Natural gas-focused energy company
) reported third quarter 2013 adjusted earnings per share of 19
cents, unchanged from the prior-year level and ahead of the Zacks
Consensus Estimate of 17 cents. The growth can be attributed to
higher liquid price realizations.
Total revenue, at $149.6 million, was up 5.5% from the
year-ago level of $141.8 million. However, it was much below the
Zacks Consensus Estimate of $270.0 million due to poor
performance by the Questar Gas and Questar Pipeline segments.
The segment reported operating loss of $11.2 million, sliding
further from the prior-year loss of $10.7 million. The reported
loss is a seasonal phenomenon. As of Sep 30, 2013, Questar Gas
served in excess of 939,000 customers, representing growth of
around 13,000 or 1.4% year over year.
The unit's operating profit decreased marginally to $40.7 million
from the year ago-quarter level of $41.0 million, primarily due
to lower production volumes. Quarterly production of natural gas
fell 6.2% to 13.7 billion cubic feet (Bcf) from 14.6 Bcf in the
third quarter of 2012. Oil and natural gas liquid (NGL) volumes
also dropped 10.4% to 147 thousand barrel of oil equivalent
(Mbbl). However, liquid sales price were up 19.1%, which somewhat
offset the results.
The segment reported an operating loss of $52.6 million against
the third quarter 2012 profit level of $32.6 million. The results
reflect the effect of an $80.6 million impairment charge, in
addition to a drop in NGL revenues and increased operating
expenses. The total natural gas transportation volumes were 208.5
million decatherms, down from the prior-year level of 219.6
million decatherms. The drop was partially offset by NGL sales
price which moved up 5.9% to $59.01 per bbl.
The general and administrative expenses for the quarter decreased
15.9% from the prior-year period to $24.4 million, while
depreciation, depletion and amortization costs increased 3.3% to
$47.4 million. Total operating expense - at $169.0 million -
increased 109.4% from the third quarter of 2012, primarily due an
asset impairment charge of $80.6 million.
As of Sep 30, 2013, Questar had long-term debt (including
current portion) of $1,136.9 million, with a
debt-to-capitalization ratio of 51.8%.
In a separate release the day earlier, Questar announced a
dividend of 18 cents per share to be paid on Dec 9, to
shareholders of record on Nov 15. This marks the company's 276th
consecutive dividend payment.
For 2013, Questar has increased the lower end of the earnings
guidance by 4 cents, which now stands at $1.16-$1.20 per share.
Zacks Rank & Stock Picks
Questar currently retains a Zacks Rank #2 (Buy), implying that it
is expected to outperform the broader U.S. equity market over the
next one to three months.
Apart from Questar, one can look at
AGL Resources Inc.
MDU Resources Group Inc.
Atmos Energy Corporation
) which currently holds a Zacks Rank #2 (Buy). These utility
stocks offer good value and are worth buying now.
ATMOS ENERGY CP (ATO): Free Stock Analysis
AGL RESOURCES (GAS): Free Stock Analysis
MDU RESOURCES (MDU): Free Stock Analysis
QUESTAR (STR): Free Stock Analysis Report
To read this article on Zacks.com click here.