Questar Corporation (STR): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
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.

Overview:

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 Company.

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 gas.

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 Basins.


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 Company).


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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 , Stocks

Referenced Stocks: QEP , STR

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