QEP Resources (QEP) Q3 Loss Narrows, Sales Miss Estimates – October 31, 2017


Independent energy explorer QEP Resources, Inc. (QEP Free Report) reported third-quarter 2017 loss per share – excluding special items – of 10 cents, narrower than the Zacks Consensus Estimate of a loss of 20 cents. The company had reported adjusted loss of 21 cents per share in the year-ago quarter. The improvement in year-over-year results was primarily driven by decrease in overall operating expenses and increased overall net realized price.

Quarterly revenues of $390.1 million marginally missed the Zacks Consensus Estimate of $392 million as total production volume fell 2% year over year.

Volume Analysis

QEP Resources’ overall production in the quarter came in at 14,124.1 thousand barrels of oil equivalent (Mboe) – 2% less than the year-ago period. While natural gas volumes of 46.7 billion cubic feet (Bcf) remained almost flat year over year, liquid volumes declined 4.7% to 6,343.2 thousand barrels (Mbbl).

The fall in production volumes can be attributed to the decline in completion activity and operational hitches in the Williston Basin. It was partially offset by 57% year-over-year rise in Permian Basin production.

Realized Prices

QEP Resources’ average realized natural gas price in the quarter was $2.79 per thousand cubic feet (Mcf), up 6% from the year-ago quarter price of $2.64. Moreover, average oil price realization improved 9% year over year to $47.67 per barrel. Overall net realized equivalent price averaged $27.80 per barrel of oil equivalent in the quarter, up 10% year over year.

Operating Expenses and Capital Expenditure

Total operating expenses for the quarter decreased to $443.4 million from $480.8 million a year ago, reflecting a reduction of 7.8%. The reduction was primarily due to a decrease in purchased oil and gas expense, general and administrative expenses and transportation and processing costs.

Capital investment, excluding acquisitions, increased 130.7% year over year to $327.3 million in the third quarter.

2017 Guidance

For 2017, QEP Resources’ total oil equivalent production is expected to be in the range of 52.3-54.1 million barrels of oil equivalent (MMboe). Total capital investment without property acquisitions is expected to be in the range of $1,050 – $1,100 million.

About the Company

Denver, CO-based QEP Resources is a leading independent energy company engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. The company’s operations are focused on the Northern Region (primarily in the Rockies and the Williston Basin) and the Southern Region (primarily Oklahoma, the Texas Panhandle, and Louisiana) of the United States. Additionally, QEP Resources is engaged in a growing midstream business – that gathers, compresses, treats and processes natural gas – and energy marketing.

Balance Sheet

As of Sep 30, 2017, QEP Resources had cash and cash equivalents of $782.6 million. The company’s long-term debt was $1,890.6 million, which represents a debt-to-capitalization ratio of 34.2%.

Q3 Price Performance

QEP Resources stock has lost 15.1% in the third quarter of 2017, underperforming the 5.1% gain of the industry it belongs to.

Zacks Rank and Stocks to Consider

The company carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector are Braskem S.A. (BAK Free Report) , Par Pacific Holdings, Inc. (PARR Free Report) and Northern Oil and Gas, Inc. (NOG Free Report) . Braskem and Par Pacific sport a Zacks Rank #1 (Strong Buy), while Northern Oil and Gas has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Braskem’s 2017 earnings are expected to surge 12.1% year over year. The company delivered a positive earnings surprise of 68.5% in the second quarter of 2017.

Par Pacific’s sales for the third quarter of 2017 are expected to increase 28.5% year over year. The company delivered a positive average earnings surprise of 195.3% in the last four quarters.

Northern Oil and Gas’s sales for the third quarter of 2017 are expected to increase 9.6% year over year. The company delivered a positive average earnings surprise of 66.7% in the last four quarters.

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