Fidelity Exploration & Production Company

Fidelity Exploration & Production Company is not new. In fact, our roots go back to 1930 when Fidelity Gas Company was incorporated. Fidelity Gas, predecessor of Fidelity Exploration & Gas Company, was formed by the company that would become MDU Resources Group, Inc. Its job was to find and develop natural gas reserves to feed a pipeline that ran from Baker to Glendive, Montana, to fuel an electric power plant. Along the pipeline route, the company picked up a number of residential customers who were glad to switch to clean-burning natural gas.

Because the amount of acreage that held potential gas reserves was vast around the eastern Montana area, the company was soon buying or leasing many of the mineral acres along the Cedar Creek Anticline under the name of Fidelity Gas Company. As MDU expanded its gas customers and sales volumes through the 1920s and 1930s more gas was needed. This kept Fidelity busy leasing more acres from landowners and contracting to buy natural gas along the anticline. More and more natural gas was needed and Fidelity was charged with finding it.

The gas wells were shallow ones located in the Judith River sand about 700 to 800 feet deep. But still many people felt there was oil much deeper. In the mid-1930s, MDU decided to drill for oil and the rest is history. The well named the N.P. #1 came in flowing at 7,600 barrels a day. But it wasn't in the cards for the company to succeed in the oil business just yet. After the first few days, oil production tapered off to practically nothing. For the next 15 years, MDU interested various oil companies in drilling on Fidelity's acres but nobody succeeded and the resulting dry holes were plugged. Then, in 1951, Shell Oil tried and succeeded.

From the early 1950s to 1985, MDU and its subsidiary, Fidelity Gas Company, reaped the benefits of the ownership interests acquired through the early part of the century. The oil and natural gas development activity was operated by Shell and the company enjoyed the net proceeds interests that it held in those properties. Fidelity Gas Company did not have employees.

This philosophy changed in 1985. Fidelity Gas Company changed its name to Fidelity Oil Group and its mission was to implement a more aggressive investment strategy for MDU's oil and gas business. Through a system of partners, most of whom were operators and explorers, Fidelity began to invest in more properties in other regions. During this period, Fidelity concentrated its investments in the western half of the United States and Canada, from as far north as Calgary, Alberta, to as far south as offshore Louisiana in the Gulf of Mexico. Fidelity remained a passive investor in these properties and was not an active operator. As a result, it operated with only a handful of employees. However, MDU's pipeline company - called Williston Basin Interstate Pipeline Company - was an active operator of natural gas reserves in Montana and through the 1990s, WBI was busy producing reserves from long-held company fields in the Baker and Bowdoin areas of the Big Sky state. Williston Basin's business unit that operated these fields was known as WBI Production, Inc.

In 1999, an internal consolidation brought together the non-operated assets of the Fidelity Oil Group and the operated natural gas production interests of WBI Production into one enterprise called Fidelity Exploration & Production Company (Fidelity E & P). In April 2000, the company acquired the assets of Preston Reynolds & Co., Inc. and its operating arm called Redstone Gas Partners, L.L.C. With this acquisition came significant coalbed natural gas lease positions in the Powder River Basin of Wyoming and Montana. The addition of these exciting assets to the company's traditional portfolio of properties caused another internal realignment of operations and philosophy. In late 2000, the company's headquarters moved from Bismarck, North Dakota, to Denver, Colorado.

Natural gas and oil production in 2007 reached 77 Bcfe. The company's reserve base grew to 707 Bcfe, 74 percent of which is comprised of natural gas. Fidelity E & P's expansion of its exploration and operational capabilities has allowed us to continue an active and diverse drilling program.



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	Fidelity Exploration & Production Company is not new. In fact, our roots go back to 1930 when Fidelity Gas Company was incorporated. Fidelity Gas, predecessor of Fidelity Exploration & Gas Company, was formed by the company that would become MDU Resources Group, Inc. Its job was to find and develop natural gas reserves to feed a pipeline that ran from Baker to Glendive, Montana, to fuel an electric power plant. Along the pipeline route, the company picked up a number of residential customers who were glad to switch to clean-burning natural gas. Because the amount of acreage that held potential gas reserves was vast around the eastern Montana area, the company was soon buying or leasing many of the mineral acres along the Cedar Creek Anticline under the name of Fidelity Gas Company. As MDU expanded its gas customers and sales volumes through the 1920s and 1930s more gas was needed. This kept Fidelity busy leasing more acres from landowners and contracting to buy natural gas along the anticline. More and more natural gas was needed and Fidelity was charged with finding it. The gas wells were shallow ones located in the Judith River sand about 700 to 800 feet deep. But still many people felt there was oil much deeper. In the mid-1930s, MDU decided to drill for oil and the rest is history. The well named the N.P. #1 came in flowing at 7,600 barrels a day. But it wasn't in the cards for the company to succeed in the oil business just yet. After the first few days, oil production tapered off to practically nothing. For the next 15 years, MDU interested various oil companies in drilling on Fidelity's acres but nobody succeeded and the resulting dry holes were plugged. Then, in 1951, Shell Oil tried and succeeded. From the early 1950s to 1985, MDU and its subsidiary, Fidelity Gas Company, reaped the benefits of the ownership interests acquired through the early part of the century. The oil and natural gas development activity was operated by Shell and the company enjoyed the net proceeds interests that it held in those properties. Fidelity Gas Company did not have employees. This philosophy changed in 1985. Fidelity Gas Company changed its name to Fidelity Oil Group and its mission was to implement a more aggressive investment strategy for MDU's oil and gas business. Through a system of partners, most of whom were operators and explorers, Fidelity began to invest in more properties in other regions. During this period, Fidelity concentrated its investments in the western half of the United States and Canada, from as far north as Calgary, Alberta, to as far south as offshore Louisiana in the Gulf of Mexico. Fidelity remained a passive investor in these properties and was not an active operator. As a result, it operated with only a handful of employees. However, MDU's pipeline company - called Williston Basin Interstate Pipeline Company - was an active operator of natural gas reserves in Montana and through the 1990s, WBI was busy producing reserves from long-held company fields in the Baker and Bowdoin areas of the Big Sky state. Williston Basin's business unit that operated these fields was known as WBI Production, Inc. In 1999, an internal consolidation brought together the non-operated assets of the Fidelity Oil Group and the operated natural gas production interests of WBI Production into one enterprise called Fidelity Exploration & Production Company (Fidelity E & P). In April 2000, the company acquired the assets of Preston Reynolds & Co., Inc. and its operating arm called Redstone Gas Partners, L.L.C. With this acquisition came significant coalbed natural gas lease positions in the Powder River Basin of Wyoming and Montana. The addition of these exciting assets to the company's traditional portfolio of properties caused another internal realignment of operations and philosophy. In late 2000, the company's headquarters moved from Bismarck, North Dakota, to Denver, Colorado. Natural gas and oil production in 2007 reached 77 Bcfe. The company's reserve base grew to 707 Bcfe, 74 percent of which is comprised of natural gas. Fidelity E & P's expansion of its exploration and operational capabilities has allowed us to continue an active and diverse drilling program.
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