QEP Resources Inc.
) hit a 52-week high of $35.48 on Aug 28. In fact, the Denver,
CO-based independent energy company has seen its stock price climb
some 22% over the past six months. The rally seems to be the result
of investors' positive perception about QEP Resources' diversified
asset base, exposure to emerging plays and quality acreage in
Why the Bullishness?
QEP Resources - a leading independent energy company engaged in the
exploration, development and production of natural gas, crude oil
and natural gas liquids - possesses a diversified reserve base in
multiple U.S. basins, to go with its focused investment in
high-return areas such as the Pinedale, Uinta, Bakken and Permian.
Since its split from Questar Corp. (
) in 2010, QEP Resources has established a strong track record of
production growth, while maintaining a competitive cost structure,
which contributes to the consistency of its growth and returns
throughout the business cycle.
Additionally, management has not been shy of divesting assets,
particularly those that do not fit into the company's long-term
growth plan. During 2013, QEP Resources sold approximately $200
million worth of non-core oil and gas properties around the world,
thereby freeing up capital to concentrate on its longer-term
high-grade prospects. In May 2014, the company unveiled another
trio of deals to sell primarily gas assets in the Midcontinent and
Williston Basin for a combined price of $807 million.
Finally, we remain positive on QEP Resources' plans to pursue
separation of its midstream segment, as it holds the promise of
unlocking significant value. Importantly, the move will allow the
company to improve its operational efficiency, as management will
be able to focus all its attention on the upstream business.
Zacks Rank & Stock Pick
With QEP Resources shares trading at 52-week high, any upside from
here may be limited, as suggested by the company's Zacks Rank #3
Meanwhile, one can look at Sanchez Energy Corp. (
) and WPX Energy Inc. (
) as good buying opportunities in the energy exploration and
production space. Both carry a Zacks Rank #1 (Strong Buy).
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