Questar Lags Earnings, Tops Revenue - Analyst Blog


Shutterstock photo

Natural gas-focused energy company Questar Corporation ( STR ) reported weak first-quarter 2013 earnings.

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 Wexpro segments.   

Segment Analysis

Questar Gas: 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.

Wexpro: 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 investment base.

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.

Questar Pipeline: 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 million decatherms.


The general and administrative expenses for this quarter have increased by 16.2% to $33.8 million as compared to the year-ago period.

The depreciation, depletion and amortization expenses increased by 9.8% to $48.5 million in this quarter as compared to first-quarter 2012.  


As of Mar 31, 2013, Questar had long-term debt (including current portion) of $1,140.4 million, with a debt-to-capitalization ratio of 51.3%.


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 future.

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. ( EPL ), Tesco Corporation ( TESO ) and SemGroup Corporation ( SEMG ) as attractive investments. All these firms - sport a Zacks Rank #1 (Strong Buy).

EPL OIL&GAS INC (EPL): Free Stock Analysis Report

SEMGROUP CORP-A (SEMG): Free Stock Analysis Report

QUESTAR (STR): Free Stock Analysis Report

TESCO CORP (TESO): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
More Headlines for: EPL , SEMG , STR , TESO

More from


Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by