Natural gas-focused energy company
) reported weak first-quarter 2013 earnings.
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Earnings per share came in at 41 cents, down 2.4% from the profit
of 42 cents earned in the prior-year quarter, mainly due to
higher depreciation and administrative expenses. The result also
missed the Zacks Consensus Estimate by 2 cents.
Total revenue was $476.9 million, beating the Zacks Consensus
Estimate of $470.0 million. Revenues also increased 12.0% from
the year-ago level of $425.7 million due to increase in demand
for natural gas as well as strong performances by Questar Gas and
The segment generated $418.3 million in revenues, up 14.3% from
the prior year. This increase was favored by the growing demand
for natural gas due to a dip in the temperature. The segment
registered an income of $64.3 million, against an income of $61.8
million in the first quarter of 2012.
As of Mar 31, 2013, Questar Gas served 937,400 customers,
representing a hike of 14,128 or 1.5% year over year as compared
to a 1.0% hike in the previous year.
Consolidated sales increased 12.0% year over year to $10.3
million in the quarter. Segmental income from continuing
operations also increased to $39.8 million from $37.2 million in
the prior-year quarter, attributable to a higher average
Quarterly production of natural gas edged up 2.7% to 15.4 billion
cubic feet (Bcf), up from 15.0 Bcf in the first quarter of 2012.
Consolidated revenues of $48.3 million decreased by 4.4% from the
$50.5 million in the comparable quarter last year. Income from
continuing operations was $30.2 million, reflecting a drop of
5.0% year over year. The quarter's performance was impacted by
lesser revenues in natural gas liquids along with a rise in
depreciation and amortization expenses.
The total natural gas transportation volumes in the quarter was
$233.7 million decatherms, up from the prior-year level of 227.2
The general and administrative expenses for this quarter have
increased by 16.2% to $33.8 million as compared to the year-ago
The depreciation, depletion and amortization expenses increased
by 9.8% to $48.5 million in this quarter as compared to
As of Mar 31, 2013, Questar had long-term debt (including current
portion) of $1,140.4 million, with a debt-to-capitalization ratio
For 2013, Questar has sustained its previous guidance for
earnings in the range of $1.12 to $1.20 per share. Questar
expects that the approval of Wexpro II by the regulators of Utah
and the three agreements signed by Questar Fueling - an affiliate
of Questar - for the production of compressed natural gas (CNG)
will generate significant cash flows for its shareholders in the
Questar estimated that its total investment of capital will be
roughly $450 million in 2013.
Stocks to Consider
Questar currently carries 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.
Meanwhile, one can look at other energy firms like
EPL Oil & Gas Inc.
) as attractive investments. All these firms - sport a Zacks Rank
#1 (Strong Buy).