Questar Corp. STR, a natural gas-focused energy company, reported first-quarter 2015 earnings of 48 cents per share missing the Zacks Consensus Estimate by a penny. The earnings were in line year over year. Continued growth in customer base and favorable results from the 2014 Utah rate case at its Questar Gas segment were marred by low transportation volumes and weak pricing.
Questar reported first-quarter revenues of $428.6 million, down 6.2% from a year ago. Moreover, quarterly revenues failed to meet the Zacks Consensus Estimate of $549 million.
Segment Analysis
Questar Gas: The segment generated $374.8 million in revenues, down 5.4% from the prior-year quarter, owing to lower natural gas transportation volumes. Despite this, the segment reported operating income of $76.6 million, above the year-ago quarter profit of $69.8 million. The 2014 Utah rate case had a positive effect on the result.
As of Mar 31, 2015, Questar Gas served 975,200 customers, up 2.4% from the year ago.
Wexpro: Segment revenues decreased 48.8% year over year to $6.3 million in the quarter. Lower production volumes and weak commodity pricing led to the decline. Segmental operating income from continuing operations also fell to $41.7 million from $48.5 million in the prior-year quarter.
Quarterly production of natural gas was down 18.9% to 15 billion cubic feet (Bcf) from 18.5 Bcf.
Questar Pipeline: The segment reported revenues of $46.8 million as against $48 million in the comparable quarter last year. Lower NGL revenues adversely affected the result. Income from continuing operations came in at $27.4 million compared with $30.1 million reported in the first quarter of 2014. Low commodity prices led to the decrease.
Total natural gas transportation volumes were $213.6 million decatherms compared with 215.9 million decatherms in the year-ago quarter.
Expense Summary
The general and administrative expenses for the quarter decreased about 3% from the prior-year period to $29.4 million, while depreciation, depletion and amortization costs fell 1.8% to $54.3 million. Total operating expense of $281.6 million declined from the year-ago period level of $308.6million.
Financials
As of Mar 31, 2015, Questar had long-term debt (including current portion) of $1,282.9 million, with a debt-to-capitalization ratio of 49.7%.
2015 Guidance
For 2015, Questar reiterated it earnings projection in the range of $1.20–$1.30 per share.
Zacks Rank
Questar currently carries a Zacks Rank #3 (Hold). Some other players from the industry that warrant a look are AGL Resources Inc. GAS, Chesapeake Utilities Corporation CPK and Sempra Energy SRE.
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