QEP Resources Earnings Beat on Higher Production, Guides Up - Analyst Blog

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Domestic energy explorer QEP Resources Inc. ( QEP ) reported strong second-quarter 2014 results on the back of higher natural gas equivalent price and production.

The company reported earnings per share - adjusted for special items - of 38 cents, up 8.6% from the prior-year quarter level of 35 cents. The bottom line also beat the Zacks Consensus Estimate of 31 cents.

Quarterly revenues of $936.7 million increased about 24.7% from second-quarter 2013 and surpassed the Zacks Consensus Estimate of $743 million.

Volume Analysis

QEP Resources' overall production during the second quarter stood at 83.9 billion cubic feet equivalent (Bcfe), highlighting a 7.7% improvement from the previous-year quarter. Notably, gas accounts for 58% of the total production. A significant increase in production in the Williston Basin and Pinedale region aided the upside.

Natural gas volumes deteriorated 15% year over year to 48.6 billion cubic feet (Bcf) while liquid volumes improved 67.6% to 5,866.6 thousand barrels (MBbl).  

Realized Prices

QEP Resources' average realized natural gas price in the quarter stood at $4.25 per thousand cubic feet (Mcf), almost on par with the year-ago quarter. However, average oil price realization decreased 7% to $83.77 per barrel.  

Overall net realized equivalent price averaged $7.22 per thousand cubic feet equivalent (Mcfe) in the quarter, reflecting a 12% rise from the year-ago figure.

Balance Sheet

As of Jun 30, 2014, QEP Resources had cash and cash equivalents of $702.3 million and long-term debt of $3,910.8 million, representing a debt-to-capitalization ratio of 50.6%.

Guidance

QEP Resources raised its 2014 production guidance to 289−304 Bcfe from 274−298 Bcfe. The company also lifted its 2014 capital investment projection to $1,815−$1,915 million from $1,705-$1,805 million.

Zacks Rank & Other Stock to Consider

QEP Resources, in its present form, came into existence following the 2010 spin-off of Salt Lake City, UT-based Questar Corporation's ( STR ) oil and gas exploration and production business into a separate, independent, publicly traded entity.

Currently, QEP Resources 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 same industry like Callon Petroleum Company ( CPE ) and Carrizo Oil & Gas Inc. ( CRZO ). Both the stocks sport a Zacks Rank #1 (Strong Buy).


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



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: STR , QEP , CRZO , CPE

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