Domestic energy explorer, QEP Resources Inc. (QEP) declared the completion of divesture of its natural gas gathering and processing subsidiary, QEP Field Services Company to Tesoro Logistics LP (TLLP) − an affiliate of independent refiner Tesoro Corp. (TSO). The $2.5 billion transaction also includes the sale of QEP Resources’ ownership stake in QEP Midstream Partners LP (QEPM).
With the closure of the deal, Tesoro Logistics becomes the owner of midstream player QEP Field Services Company – having four processing facilities and pipeline systems that spread over 2,000 miles – along with 58% stake in QEP Midstream Partners.
The sale of midstream assets reflects QEP Resources’ intention of becoming a promising upstream energy player with a sound financial base and resources in key locations. The company has oil properties in the prolific Williston and Permian Basins, and good quality natural gas assets in northwest Louisiana and Rocky Mountains.
Management at QEP Resources mentioned that the transaction is a strategic move to maximize shareholder value. The company intends to use the proceeds to return capital to investors, lower its debt burden and invest more in its profitable exploration and production assets.
QEP Resources added that it has already paid its term loan of $600 million and the entire amount outstanding under the revolving credit facility. The company has also paid $230 million borrowed for refinancing the outstanding loan of QEP Midstream Partners.
Along with the asset divesture news, QEP Resources reported that it has increased its limit under the revolving credit facility to $1.8 billion.
Denver, CO-based QEP Resources has a Zacks Rank #3 (Hold), implying that the stock is expected to perform in line with the broader U.S. equity market in the next one to three months.
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