Domestic energy explorer
QEP Resources Inc.
) reported weaker-than-expected third quarter results, hamstrung
by lower production.
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The company reported earnings per share - adjusted for special
items - of 36 cents, underperforming the Zacks Consensus Estimate
of 40 cents. Revenues - at $772.8 million - also failed to
surpass the Zacks Consensus Estimate of $799.0 million.
However, QEP Resources' performance improved considerably from
the year-ago period amid a jump in commodity prices. Adjusted
profit almost doubled from the third quarter 2012 level of 19
cents per share, while revenues were up 42.5%.
Overall production for QEP Resources during the quarter was 78.0
billion cubic feet equivalent (Bcfe) - 71% gas - down 4.3% from
the previous-year period. Natural gas volumes deteriorated 14.4%
year over year to 55.2 billion cubic feet (Bcf), while liquids
volumes jumped 34.3% to 3,798.6 thousand barrels (MBbl). Weakness
in natural gas production reflected lower output from the
Haynesville region. On the other hand, liquids (particularly
crude oil) volumes benefited from robust performance in the
QEP Resources' average realized natural gas price was up 7.8%
from the corresponding period of 2012 to $4.29 per thousand cubic
feet (Mcf), while average oil price realization increased 8.1% to
$90.19 per barrel. Overall net realized equivalent price averaged
$6.71 per thousand cubic feet equivalent (Mcfe) in the quarter,
which was $1.57 higher than the year-ago period.
Capital Expenditure & Balance Sheet
During the quarter, QEP Resources spent $411.8 million on capital
expenditures for drilling and completion activities. As of Sep
30, 2013, the company had cash and cash equivalents of $123.0
million and long-term debt of $2,882.3 million, with a
debt-to-capitalization ratio of 42.4%.
QEP Resources remain focused on raising high-margin crude oil
production, with the company expected to grow crude oil volumes
by 60% over 2012 levels.
QEP Resources, in its present form, came into existence following
the 2010 spin-off of Salt Lake City, Utah-based
) oil and gas exploration and production business into a
separate, independent, publicly traded entity.
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
Matador Resources Co.
Northern Oil & Gas Inc.
) as good buying opportunities. These U.S. upstream energy
operators - sporting a Zacks Rank #1 (Strong Buy) - have solid
secular growth stories with potential to rise significantly from