.00 $229.00 $179.00 $159.00
1998 $238.00 $294.00 $204.00 $176.00

(1) All data is indexed to December 31, 1993, for the Company, the S&P 500, and
the peer groups. 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 is weighted according to the issuer's stock market
capitalization at the beginning of the period. New Peer Group issuers are
Black Hills Corporation, Coastal Corporation, Equitable Resources, Inc.,
LG&E Energy Inc., UGI Corp., Minnesota Power & Light Company, The Montana Power
Company, Northwestern Corporation, ONEOK, Inc., Otter Tail Power Company,
Questar Corporation, and UGI Corporation. Old Peer Group issuers are Black
Hills Corporation, CILCORP, Inc., Equitable Resources, Inc., Florida
Progress Corporation, Minnesota Power & Light Company, The Montana Power
Company, ONEOK, Inc., Questar Corporation, South Jersey Industries, Inc.,
Teco Energy, Inc., UGI Corporation, and Utilicorp United Inc. The peer group
was changed to include issuers that better reflect the Company's mix of
regulated and unregulated businesses.

DIRECTORS' COMPENSATION

Each Director who is not an officer of the Company (except the Chairman of
the Board) receives a $13,000 and 450 shares of Company Common Stock as an annual
retainer for Board Service,service. The Chairman receives $52,000 and 450 shares of
Company Common Stock. Audit and CompensationNominating Committee Chairmen each receive a
$2,500 annual retainer, and Finance and NominatingCompensation Committee Chairmen each
receive a $1,000$4,000 annual retainer. Additionally, each Director who is not an
officer of the Company receives $1,000 for each meeting of the Board of
Directors attended and each Committee member who is not an officer of the
Company receives $1,000 for each Committee meeting attended. All such Directors
except the Chairman of the Board must defer $1,000 of the annual Board retainer, which amount
is credited to a deferral account quarterly. The deferral amount is divided by
the market price of Company Common Stock and converted to investment units. If
dividends are paid on Company Common Stock then an equivalent amount is credited
for each investment unit and the resulting amount is converted to investment
units and credited to such Directors' accounts. WhenAfter a participating Director
leaves the Board, dies, or becomes disabled, then the investment units credited
to that Director's account are multiplied times the market

15
price of the Company Common Stock, at that time, converted to a dollar value, and paid to the
Director or named beneficiary in equal monthly payments (with interest) over a
five year period. EachOf the remaining cash retainer, each Director may also defer alldirect the
retainer be paid in one or any parta combination of the $12,000 Board retainer paid infollowing forms: (1) deferred
into the account described, (2) Company stock, or (3) cash. Additionally, eachEach Director who is
not an officer of the Company receives $700received on June 3, 1998, an option to purchase
2,250 shares of Company Common Stock. The option award vested immediately and is
exercisable for each meeting10 years from the date of grant. The option price was $23.0833,
the fair market value of the Board of Directors attended and each Committee member
who is not an officerstock on the date of the Company receives $700 for each Committee meeting
attended.grant.

The Company also has a post-retirement arrangement for Directors who are not
officers or retired officers of the Company which provides that after retirement
from the Board, a Director is entitled to receive annual compensation in an
amount equal to the sum of all annual retainers in effect at the time of
retirement. Such amount will be paid to the Director or named beneficiary in
equal monthly installments over a period of time equal to the period of service
on the Board.
12

The Company also has a program whereby past Directors of the Company may be
chosen each year as "Director Emeritus" and each such past Director so chosen
may be invited to participate as a nonvoting member of the Company's Board of
Directors. Each such "Director Emeritus" serves for five years and receives no
compensation, other than reimbursement by the Company for reasonable travel
expenses in connection with attendance at meetings of the Company's Board of
Directors.

INFORMATION CONCERNING EXECUTIVE OFFICERS

Executive officers of the Company are elected by the Board of Directors and
serve until the next annual meeting of the Board. Any executive officer so
elected may be removed at any time by the affirmative vote of a majority of the
Board. Certain information concerning such executive officers, including their
ages, present corporate positions, and business experience, is set forth below.

PRESENT CORPORATE POSITION
NAME AGE AND BUSINESS EXPERIENCE
- -------------------------------------------------------------------- --- ---------------------------------------------------------------------------------------------------------------------------

JohnMartin A. Schuchart............ 64 Chairman of the BoardWhite........................ 57 President and Chief Executive Officer. For information about Mr.
Schuchart,White, see "Election of Directors."

Cathleen M. Christopherson... 49Christopherson............. 54 Ms. Christopherson was elected Vice President-Corporate
Communications effective November 1989. Prior to that she served
as Assistant Vice President-Corporate Communications effective
September 1989 and Division Manager of Montana-Dakota Utilities
Co., a Division of the Company, from August 1984.

Douglas C. Kane.............. 44Kane........................ 49 Executive Vice President, Chief Administrative and Chief OperatingCorporate
Development Officer. For information about Mr. Kane, see
"Election of Directors."

Lester H. Loble, II.......... 52II.................... 57 Mr. Loble was elected General Counsel and Secretary of the Company
effective May 1987. Mr. Loble also serves as a Director and/or
General Counsel and Secretary of allthe principal subsidiaries of
the Company except Wibaux
Gas Co.; Prairielands Energy Marketing, Inc.; and
Gwinner Propane, Inc.Company. Mr. Loble is also a member and the Secretary of the Managing Committee of
Montana-Dakota Utilities Co., a Division of the
Company.
Joseph R. Maichel............ 59 Mr. Maichel has been President, Chief Executive Officer
and a member of the
Managing Committee of Montana-Dakota Utilities Co., a Division
of the Company, since
May 1990 and President since August 1985 and was
Group Vice President-Distribution of the Company
from February 1982.
Harold J. Mellen, Jr......... 59 President and Chief Corporate Development Officer. For
information about Mr. Mellen, see "Election of
Directors."Company.

PRESENT CORPORATE POSITION
NAME AGE AND BUSINESS EXPERIENCE
- --------------------------------------- --- ------------------------------------------------------------------

Vernon A. Raile.............. 49Raile........................ 54 Mr. Raile was elected Vice President, Controller and Chief
Accounting Officer effective August 1992. Prior to that he was
Controller and Chief Accounting Officer from May 1989, Assistant
Treasurer from December 1987, and Tax Manager from March 1980.

Warren L. Robinson........... 43Robinson..................... 48 Mr. Robinson was elected Vice President, Treasurer and Chief
Financial Officer of the Company effective August 1992. He is
also Vice President, Vice President and Chief Financial Officer,
Treasurer and Assistant Secretary, or Treasurer, of Centennial Energy Holdings, Inc.,
Fidelity Oilsubsidiaries
of the Company. Mr. Robinson also is a member of the Managing
Committee of Montana-Dakota Utilities Co., Fidelity Oil Holdings, Inc.,
Wibaux Gas Co. and Treasurer and Secretary of
Prairielands Energy Marketing, Inc., all being
subsidiariesa Division of the
Company. Prior to that1992 he served as Treasurer and Assistant
Secretary from December 1989, and as Manager of Corporate Development
and Assistant Treasurer from May 1989 to December 1989, and
Manager of Corporate Development from October 1988.

Prior to that he
served as the Senior Vice President and Chief
Financial Officer of Great Falls Gas Company,
Great Falls, Montana.

PRESENT CORPORATE POSITION
NAME AGE AND BUSINESS EXPERIENCE
- ----------------------------- --- ---------------------------------------------------------

Martin A. White..............Ronald D. Tipton....................... 52 Mr. WhiteTipton was elected Vice President-Corporate
Development November, 1991. Prior to that he was ChairmanPresident and Chief Executive Officer of
White Resources
Corp., a mining company, fromMontana-Dakota Utilities Co. effective January 1990, and
Executive Vice President and Chief Operating
Officer of Consolidated TVX Mining Corporation
from January 1988.1995. Prior to
that time he was President
and Chief Operating Officer of Entech, Inc., a
subsidiary of The Montana Power Company.
Rodney J. White.............. 57 Mr. White was elected Vice President-Marketing Strategy
September 1992. Prior to that he was Vice
President-Administration ofserved Williston Basin Interstate Pipeline Company
from August 1986 to
August 1989 when he becamein the following capacities: President and a
DirectorChief Executive
Officer from May 1994, President from May 1990, Executive Vice
President from May 1989, and Vice President-Gas Supply from
January 1985. From January 1983 to January 1985 he was the
Assistant Vice President-Gas Supply of Prairielands Energy Marketing, Inc.,
and in 1993 President and a Director of Gwinner
Propane, Inc., subsidiaries of the Company.Montana-Dakota Utilities
Co.

Robert E. Wood............... 51Wood......................... 56 Mr. Wood has beenwas elected Vice President-Public Affairs and
Environmental Policy of the Company sinceeffective August 1991.
Before that he was Vice President-Public Affairs from June 1986.
For five years prior thereto he served as Manager of Legislative
Affairs for the Company.

17
SECURITY OWNERSHIP

The tableTable below sets forth the number of shares of capital stock of the
Company owned beneficially as of December 31, 1993,1998, by each directorDirector and each
nominee for director,Director, each Named Officer and by all directorsDirectors and executive
officers of the Company as a group.

AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP PERCENTAGE OF
OWNERSHIP CLASS
--------------------------- ------------------------------------- -------------
NAME COMMON(1) COMMON
PREFERRED COMMON PREFERRED
- ----------------------------------------------- ------- --------- ------ ------------------------------------------------------------------------------------------- ------------------ -------------

Thomas Everist.................................................................... 10,600 *
Douglas C. Kane................................ 8,014(a) --Kane................................................................... 91,208(2) *
--
Joseph R. Maichel.............................. 19,514(a)Lester H. Loble, II............................................................... 45,217(2)
Harold J. Mellen, Jr........................... 14,963(a) --Jr.............................................................. 57,365 * --
Richard L. Muus................................ 2,934 --Muus................................................................... 15,816 * --
Robert L. Nance................................ 1,400Nance................................................................... 10,726(3) *
John L. Olson.................................. 3,000 --Olson..................................................................... 28,800 * --
San W. Orr, Jr................................. 123,232(b) --Jr.................................................................... 137,176(4) *
--Harry J. Pearce................................................................... 20,821 *
Warren L. Robinson................................................................ 30,766(2)(5) *
John A. Schuchart.............................. 82,811(a)(f) --Schuchart................................................................. 204,381(6) * --
Charles L. Scofield............................ 8,000 -- * --
Homer A. Scott, Jr............................. 2,000(c) --Jr................................................................ 12,403(7) * --
Joseph T. Simmons.............................. 3,476 --Simmons................................................................. 16,367 *
--
Stanley F. Staples, Jr......................... 83,680(d) 300(d) *Ronald D. Tipton.................................................................. 48,625(2) *
Sister Thomas Welder........................... 12,763(e) --Welder.............................................................. 4,950(8) * --
Martin A. White................................ 3,682 --White................................................................... 29,466(2) *
--
All directorsDirectors and executive officers of the Company as a group (20(19 in number)...... 392,531 300 2.1 *

- ------------------------------------------------------------
* Less than one percent of the class.
(a) Includes full shares allocated to the officer's account in the Tax Deferred Compensation
Savings Plan.
(b) Mr. Orr serves as a co-trustee with shared voting and investment power of various trusts
and as an officer and director of the corporate trustee for various other trusts holding
these shares.
(c) Shares held by Homer A. Scott, Jr. Trust. Mr. Scott is a co-trustee of the trust and
shares voting and investment power with respect to these shares.
(d) All except 1000 shares of Common Stock are held in the name of Judd S. Alexander
Foundation, Inc. and Walter Alexander Foundation, Inc. Mr. Staples, as President of the
Judd S. Alexander Foundation, Inc., and Secretary of the Walter Alexander Foundation,
Inc., disclaims all beneficial ownership of the shares held by the Foundations.
(e) Shares of Common Stock owned by University of Mary. Sr. Welder, as President of the
University of Mary, disclaims all beneficial ownership of these shares.
(f) Includes 52,489..... 867,366(2) 1.6%

- ------------------------

* Less than one percent of the class.

(1) The totals include beneficial ownership of shares which may be acquired
within 60 days pursuant to stock options: Mr. Everist 2,250 shares, Mr. Kane
46,343 shares, Mr. Loble 14,850 shares, Mr. Mellen 2,250 shares, Mr. Muus
4,500 shares, Mr. Nance 4,500 shares, Mr. Olson 2,250 shares, Mr. Orr 4,500
shares, Mr. Pearce 2,250 shares, Mr. Robinson 7,912 shares, Mr. Schuchart
2,250 shares, Mr. Scott 4,500 shares, Mr. Simmons 4,500 shares, Sister
Thomas Welder: see footnote 8, and all Directors and all executive officers
of the Company as a group 145,539 shares.

(2) Includes full shares allocated to the officer's account in the Tax Deferred
Compensation Savings Plan.

(3) 2,250 shares of the total is owned by Nance Petroleum Corporation.

(4) Mr. Orr serves as a co-trustee with shared voting and investment power of
various trusts and as an officer and Director of the corporate trustee for
various other trusts holding these shares. Mr. Orr disclaims beneficial
ownership of all but 4,149 shares held by the trusts.

(5) Includes 689 shares owned by Mr. Robinson's children and 225 shares by his
wife.

(6) Includes 118,099 shares owned by Mr. Schuchart's wife. Mr. Schuchart
disclaims all beneficial ownership of the shares owned by his wife.

14
(7) Shares held by Homer A. Scott, Jr. Trust. Mr. Scott is a co-trustee of the
trust and shares voting and investment power with respect to these shares.

(8) Shares held by the Annunciation Monastery, of which community Sister Thomas
Welder is a member. The total includes 4,500 shares which may be acquired
within 60 days pursuant to stock options. Sister Thomas Welder disclaims all
beneficial ownership of these shares owned by the Monastery.

ACCOUNTING AND AUDITING MATTERS

The Board of Directors of the Company has appointed Arthur Andersen & Co.,
Certified Public Accountants, as independent auditors for the year ending
December 31, 1993. The appointment was made on theUpon recommendation of the Audit Committee, of the Board of Directors whichhas
selected and employed the firm of Arthur Andersen LLP as the Company's
independent certified public accountants to audit its financial statements for
the fiscal year 1998. The Audit Committee is presently composed of Messrs.
Richard L. Muus, John L. Olson, San W. Orr, Jr., Harry J. Pearce, and Homer A.
Scott, Jr. (Chairman). The Audit Committee, establishedThis will be the thirteenth year in 1972, meets regularly with management,
internal auditors, and representatives ofwhich the Company's independent public
accountants. The independent accountants have free access to the Committee and
the Board of Directors. In 1993, the Committee met three times and reviewed the
scope, timing and fees for the annual audit, other services provided by the
independent auditors, and the results of audit examinations completed by the
independent auditors, including the recommendations to improve internal controls
and the follow-up reports prepared by management. The Audit Committee reports
the results of its activities to the full Board of Directors. No member of the
Audit Committee is orfirm has
been an employee of the Company.acted in this capacity. A representative of Arthur Andersen & Co. is expected towill be present at
the Annual Meeting of Stockholders ofStockholders. It is not anticipated that the
Company with the opportunity torepresentative will make a prepared statement ifat the meeting. However, he desiresor she
will be free to do so and to respondif he or she so chooses, as well as responding to
appropriate questions.

OTHER BUSINESS

The management of the Company knows of no other matter to come before the
meeting. However, if any matter requiring a vote of the stockholders should
arise, it is the intention of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment.

19952000 ANNUAL MEETING OF STOCKHOLDERS

AnyUnder the Company's Bylaws, nominations for Director may be made only by the
Board or the Nominating Committee, or by a stockholder entitled to vote who wisheshas
delivered written notice to submit a proposal for inclusionthe Secretary of the Company (containing certain
information specified in the Bylaws) not less than 120 days prior to the
anniversary of the date on which the Company first mailed its proxy material relatingmaterials
for the prior year's annual meeting. The Bylaws also provide that no business
may be brought before an annual meeting of the stockholders except as specified
in the notice of the meeting or as otherwise properly brought before the meeting
by or at the direction of the Board or by a stockholder entitled to vote who has
delivered written notice to the Secretary of the Company (containing certain
information specified in the Bylaws) not less than 120 days prior to the
anniversary of the date on which the Company first mailed its proxy materials
for the prior year's annual meeting.

Rule 14a-4 of the Securities and Exchange Commission's proxy rules allows
the Company to use discretionary voting authority to vote on matters coming
before an annual meeting of stockholders, if the Company does not have notice of
the matter at least 45 days before the anniversary of the date on which the
Company first mailed its proxy materials for the prior year's annual meeting of
stockholders or the date specified by an advance notice provision in the
Company's Bylaws. The Company's Bylaws contain such an advance notice provision
as decribed above. For the Company's Annual Meeting of Stockholders expected to
be held on April 25, 1995,2000, stockholders must submit such written notice to the
Secretary of the Company on or before November 16, 1999.

These requirements are separate and apart from and in addition to the
Securities and Exchange Commission's requirements that a stockholder must meet
in order to have a stockholder proposal included in the Company's Proxy
Statement under Rule 14a-8 of the Exchange Act. For purposes of the Company's
Annual Meeting of Stockholders expected to be held on April 25, 2000, any
stockholder who wishes to submit a proposal for inclusion in the Company's proxy
materials must submit such proposal to the Secretary of the Company on or before
November 1, 1994.
- --------------------------------------------------------------------------------16, 1999.

A copy of the full text of the Bylaw provisions discussed above may be
obtained by writing to the Secretary of the Company.

------------------------

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS) FOR
THE YEAR ENDED DECEMBER 31, 1993,1998, WHICH IS REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE MADE AVAILABLE TO STOCKHOLDERS TO
WHOM THIS PROXY STATEMENT IS MAILED, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE
OFFICE OF THE TREASURER OF MDU RESOURCES GROUP, INC., 400 NORTH FOURTH STREET,SCHUCHART BUILDING, 918
EAST DIVIDE AVENUE, MAILING ADDRESS: P.O. BOX 5650, BISMARCK, NORTH DAKOTA 58501.ND 58506-5650.

By order of the Board of Directors,

[/S/ LESTER H. LOBLE, II]

Lester H. Loble, II
SecretarySECRETARY
March 7, 1994
15, 1999

EXHIBIT A

RESOLVED, that the Board of Directors of MDU Resources Group, Inc., (the
"Corporation") hereby declares it advisable:
(A) that, as permitted by law, the purpose of the Corporation be amended to
include any lawful act or activity for which corporations may be organized under
the General Corporation Law of Delaware to reflect the fact that the Corporation
is a multidimensional natural resource company; and
(B) that, in order to effect the foregoing the Certificate of Incorporation of
the Corporation, as heretofore amended, be further amended by deleting Article
THIRD in its entirety, and by inserting in place thereof a new Article THIRD to
read as follows:
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware. Included within this purpose, without
limiting the generality of the foregoing sentence is (1) to own and
operate electric and gas public utility systems and (2) to transact
business as a multidimensional natural resource company.
The Corporation shall have and exercise all the powers conferred upon
corporations by the General Corporation Law of Delaware.
FURTHER RESOLVED, that the Board of Directors hereby directs that the
proposed amendment be attached as an exhibit to the proxy statement for the
Company's Annual Meeting of Stockholders to be held on April 26, 1994, for
consideration by the Stockholders entitled to vote in respect thereof.

EXHIBIT B
RESOLVED, that the Board of Directors of MDU Resources Group, Inc., hereby
declares it advisable:

(A) That the number of shares of Common Stock which the Company is
authorized to issue be increased from 50,000,00075,000,000 shares of Common Stock with the
par value of $5.00$3.33, to 75,000,000150,000,000 shares with the par value of $3.33,$1.00, effective
at the close of business on the date on which the appropriate Certificate of
Amendment to the Company's Certificate of Incorporation is filed in the office
of the Secretary of State of the State of Delaware;

(B) That, in order to effect the foregoing, the Certificate of Incorporation
of the Company, as heretofore amended, be further amended by deleting the first
paragraph of Article FOURTH, and by inserting in place thereof a new first
paragraph of said Article FOURTH to read as follows:

FOURTH. The total number of shares of stock which the corporationCorporation shall
have authority to issue is Seventy-sevenOne Hundred Fifty-two Million (77,000,000)(152,000,000)
divided into four classes, namely, Preferred Stock, Preferred Stock A,
Preference Stock, and Common Stock. The total number of shares of such
Preferred Stock authorized is Five Hundred Thousand (500,000) shares of
the par value of One Hundred Dollars ($100) per share (hereinafter
called the "Preferred Stock") amounting in the aggregate to Fifty
Million Dollars ($50,000,000). The total number of shares of such
Preferred Stock A authorized is One Million (1,000,0000)(1,000,000) shares without
par value (hereinafter called the "Preferred Stock A"). The total number
of shares of such Preference Stock authorized is Five Hundred Thousand
(500,000) shares without par value (hereinafter called the "Preference
Stock"). The total number of shares of such Common Stock authorized is
Seventy-fiveOne Hundred Fifty Million (75,000,000)(150,000,000) of the par value of ThreeOne and
33/no/100 Dollars ($3.33)1.00) per share (hereinafter called the "Common
Stock"), amounting in the aggregate to Two Hundred Forty-nine Million SevenOne Hundred Fifty ThousandMillion Dollars
($249,750,000)150,000,000).

FURTHER RESOLVED, that the Board of Directors hereby directs that the
proposed amendmentamendments be attached as an exhibit to the proxy statement for the
Company's next Annual or Special Meeting of Stockholders to be held on April 26, 1994, for consideration by
the Stockholders entitled to vote in respect thereof.

[LOGO] PROXY
ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1999 - 11:00 AM (CDT)

The undersigned hereby appoints John A. Schuchart, Martin A. White, and Lester
H. Loble, II, and each of them, proxies, with full power of substitution, to
vote all Common Stock of the undersigned at the Annual Meeting of Stockholders
to be held at 11:00 AM (CDT), April 27, 1999, at 909 Airport Road, Bismarck, ND
58504, and at any adjournment thereof, upon all subjects that may properly come
before the meeting, including the matters described in the Proxy Statement
furnished herewith, subject to any directions indicated below. YOUR VOTE IS
IMPORTANT! ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. Either (1)
mark, date, sign, and return this letter proxy in the envelope provided (no
postage is necessary if mailed in the United States), or (2) submit your proxy
by Touchtone telephone (following the instructions on the reverse side). IF NO
DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE FOR THE ELECTION OF ALL LISTED
NOMINEES, IN ACCORD WITH THE DIRECTORS' RECOMMENDATION ON THE OTHER MATTER
LISTED ON THIS PROXY, AND AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING. We regret that we are unable to respond to
comments noted on this proxy. We do welcome communications from stockholders, so
if you have comments please send them in a separate letter. Thank you.

PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE: /X/

Item 1. THE ELECTION OF DIRECTORS

NOMINEES: 01 Thomas Everist 02 Robert L. Nance 03 John A. Schuchart

/ / FOR ALL NOMINEES / / WITHHOLD FOR ALL NOMINEES / / WITHHOLD FOR

To withhold authority to vote for any individual nominee, mark the box next
to "WITHHOLD FOR" and write the nominee's name in the space provided:
_________________________________________________________ . Your shares
will be voted for the remaining nominees.

Item 2. AMEND ARTICLE FOURTH OF THE CERTIFICATE OF INCORPORATION increasing the
number of shares of Common Stock and decreasing the par value of Common Stock.

/ / FOR / / AGAINST / / ABSTAIN

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1 AND "FOR"
ITEM 2.

[LOGO] -------------
COMPANY #
CONTROL #
-------------
ANNUAL MEETING OF STOCKHOLDERS - APRIL 27, 1999

MDU Resources Group, Inc. offers you the convenience of voting your proxy by
Touchtone telephone using the toll-free automated telephone voting system.
Your telephone vote allows your shares to be voted in the same manner as if
you marked, signed and returned the proxy card. This system is available 24
hours a day. A recorded voice will confirm your vote has been cast as you
directed and end the phone call. The deadline for voting by telephone is
11:00 AM (CDT) one business day prior to the Annual Meeting date.

TELEPHONE VOTING INSTRUCTIONS: Using a Touchtone telephone, dial 1-800-240-
6326. When prompted, enter the 3 digit company number located in the box in the
upper right-hand corner. When prompted, enter the 7 digit control number that
follows the 3 digit company number.

- --------------------------------------------------------------------------------
Option #1: To vote as the Board of Directors recommends on ALL matters, press 1.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Option #2: If you choose to vote each item separately, press 0.
- --------------------------------------------------------------------------------

Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9; to WITHHOLD FOR AN INDIVIDUAL nominee, press 0. You will be
asked to enter the 2 digit number next to the nominee name you wish to
withhold.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
When asked, please confirm your vote by pressing 1.
(IF YOU VOTE BY TELEPHONE, DO NOT MAIL BACK YOUR PROXY.)
THANK YOU FOR VOTING - PLEASE DETACH HERE.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON APRIL 27, 1999.

ANNUAL MEETING OF STOCKHOLDERS
909 AIRPORT ROAD
BISMARCK, ND 58504
APRIL 27, 1999
11:00 AM (CDT)
(KEEP FOR REFERENCE)
PLEASE DETACH HERE.

Dated:_______________, 1999

___________________________
Signature

Please sign exactly as name(s) appear to the left. If signing for a
corporation or partnership or as agent, attorney or fiduciary, indicate the
capacity in which you are signing. If you do attend the meeting and decide to
vote by ballot, such vote will supersede this proxy.

YOUR VOTE IS IMPORTANT.
PLEASE VOTE BY TELEPHONE OR COMPLETE, DATE,
SIGN AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.