QEP Resources Arm Pens $950M Deal - Analyst Blog

By Zacks Equity Research,

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QEP Energy Company, a fully owned affiliate of domestic energy explorer QEP Resources Inc. ( QEP ), has entered into an agreement with an undisclosed seller.

Per the contract, the subsidiary of QEP Resources will purchase Permian Basin-based oil and gas assets for roughly $950.0 million. The company is expected to finance the transaction with available cash and revolving credit facility. QEP Resources anticipates to seal the deal by Jan 31, 2014.

QEP Resources reveals that the Permian basin assets span across roughly 26,519 net acre and generate 6,700.0 barrels of oil equivalent per day (Boepd). 68% of the total production is crude oil. Moreover, the net proved reserve and the projected recoverable reserve of the Permian Basin oil and gas properties are 47.0 million barrels of oil equivalent (MMBoe) and 300.0 million MMBoe, respectively.  

The above acquisition reflects the company's strong focus on resource plays that generate crude oil and natural gas liquids.

Additionally, QEP Resources is planning to divest mid-continent area based several non-core exploration and production properties by the first half of 2014. The proceeds from the divestment are expected to be invested in Williston and the Permian basins, two leading oil resources. A part of the divestment profits will also be spent on Pinedale Anticline and Uinta basin located Lower Mesaverde play.

QEP Resources, in its present form, came into existence following the 2010 spin-off of Questar Corp's ( STR ) oil and gas exploration and production business. The company currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the exploration and production sectors like Bonanza Creek Energy Inc. ( BCEI ) and Harvest Natural Resources Inc. ( HNR ). Both the stocks sport a Zacks Rank #1 (Strong Buy).

BONANZA CREEK (BCEI): Free Stock Analysis Report

HARVEST NATURAL (HNR): Free Stock Analysis Report

QEP RESOURCES (QEP): Free Stock Analysis Report

QUESTAR (STR): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BCEI , HNR , QEP , STR

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