We believe Questar will be able to generate meaningful earnings and
dividend growth in the coming years through strong operational
performances by its business units. Other positives in the Questar
story include its sole emphasis on the natural gas markets, its
focus on long-term contracts and the efficient management team. An
above-average credit quality adds to the bullish sentiment.
However, we remain worried about the current volatile natural gas
price environment that is likely to restrict near-term growth
prospects at Questar Pipeline. We are maintaining our Neutral
recommendation on Questar shares. We also believe that upside
potential will remain limited until the company has fully reaped
the benefits of the spin-off.
Founded in 1922, Salt Lake City, Utah-based Questar Corporation
(STR) is a natural gas-focused energy company with three principal
subsidiaries Wexpro Company, Questar Pipeline, and Questar Gas
Wexpro Company: A unique regulated exploration and production
(E&P) company that develops and produces natural gas on behalf
of Questar's gas distribution utility (Questar G as) customers for
delivery and sale across Utah and Wyoming. Wexpro earns an
authorized return for developing and producing cost of service
Questar Pipeline Company: Questar's pipeline division operates
interstate natural gas pipelines and storage facilities in the
western U.S. and provides other energy services. It owns more than
2,500 miles of pipeline throughout the Rocky Mountain area,
reaching out to the Uinta, Greater Green River and Piceance
Questar Gas Company: This unit offers retail natural gas
distribution to more than 900,000 customers spread over 277 cities
in Utah, southwestern Wyoming and a portion of Idaho.
In June 2010, Questar completed the spin-off of its unregulated
E&P business as well as its gas gathering and marketing segment
into a separate, independent and publicly traded company QEP
Resources Inc. (QEP). The new entity includes erstwhile Questar
subsidiaries Questar E&P Company (now known as QEP Energy
Company), Questar Gas Management (now known as QEP Field Services
Company), and Questar Energy Trading (now known as QEP Marketing
Questar Corporation (STR): Read the Full Research
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