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Questar Q3 Earnings In Line with Estimates, Revenues Lag

Natural gas-focused energy company Questar Corp.STR reported third-quarter 2015 earnings of 18 cents per share, in line with the Zacks Consensus Estimate. Significant lower operating expenses along with higher operating profit from the Questar Gas unit supported the results. The positives were negated partially by lower transportation volume and decreased natural gas sales.

The company's bottom line fell from the prior-year quarter figure of 22 cents.

Questar Corporation (STR) - Earnings Surprise | FindTheCompany

Questar reported third-quarter revenues of $142.3 million, down from the year-ago level of $157.9 million. Moreover, quarterly revenues failed to meet the Zacks Consensus Estimate of $200 million.

Segment Analysis

Questar Gas: The segment generated $89.3 million in revenues, down 11.3% from the prior-year quarter. Despite this, the segment reported adjusted operating income of $6.2 million, higher than the year-ago quarter profit of $5.8 million. As of Sep 30, 2015, Questar Gas served 981,348 customers.

Wexpro: Segment revenues decreased 31.9% year over year to $6.4 million in the quarter. Moreover, segment operating income from continuing operations fell to $66.9 million from $68.4 million in the prior-year quarter. Lower natural gas sales hurt the results.

Quarterly production of natural gas increased to 15.8 billion cubic feet (Bcf) from 15.5 Bcf.

Questar Pipeline: The segment reported revenues of $45 million against $47.3 million in the comparable quarter last year. Income from continuing operations came in at $43 million compared with $43.5 million in the third quarter of 2014. Lower transportation volumes affected the results.

Total natural gas transportation volume was 205.2 million decatherms compared with 207.2 million decatherms in the year-ago quarter.

Expense Summary

The general and administrative expenses for the quarter increased over 7% from the prior-year quarter to $26.5 million. Depreciation, depletion and amortization costs rose 8.3% year over year to $55 million. Total operating expense of $80.2 million, however, decreased from the year-ago level of $90.5 million.

Financials

As of Sep 30, 2015, Questar had long-term debt (including current portion) of $1,281.2 million, with a debt-to-capitalization ratio of 55.1%.

Guidance

For 2015, Questar projects earnings in the range of $1.25-$1.30 per share against the prior projection of $1.20-$1.30.

The company lowered its capital spending for 2015 to $320 million from $370 million.

Zacks Rank

Questar currently carries a Zacks Rank #4 (Sell). Some better-ranked players in the energy sector are Natural Gas Services Group Inc. NGS , Sprague Resources LP SRLP and Seadrill Partners LLC SDLP . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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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 Nasdaq, Inc.


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

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