QEP Resources (QEP) Posts Lower-than-Excepted Loss In Q2

On Jul 28, 2016, domestic energy explorer QEP Resources Inc. (NYSE:QEP) reported narrower-than-expected loss for second-quarter 2016. Higher production, especially from the Williston and Permian Basins, aided the results. This was, however, partially dampened by lower price realizations.

The company reported loss per share – excluding special items – of 23 cents, narrower than the Zacks Consensus Estimate of loss of 38 cents. Notably, the company had reported adjusted earnings of 9 cents per share in the year-ago-quarter.

Quarterly revenues of $333.7 million plunged about 45.2% from second-quarter 2015. The top line also came in below the Zacks Consensus Estimate of $376 million.

Volume Analysis

QEP Resources’ overall production during the second quarter was 83.3 billion cubic feet equivalent (Bcfe), which reflects a 3% improvement from the prior-year quarter. Notably, gas accounted for 51.5% of total production. A significant increase in production from the Williston and Permian Basins drove the upside.

Natural gas volumes declined 4% year over year to 42.9 Bcf, whereas liquid volumes improved significantly to 6,730.8 thousand barrels.

Realized Prices

QEP Resources’ average realized natural gas price in the quarter was $2.51 per thousand cubic feet, down 20% from the year-ago quarter price of $3.15. Moreover, average oil price realization decreased nearly 32% to $43.69 per barrel.

Overall net realized equivalent price averaged $4.31 per thousand cubic feet equivalent in the quarter, which reflects a 27% decline from the year-ago figure.

Operating Expense

Total operating expenses for the quarter decreased to $425.8 million from $615.8 million in the year-ago quarter.

Balance Sheet

As of Jun 30, 2016, QEP Resources had cash and cash equivalents of $1,038.3 million. The company’s long-term debt (including current portion) was $2,194.6 million, which represents a debt-to-capitalization ratio of 37.4%.

Guidance

QEP Resources slightly increased the lower and upper limit of its 2016 production guidance range to 311–330 Bcfe from 303–328 Bcfe.

The projection for 2016 capital spending was increased to $500−$550 million from $450−$500 million.

Zacks Rank & Stocks to Consider

Currently, QEP Resources sports a Zacks Rank #1 (Strong Buy).

Other well-ranked players in the same sector include GeoPark Limited (NYSE:GPRK) , Northern Oil and Gas, Inc. (NYSE:NOG) and Rex Energy Corporation (NASDAQ:REXX) . Each of these stocks sports a Zacks Rank #1.