Domestic energy explorer QEP Resources Inc. (QEP) reported strong second-quarter 2014 results on the back of higher natural gas equivalent price and production.
The company reported earnings per share – adjusted for special items – of 38 cents, up 8.6% from the prior-year quarter level of 35 cents. The bottom line also beat the Zacks Consensus Estimate of 31 cents.
Quarterly revenues of $936.7 million increased about 24.7% from second-quarter 2013 and surpassed the Zacks Consensus Estimate of $743 million.
Volume Analysis
QEP Resources’ overall production during the second quarter stood at 83.9 billion cubic feet equivalent (Bcfe), highlighting a 7.7% improvement from the previous-year quarter. Notably, gas accounts for 58% of the total production. A significant increase in production in the Williston Basin and Pinedale region aided the upside.
Natural gas volumes deteriorated 15% year over year to 48.6 billion cubic feet (Bcf) while liquid volumes improved 67.6% to 5,866.6 thousand barrels (MBbl).
Realized Prices
QEP Resources’ average realized natural gas price in the quarter stood at $4.25 per thousand cubic feet (Mcf), almost on par with the year-ago quarter. However, average oil price realization decreased 7% to $83.77 per barrel.
Overall net realized equivalent price averaged $7.22 per thousand cubic feet equivalent (Mcfe) in the quarter, reflecting a 12% rise from the year-ago figure.
Balance Sheet
As of Jun 30, 2014, QEP Resources had cash and cash equivalents of $702.3 million and long-term debt of $3,910.8 million, representing a debt-to-capitalization ratio of 50.6%.
Guidance
QEP Resources raised its 2014 production guidance to 289−304 Bcfe from 274−298 Bcfe. The company also lifted its 2014 capital investment projection to $1,815−$1,915 million from $1,705–$1,805 million.
Zacks Rank & Other Stock to Consider
QEP Resources, in its present form, came into existence following the 2010 spin-off of Salt Lake City, UT-based Questar Corporation’s (STR) oil and gas exploration and production business into a separate, independent, publicly traded entity.
Currently, QEP Resources carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the same industry like Callon Petroleum Company (CPE) and Carrizo Oil & Gas Inc. (CRZO). Both the stocks sport a Zacks Rank #1 (Strong Buy).
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