QEP Resources Inc. QEP reported better-than-expected second-quarter 2015 results on increased liquid volumes, lower taxes and higher realizations from commodity derivatives. The company also announced an upward revision in its full-year production guidance. Shares of QEP Resources gained over 7% in the after hours trading session following these positive developments.
The domestic energy explorer announced adjusted earnings per share of 9 cents, which compared favorably with the Zacks Consensus Estimate of a loss of 10 cents.
However, the bottom line declined substantially from the prior-year level of 30 cents per share. Lower oil, natural gas and natural gas liquid prices affected the results.
Quarterly revenues of $608.6 million were almost in line with the Zacks Consensus Estimate of $608 million but decreased 31.4% from the second-quarter 2014 level.
Volume Analysis
QEP Resources’ overall production during the second quarter was 80.9 billion cubic feet equivalent (Bcfe), which reflects a 4% decline from the prior-year quarter. Notably, gas accounts for 55% of total production.
Natural gas volumes deteriorated 8% year over year to 44.5 Bcf, while liquid volumes improved more than 3.5% to 6073.9 thousand barrels.
Realized Prices
QEP Resources’ average realized natural gas price in the quarter was $3.15 per thousand cubic feet, down from the year-ago quarter price of $4.25. Moreover, average oil price realization decreased 23% to $64.58 per barrel.
Overall net realized equivalent price averaged $5.94 per thousand cubic feet equivalent in the quarter. This marks an 18% decrease from the year-ago level of $7.22.
Operating Expense
Total operating expenses for the quarter came in at $649.8 million, down 10% from the year-ago quarter level of $722.2 million.
Balance Sheet
As of Jun 30, 2015, QEP Resources had cash and cash equivalents of $445.6 million. The company’s long-term debt totaled $2,218.5 million, which represents a debt-to-capitalization ratio of 36%.
Guidance
QEP Resources projects 2015 production between 297 Bcfe and 315 Bcfe compared with the previous guidance of 291–312 Bcfe. This is the second production guidance hike for the company this year.
QEP Resources reiterated its 2015 capital investment guidance of $900−$1,050 million.
Zacks Rank
Currently, QEP Resources holds a Zacks Rank #2 (Buy).
Other exploration and production companies worth considering include Anadarko Petroleum Corporation APC, Linn Energy, LLC LINE and Murphy Oil Corporation MUR. All these stocks carry the same Zacks Rank as QEP Resources.
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