Domestic energy explorer QEP Resources Inc. (QEP) reported weaker-than-expected fourth quarter 2013 results, hamstrung by lower production. The unfavorable results led to a 12.6% share price fall on the NYSE, in after-market trade hours.
The company reported earnings per share – adjusted for special items – of 17 cents, lagging the Zacks Consensus Estimate of 42 cents. Moreover, the figure was down 48.5% from the year-ago adjusted profit of 33 cents per share.
Revenues – at $715.5 million – failed to surpass the Zacks Consensus Estimate of $814.0 million. However, the top line increased 1.5% from $704.9 million a year ago.
For the year ended Dec 31, 2013, QEP Resources reported income (excluding non-operating items) of $1.15 per share, below the Zacks Consensus Estimate of $1.40. The figure also decreased 9.5% from $1.27 per share adjusted profit reported in 2012. Revenues were recorded at $2.9 billion against the year-ago number of $2.4 billion.
Volume Analysis
Overall production at QEP Resources during the quarter was 75.1 billion cubic feet equivalent (Bcfe) – 64.3% gas – down 10.5% from the previous-year period. Significant fall in production in the Haynesville area of the southern region along with decreased output in the Pinedale area of the northern region hampered the result.
Natural gas volumes deteriorated 21.2% year over year to 48.3 billion cubic feet (Bcf), while liquids volumes jumped 18.5% to 4,474.8 thousand barrels (MBbl).
Realized Prices
QEP Resources’ average realized natural gas price in the quarter was $4.33 per thousand cubic feet (Mcf), up 4.1% from the year-ago quarter. However, average oil price realization decreased 3.9% to $86.10 per barrel. Overall net realized equivalent price averaged $6.90 per thousand cubic feet equivalent (Mcfe) in the quarter, which was 11.8% higher than the year-ago quarter’s figure.
Capital Expenditure & Balance Sheet
During the quarter, QEP Resources spent $358.3 million on drilling and completion activities. As of Dec 31, 2013, the company had cash and cash equivalents of $11.9 million and long-term debt of $2,997.5 million, with a debt-to-capitalization ratio of 43.6%.
Guidance
QEP Resources is expected to produce 283-307 Bcfe in 2014. Moreover, the company will likely invest $1,755.0–$1,855.0 million in 2014.
Zacks Rating
QEP Resources, in its present form, came into existence following the 2010 spin-off of Salt Lake City, Utah-based Questar Corporation’s (STR) oil and gas exploration and production business into a separate, independent, publicly traded entity.
The company currently 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 oil and gas exploration and production sector like Athlon Energy Inc. (ATHL) and Warren Resources Inc. (WRES). Both the stocks sport a Zacks Rank #1 (Strong Buy).
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