QEP RESOURCES PROVIDES OPERATIONAL AND FINANCIAL UPDATE
March 13 2020 - 8:00AM
QEP Resources, Inc. (NYSE: QEP) (QEP or the Company)
today provided an operational and financial update in response
to current market conditions.
- Expect to reduce planned 2020 and 2021 combined capital
expenditures by more than an aggregate $300 million, or nearly
30%
- Plan to suspend completion operations in the Permian Basin from
early May through at least the beginning of the fourth quarter
2020
- Intend to release the intermediate drilling rig operating in
the Permian Basin at the conclusion of its current operation in
March 2020
- Plan to suspend the refracturing program in the Williston Basin
upon completion of current projects for the remainder of 2020
- Expect to generate approximately $75 million of Free Cash Flow
(a non-GAAP measure)1 in 2020 at $35/bbl WTI, which excludes
the $37.5 million tax refund expected in 2020
- The adjusted plan is expected to generate Free Cash Flow in
2021 at current commodity strip prices
- Plan to suspend $0.02 quarterly dividend following payment on
March 20, 2020 of the dividend for fourth quarter 2019
- The Company expects to update 2020 guidance in connection with
reporting its first quarter 2020 financial results and as such, the
2020 guidance issued on February 26, 2020 should no longer be
relied upon
COMMODITY DERIVATIVES
The following tables present QEP's volumes and average prices
for its open derivative positions as of February 14, 2020:
|
Production Commodity Derivative Swaps |
Year |
|
Index |
|
Total Volumes |
|
Average Swap Price per Unit |
|
|
|
|
(in millions) |
|
|
Oil sales |
|
|
|
(bbls) |
|
|
($/bbl) |
2020 |
|
NYMEX WTI |
|
13.0 |
|
$ |
57.81 |
2020 |
|
Argus WTI Midland |
|
1.3 |
|
$ |
57.30 |
2020 |
|
Argus WTI Houston |
|
0.8 |
|
$ |
60.06 |
2021 |
|
NYMEX WTI |
|
1.6 |
|
$ |
55.04 |
Production Commodity Derivative Basis Swaps |
Year |
|
Index |
|
Basis |
|
Total Volumes |
|
Weighted-Average Differential |
|
|
|
|
|
|
(in millions) |
|
|
Oil sales |
|
|
|
|
|
(bbls) |
|
|
($/bbl) |
2020 |
|
NYMEX WTI |
|
Argus WTI Midland |
|
6.2 |
|
$ |
0.19 |
2020 |
|
NYMEX WTI |
|
Argus WTI Houston |
|
0.3 |
|
$ |
3.75 |
2021 |
|
NYMEX WTI |
|
Argus WTI Midland |
|
4.4 |
|
$ |
0.99 |
|
|
|
|
|
|
|
|
|
|
About QEP Resources, Inc.
QEP Resources, Inc. (NYSE: QEP) is an independent crude oil and
natural gas exploration and production company focused in two
regions of the United States: the Southern Region (primarily in
Texas) and the Northern Region (primarily in North Dakota). For
more information, visit QEP's website at: www.qepres.com.
Forward-Looking Statements
This release includes forward-looking statements within the
meaning of Section 27(a) of the Securities Act of 1933, as amended,
and Section 21(e) of the Securities Exchange Act of 1934, as
amended. Forward-looking statements can be identified by words such
as “anticipates,” “believes,” “forecasts,” “plans,” “estimates,”
“expects,” “should,” “will” or other similar expressions. Such
statements are based on management’s current expectations,
estimates and projections, which are subject to a wide range of
uncertainties and business risks. These forward-looking statements
include statements regarding: plans to suspend completion
operations and release the intermediate drilling rig operating in
the Permian Basin; plans to suspend the refracturing program in the
Williston Basin; expected generation of free cash flow in 2020 and
2021 and related assumptions; expected tax refund in 2020; plans to
suspend the quarterly dividend following payment of the fourth
quarter 2019 dividend; and plans to update 2020 guidance in
connection with reporting first quarter 2020 financial results.
Actual results may differ materially from those included in the
forward-looking statements due to a number of factors, including,
but not limited to: the length and severity of the recent outbreak
of the COVID-19 virus and its impact on QEP’s business; changes in
oil, gas and NGL prices; liquidity constraints, including those
resulting from the cost or unavailability of financing due to debt
and equity capital and credit market conditions, changes in QEP’s
credit rating, QEP’s compliance with loan covenants, the increasing
credit pressure on QEP’s industry or demands for cash collateral by
counterparties to derivative and other contracts; market
conditions; global geopolitical and macroeconomic factors; the
activities of the Organization of Petroleum Exporting
Countries and other oil producing countries such as Russia; general
economic conditions, including interest rates; changes in local,
regional, national and global demand for natural oil, gas and NGL;
impact of new laws and regulations, including the use of hydraulic
fracture stimulation; impact of U.S. dollar exchange rates on oil,
gas and NGL prices; elimination of federal income tax deductions
for oil and gas exploration and development; guidance for
implementation of the Tax Cuts and Jobs Act; actual proceeds from
asset sales; actions of activist shareholders; tariffs on products
QEP uses in its operations or on the products QEP sells; drilling
results; shortages of oilfield equipment, services and personnel;
the availability of storage and refining capacity; operating risks
such as unexpected drilling conditions; transportation constraints,
including gas and crude oil pipeline takeaway capacity in the
Permian Basin; weather conditions; changes in maintenance, service
and construction costs; permitting delays; outcome of contingencies
such as legal proceedings; inadequate supplies of water and/or lack
of water disposal sources; credit worthiness of counterparties to
agreements; and the other risks discussed in the Company’s periodic
filings with the Securities and Exchange Commission, including
the Risk Factors section of the Company’s Annual Report on Form
10-K for the year ended December 31, 2019. QEP Resources
undertakes no obligation to publicly correct or update the
forward-looking statements in this news release, in other
documents, or on the website to reflect future events or
circumstances. All such statements are expressly qualified by this
cautionary statement.
Contact
|
Investors/Media: |
|
William I. Kent, IRC |
|
Director, Investor
Relations |
|
303-405-6665 |
1 QEP is unable to provide a quantitative
reconciliation of Free Cash Flow, a forward-looking non-GAAP
measure, to its most directly comparable forward-looking GAAP
measure because management cannot reliably quantify certain of the
necessary components of such forward-looking GAAP measure. The
reconciling items in future periods could be significant.
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