QEP Resources, Inc. (NYSE: QEP) (QEP or the Company) today reported
third quarter 2020 financial and operating results.
Third Quarter 2020 Highlights
- Received a $170.7 million Alternative Minimum Tax (AMT) credit
refund, which included $5.6 million of interest income
- Generated $329.6 million of Net Cash Provided from Operating
Activities
- Delivered $98.3 million of Free Cash Flow (a non-GAAP
measure)
- Redeemed the remaining $275.3 million in principal amount of
the 2021 Senior Notes
- Recorded an additional income tax receivable of $81.0 million
for AMT credit refunds
"Our third quarter 2020 results exhibit both the strength of our
core assets and the success of the financial and operational
decisions we have made over the last two years," commented Tim
Cutt, President and CEO of QEP. "Our financial outlook for
full-year 2020 has continued to improve and we now expect to spend
approximately $340 million of capital and generate more than $200
million in Free Cash Flow at strip prices as we continue to
prioritize profitability and financial discipline over production
growth.
"During the quarter we received our $170.7 million tax refund
ahead of our expected timeline, which enabled us to redeem our 2021
Senior Notes five months before their due date. The redemption of
the senior notes is another important step toward our corporate
goal of strengthening our balance sheet and improving liquidity.
Since January of 2019 we have reduced our outstanding debt by more
than $900 million through a combination of free cash flow
generation, tax refunds and asset divestiture proceeds.
“We currently plan to invest approximately $300 million in 2021
to maintain a relatively flat production profile and expect to
deliver free cash flow down to a WTI price of $35 per barrel. We
have established one of the lowest operating and development cost
structures in the Permian Basin and will continue to manage costs
down, while minimizing our impact on the environment, and
protecting the health, safety and well-being of our employees,
contractors and community partners," concluded Cutt.
The Company has posted to its website www.qepres.com a
presentation that supplements the information provided in this
release.
OPERATIONS UPDATE
For the third quarter 2020, the Company drilled a total of nine
gross horizontal wells in the Permian Basin and completed two gross
horizontal wells in the Williston Basin. The average lateral length
for the wells drilled in the Permian Basin in the third quarter was
12,548 feet. The average lateral length for the wells completed in
the Williston Basin in the third quarter was 12,258 feet. In
addition, five non-operated wells were put on production in the
Williston Basin late in the third quarter 2020.
Production in the Permian Basin was 4.4 million barrels of oil
equivalent (MMboe) in the third quarter 2020, a decrease of 23%
compared with the third quarter 2019. The decrease was a result of
decreased drilling activity and the suspension of completion
activity in the basin during the quarter. Production in the
Williston Basin was 2.7 MMboe in the third quarter 2020, a decrease
of 2% compared with the third quarter 2019. The decrease was a
result of reduced operated drilling and completion activity in the
basin, partially offset by an increase in non-operated activity.
Total Company oil equivalent production was 7.1 MMboe in the third
quarter of 2020, a decrease of 16% compared with the third quarter
2019. As of September 30, 2020, the Company had two operated
drilling rigs in the Permian Basin and no operated activity in the
Williston Basin.
Oil and condensate production in the Permian Basin was 2.8
million barrels (MMbbl) in the third quarter 2020, a decrease of
29% over the third quarter 2019. Total Company oil and condensate
production was 4.4 MMbbl in the third quarter 2020, down 22%
compared with the third quarter 2019. The oil and condensate
production decrease was primarily the result of a decrease in
volumes in the Permian Basin due to reduced drilling activity and
the suspension of completion activity in response to market
conditions.
FINANCIAL UPDATE
The Company reported a net loss of $49.2 million in the third
quarter 2020, or $0.20 per diluted share, compared with net income
of $81.0 million, or $0.34 per diluted share, in the third quarter
2019. The $130.2 million decrease was primarily due to a $196.1
million increase in unrealized derivative losses, partially offset
by a $81.8 million increase in income tax benefits.
Net income (loss) includes non-cash gains and losses associated
with the change in the fair value of derivative instruments, gains
and losses from asset sales, gains and losses from debt
extinguishment, asset impairments and certain other items.
Excluding these items, the Company's third quarter 2020 Adjusted
Net Income (a non-GAAP measure) was $31.2 million, or $0.13 per
diluted share, compared with an Adjusted Net Income of $11.0
million, or $0.05 per diluted share, for the third quarter
2019.
Adjusted EBITDA for the third quarter 2020 was $160.4 million
compared with $193.5 million in the third quarter 2019, a 17%
decrease. The decrease was primarily due to a $129.8 million
decrease in oil, gas, and NGL sales, which was due to a 29%
decrease in average field-level equivalent prices and a 16%
decrease in total oil equivalent production volumes, partially
offset by a $74.5 million increase in realized derivative gains, a
$8.7 million reduction in general and administrative expenses, a
$6.0 million decrease in production and property taxes and a $5.6
million reduction in transportation and processing costs.
The definitions and reconciliations of Adjusted Net Income and
Adjusted EBITDA are provided under the heading Non-GAAP Measures at
the end of this release.Capital Investment
Capital investment, excluding property acquisitions, was $38.4
million (on an accrual basis) for the third quarter 2020, compared
with $128.9 million for the third quarter 2019, of which $35.7
million related to the drilling, completion and equipping of wells.
The decrease in capital expenditures was primarily related to our
decision to significantly reduce development activity in response
to market conditions in both the Permian and Williston basins, and
by peer leading drilling and completion costs in the Permian
Basin.
Operating Expenses
During the third quarter 2020, lease operating expense (LOE) was
$35.5 million, a decrease of 7% compared with the third quarter
2019. The decrease was primarily due to a decrease in workover
activity in the Williston Basin, a decrease in water disposal costs
in the Williston and Permian basins and continuing efforts to
reduce operating expenses. These decreases were partially offset by
an increase in workover activity in the Permian Basin. Total
Company LOE was $5.03 per Boe in the third quarter 2020, including
Permian Basin LOE of $4.02 per Boe.
During the third quarter 2020, transportation and processing
costs were $12.4 million, a decrease of 31% compared with the third
quarter 2019. Adjusted transportation and processing costs (a
non-GAAP measure) were $28.4 million, a decrease of 12% compared
with the third quarter 2019. The decrease was primarily due to the
recognition of $7.7 million of firm transportation expense in the
third quarter of 2019 related to future obligations in an area in
which the Company no longer has production operations as well as
decreased production in the Permian and Williston basins, partially
offset by an increase in gathering and processing rates in the
Permian and Williston basins. During the third quarter 2020,
transportation and processing costs were $1.77 per Boe, while
Adjusted transportation and processing costs were $4.04 per
Boe.
The definition and reconciliation of Adjusted transportation and
processing costs is provided under the heading Non-GAAP Measures at
the end of this release.
During the third quarter 2020, general and administrative
(G&A) expense was $20.9 million, a decrease of 29% compared
with the third quarter 2019. The decrease was primarily related to
workforce reductions and a reduction in strategic initiative costs,
partially offset by an increase in market value on the deferred
compensation plan and performance share units. For the first three
quarters of 2020, G&A expense decreased 49% compared with the
first three quarters 2019, primarily due to the work force
reductions, lower expenses associated with strategic initiatives in
2019 and a decrease in expense related to decreased market value on
the deferred compensation plan. During the third quarter 2020,
total G&A was $2.96 per Boe of which $2.34 per Boe was general
and administrative expense excluding share-based and deferred
compensation.
Liquidity
Net Cash Provided by Operating Activities for the third quarter
2020 was $329.6 million compared with $146.3 million for the third
quarter 2019.
The Company generated Free Cash Flow of $98.3 million for the
third quarter 2020 compared with $38.1 million in the third quarter
2019, an improvement of $60.2 million. The improvement was
primarily due to a $90.5 million decrease in accrued property,
plant and equipment capital expenditures, and a $4.2 million
decrease in interest expense, excluding amortization of debt
issuance costs and discounts, partially offset by a $33.1 million
decrease in Adjusted EBITDA.
Net Cash Provided by Operating Activities for the nine months
ended September 30, 2020, was $554.0 million compared with
$342.0 million for the nine months ended September 30,
2019.
The Company generated Free Cash Flow of $162.0 million during
the first three quarters of 2020 compared with an outspend of $66.0
million during the first three quarters of 2019, an improvement of
$228.0 million. The improvement was primarily due to a $212.5
million decrease in accrued property, plant and equipment capital
expenditures, driven by reducing drilling and suspending completion
activity until the fourth quarter of 2020 and by peer leading
drilling and completion costs in the Permian Basin, an $11.8
million increase in Adjusted EBITDA, and a $9.9 million decrease in
interest expense, excluding amortization of debt issuance costs and
discounts. In the first three quarters of 2020, Adjusted EBITDA
increased to $491.6 million compared with $479.8 million in the
first three quarters of 2019. The improvement was primarily due to
a $259.4 million increase in realized derivative gains, a $61.3
million decrease in general and administrative expenses, a $31.0
million decrease in lease operating costs and a $25.3 million
reduction in production and property taxes. These improvements were
partially offset by a $359.9 million decrease in oil, gas and NGL
sales, primarily due to a 37% decrease in average field-level
prices.
During the third quarter 2020, QEP redeemed the remaining $275.3
million in principal amount of its outstanding 6.875% Senior Notes
due March 2021.
As of September 30, 2020, QEP had $9.5 million in cash and
cash equivalents, no borrowings under its revolving credit
facility, $11.9 million in letters of credit outstanding and was in
compliance with the covenants under its credit agreement. The
Company also has a $81.0 million income tax receivable as of
September 30, 2020, primarily attributable to AMT credit refunds
that were accelerated by the Coronavirus Aid, Relief, and Economic
Security Act stimulus bill. The Company anticipates it will receive
$50.1 million of the AMT credit refunds within the next twelve
months.
The definitions and reconciliations of Free Cash Flow and
Adjusted EBITDA are provided under the heading Non-GAAP Measures at
the end of this release.
Updated 2020 Guidance
QEP's updated 2020 guidance assumes: (i) commodity strip prices
as of September 30, 2020, adjusted for applicable commodity and
location differentials, (ii) that QEP will elect to recover ethane
from its produced gas in the Permian Basin where
processing economics support it, and (iii) no property acquisitions
or divestitures, other than those already disclosed.
|
2020 |
2020 |
|
Prior Guidance (1) |
Updated Guidance |
Oil & condensate
production (MMbbl) |
19.0 - 19.5 |
19.4 - 19.7 |
Gas production (Bcf) |
30.0 - 33.0 |
31.0 - 32.0 |
NGL
production (MMbbl) |
4.1 - 4.6 |
4.6 - 5.1 |
Total oil equivalent production (MMboe) |
28.1 - 29.6 |
29.2 - 30.1 |
|
|
|
Lease operating expense (per
Boe) |
$5.00 - $5.30 |
$4.60 - $4.90 |
Adjusted transportation and
processing costs (per Boe) (2) |
$3.60 - $3.90 |
$3.50 - $3.80 |
Depletion, depreciation and
amortization (per Boe) |
$17.75 - $18.75 |
$17.75 - $18.75 |
Production and property taxes
(% of field-level revenue) |
8.5% |
8.5% |
(in millions) |
General and administrative
expense (3) |
$85.0 - $90.0 |
$85.0 - $88.0 |
|
|
|
Capital investment (excluding
property acquisitions) |
|
|
Drilling, completion and equipment (4) |
$325.0 - $360.0 |
$319.0 - $329.0 |
Midstream infrastructure(5) |
$12.0 - $15.0 |
$12.0 - $15.0 |
Corporate |
$3.0 - $5.0 |
$2.0 - $3.0 |
Total capital investment (excluding property acquisitions) |
$340.0 - $380.0 |
$333.0 - $347.0 |
|
|
|
Wells put on production
(net) |
44 |
50 |
Refracs put on production
(net) |
5 |
5 |
__________________________
(1) Prior guidance as of July 29,
2020.(2) Adjusted transportation and processing costs (per
Boe) is a non-GAAP measure. Refer to the definitions and
reconciliations of Non-GAAP Measures at the end of this
release.(3) The mid-point of general and administrative
expense includes approximately $11.0 million of expenses related to
cash and non-cash share-based compensation and our deferred
compensation plan mark-to-market. Because our cash share-based
compensation and our deferred compensation plan liabilities
fluctuate with stock price changes, the amount of actual expense
may vary from the forecasted amount.(4) Drilling, Completion
and Equipment includes approximately $30.0 million of non-operated
well costs.(5) Includes capital expenditures in the Permian
Basin associated with (i) water sourcing, gathering, recycling and
disposal and (ii) crude oil and natural gas gathering system.
The following tables present QEP's volumes and average prices
for its open derivative positions as of October 21, 2020:
Production Commodity Derivative Swaps |
Year |
|
Index |
|
Total Volumes |
|
Average Swap Priceper Unit |
|
|
|
|
(in millions) |
|
|
Oil sales |
|
|
|
(bbls) |
|
|
($/bbl) |
2020 |
|
NYMEX WTI |
|
3.9 |
|
$ |
57.60 |
2020 |
|
Argus WTI Midland |
|
0.4 |
|
$ |
57.30 |
2021 (January - June) |
|
NYMEX WTI |
|
5.2 |
|
$ |
44.70 |
2021 (July - December) |
|
NYMEX WTI |
|
5.2 |
|
$ |
42.24 |
Gas sales |
|
|
|
(MMbtu) |
|
|
($/MMbtu) |
2020 |
|
IF Waha |
|
3.7 |
|
$ |
0.97 |
2020 |
|
NYMEX HH |
|
2.8 |
|
$ |
2.20 |
2021 |
|
IF Waha |
|
18.2 |
|
$ |
1.92 |
2021 |
|
NYMEX HH |
|
9.1 |
|
$ |
2.44 |
Production Commodity Derivative Basis Swaps |
Year |
|
Index |
|
Basis |
|
Total Volumes |
|
Weighted-AverageDifferential |
|
|
|
|
|
|
(in millions) |
|
|
Oil sales |
|
|
|
|
|
(bbls) |
|
|
($/bbl) |
2020 |
|
NYMEX WTI |
|
Argus WTI Midland |
|
1.8 |
|
$ |
0.22 |
2021 |
|
NYMEX WTI |
|
Argus WTI Midland |
|
4.4 |
|
$ |
0.99 |
Production Commodity Derivative Oil Costless
Collars |
Year |
|
Index |
|
Total
Volumes |
|
Average
Price Floor |
|
Average Price Ceiling |
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
(bbls) |
|
($/bbl) |
|
|
($/bbl) |
|
2021 |
|
NYMEX WTI |
|
0.4 |
|
$ |
40.00 |
|
$ |
49.20 |
Third Quarter 2020 Results Conference Call
QEP’s management will discuss third quarter 2020 results in a
conference call tomorrow, October 29, 2020, beginning at 9:00
a.m. ET. The conference call can be accessed at www.qepres.com. You
may also participate in the conference call by dialing (877)
869-3847 in the U.S. or Canada and (201) 689-8261 for international
calls. A replay of the teleconference will be available on the
website immediately after the call through November 29, 2020, or by
dialing (877) 660-6853 in the U.S. or Canada and (201) 612-7415 for
international calls, and then entering the conference ID #13711861.
In addition, QEP’s slides for the third quarter 2020 can be found
on the Company’s website.
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: expectations regarding the Company's
outlook for 2020 and 2021; reductions in expected capital
expenditures; generation of Free Cash Flow; de-levering the
Company's balance sheet and improving liquidity; anticipated
receipt of AMT refunds under the Coronavirus Aid, Relief, and
Economic Security Act stimulus bill; expectations regarding
drilling and completion activity in the Permian Basin; our ability
to execute our business plan; our 2021 break-even price and capital
expenditures; updated 2020 guidance and certain underlying
assumptions related thereto; and usefulness of non-GAAP measures.
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 and Williston basins; 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, as updated by the Risk Factors section of the Company’s
Quarterly Report on Form 10-Q for the quarters ended March 31, 2020
and June 30, 2020. 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 |
QEP RESOURCES, INC.CONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
REVENUES |
(in millions, except per share amounts) |
Oil and condensate, gas and NGL sales |
$ |
175.8 |
|
|
|
$ |
305.6 |
|
|
|
$ |
515.9 |
|
|
|
$ |
875.8 |
|
|
Other revenues |
1.4 |
|
|
|
1.8 |
|
|
|
1.6 |
|
|
|
7.1 |
|
|
Purchased oil and gas sales |
0.6 |
|
|
|
0.1 |
|
|
|
6.7 |
|
|
|
1.4 |
|
|
Total Revenues |
177.8 |
|
|
|
307.5 |
|
|
|
524.2 |
|
|
|
884.3 |
|
|
OPERATING
EXPENSES |
|
|
|
|
|
|
|
Purchased oil and gas expense |
0.8 |
|
|
|
0.1 |
|
|
|
8.2 |
|
|
|
1.5 |
|
|
Lease operating expense |
35.5 |
|
|
|
38.3 |
|
|
|
104.5 |
|
|
|
135.5 |
|
|
Transportation and processing costs |
12.4 |
|
|
|
18.0 |
|
|
|
38.2 |
|
|
|
38.8 |
|
|
Gathering and other expense |
3.4 |
|
|
|
3.1 |
|
|
|
8.9 |
|
|
|
9.9 |
|
|
General and administrative |
20.9 |
|
|
|
29.6 |
|
|
|
63.1 |
|
|
|
124.4 |
|
|
Production and property taxes |
14.0 |
|
|
|
20.0 |
|
|
|
42.3 |
|
|
|
67.6 |
|
|
Depreciation, depletion and amortization |
133.0 |
|
|
|
144.2 |
|
|
|
424.6 |
|
|
|
395.5 |
|
|
Impairment |
— |
|
|
|
— |
|
|
|
— |
|
|
|
5.0 |
|
|
Total Operating Expenses |
220.0 |
|
|
|
253.3 |
|
|
|
689.8 |
|
|
|
778.2 |
|
|
Net gain (loss) from asset
sales, inclusive of restructuring costs |
0.1 |
|
|
|
(2.1 |
) |
|
|
3.8 |
|
|
|
2.5 |
|
|
OPERATING INCOME (LOSS) |
(42.1 |
) |
|
|
52.1 |
|
|
|
(161.8 |
) |
|
|
108.6 |
|
|
Realized and unrealized gains
(losses) on derivative contracts |
(34.2 |
) |
|
|
87.4 |
|
|
|
317.0 |
|
|
|
(55.8 |
) |
|
Interest and other income
(expense) |
7.7 |
|
|
|
0.9 |
|
|
|
7.7 |
|
|
|
4.6 |
|
|
Gain (loss) from early
extinguishment of debt |
(7.4 |
) |
|
|
— |
|
|
|
18.2 |
|
|
|
— |
|
|
Interest expense |
(28.4 |
) |
|
|
(32.8 |
) |
|
|
(89.8 |
) |
|
|
(100.0 |
) |
|
INCOME (LOSS) BEFORE INCOME TAXES |
(104.4 |
) |
|
|
107.6 |
|
|
|
91.3 |
|
|
|
(42.6 |
) |
|
Income tax (provision)
benefit |
55.2 |
|
|
|
(26.6 |
) |
|
|
42.5 |
|
|
|
55.7 |
|
|
NET INCOME (LOSS) |
$ |
(49.2 |
) |
|
|
$ |
81.0 |
|
|
|
$ |
133.8 |
|
|
|
$ |
13.1 |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common
share |
|
|
|
|
|
|
|
Basic |
$ |
(0.20 |
) |
|
|
$ |
0.34 |
|
|
|
$ |
0.55 |
|
|
|
$ |
0.06 |
|
|
Diluted |
$ |
(0.20 |
) |
|
|
$ |
0.34 |
|
|
|
$ |
0.55 |
|
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding |
|
|
|
|
|
|
|
Used in basic calculation |
242.3 |
|
|
|
237.9 |
|
|
|
241.2 |
|
|
|
237.7 |
|
|
Used in diluted calculation |
242.3 |
|
|
|
237.9 |
|
|
|
241.2 |
|
|
|
237.7 |
|
|
QEP RESOURCES, INC.CONDENSED
CONSOLIDATED BALANCE
SHEETS(Unaudited)
|
September 30, 2020 |
|
December 31, 2019 |
|
|
ASSETS |
(in millions) |
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
9.5 |
|
|
|
$ |
166.3 |
|
|
Accounts receivable, net |
84.1 |
|
|
|
108.4 |
|
|
Income tax receivable |
50.5 |
|
|
|
37.4 |
|
|
Fair value of derivative contracts |
77.5 |
|
|
|
1.5 |
|
|
Prepaid expenses and other current assets |
8.5 |
|
|
|
11.6 |
|
|
Total Current Assets |
230.1 |
|
|
|
325.2 |
|
|
Property, Plant and Equipment (successful efforts method for
oil and gas properties) |
|
|
|
Proved properties |
9,812.9 |
|
|
|
9,574.9 |
|
|
Unproved properties |
544.2 |
|
|
|
599.1 |
|
|
Gathering and other |
165.5 |
|
|
|
164.2 |
|
|
Materials and supplies |
16.9 |
|
|
|
15.6 |
|
|
Total Property, Plant and Equipment |
10,539.5 |
|
|
|
10,353.8 |
|
|
Less Accumulated Depreciation, Depletion and Amortization |
|
|
|
Exploration and production |
5,603.6 |
|
|
|
5,250.5 |
|
|
Gathering and other |
68.5 |
|
|
|
61.0 |
|
|
Total Accumulated Depreciation, Depletion and Amortization |
5,672.1 |
|
|
|
5,311.5 |
|
|
Net Property, Plant and Equipment |
4,867.4 |
|
|
|
5,042.3 |
|
|
Fair value of derivative contracts |
0.8 |
|
|
|
0.2 |
|
|
Operating lease right-of-use
assets, net |
52.7 |
|
|
|
56.8 |
|
|
Other noncurrent assets |
85.7 |
|
|
|
53.3 |
|
|
TOTAL ASSETS |
$ |
5,236.7 |
|
|
|
$ |
5,477.8 |
|
|
LIABILITIES AND EQUITY |
|
|
|
Current Liabilities |
|
|
|
Checks outstanding in excess of cash balances |
$ |
— |
|
|
|
$ |
18.3 |
|
|
Accounts payable and accrued expenses |
164.5 |
|
|
|
227.2 |
|
|
Production and property taxes |
10.7 |
|
|
|
18.9 |
|
|
Interest payable |
29.1 |
|
|
|
31.0 |
|
|
Fair value of derivative contracts |
4.7 |
|
|
|
18.7 |
|
|
Current operating lease liabilities |
22.6 |
|
|
|
18.0 |
|
|
Asset retirement obligations |
7.1 |
|
|
|
6.0 |
|
|
Total Current Liabilities |
238.7 |
|
|
|
338.1 |
|
|
Long-term debt |
1,590.4 |
|
|
|
2,015.6 |
|
|
Deferred income taxes |
440.0 |
|
|
|
274.5 |
|
|
Asset retirement obligations |
94.8 |
|
|
|
94.9 |
|
|
Fair value of derivative contracts |
6.7 |
|
|
|
0.5 |
|
|
Operating lease
liabilities |
35.4 |
|
|
|
44.8 |
|
|
Other long-term liabilities |
32.1 |
|
|
|
48.8 |
|
|
Commitments and contingencies |
|
|
|
EQUITY |
|
|
|
Common stock – par value $0.01 per share; 500.0 million shares
authorized; 247.2 million and 242.1 million shares issued,
respectively |
2.5 |
|
|
|
2.4 |
|
|
Treasury stock – 5.0 million and 4.4 million shares,
respectively |
(56.7 |
) |
|
|
(55.4 |
) |
|
Additional paid-in capital |
1,466.2 |
|
|
|
1,456.5 |
|
|
Retained earnings |
1,398.6 |
|
|
|
1,269.6 |
|
|
Accumulated other comprehensive income (loss) |
(12.0 |
) |
|
|
(12.5 |
) |
|
Total Common Shareholders' Equity |
2,798.6 |
|
|
|
2,660.6 |
|
|
TOTAL LIABILITIES AND EQUITY |
$ |
5,236.7 |
|
|
|
$ |
5,477.8 |
|
|
|
|
|
|
|
|
|
|
|
|
QEP RESOURCES, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
OPERATING
ACTIVITIES |
(in millions) |
Net income (loss) |
$ |
(49.2 |
) |
|
|
$ |
81.0 |
|
|
|
$ |
133.8 |
|
|
|
$ |
13.1 |
|
|
Adjustments to reconcile net
income (loss) to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
133.0 |
|
|
|
144.2 |
|
|
|
424.6 |
|
|
|
395.5 |
|
|
Deferred income taxes (benefit) |
23.9 |
|
|
|
26.5 |
|
|
|
165.3 |
|
|
|
(61.2 |
) |
|
Impairment |
— |
|
|
|
— |
|
|
|
— |
|
|
|
5.0 |
|
|
Non-cash share-based compensation |
2.9 |
|
|
|
5.0 |
|
|
|
9.3 |
|
|
|
16.2 |
|
|
Non-cash (gain) loss from warehouse inventory |
0.7 |
|
|
|
— |
|
|
|
0.7 |
|
|
|
— |
|
|
Amortization of debt issuance costs and discounts |
1.1 |
|
|
|
1.3 |
|
|
|
3.7 |
|
|
|
4.0 |
|
|
Net (gain) loss from asset sales, inclusive of restructuring
costs |
(0.1 |
) |
|
|
2.1 |
|
|
|
(3.8 |
) |
|
|
(2.5 |
) |
|
Gain from early extinguishment of debt |
7.4 |
|
|
|
— |
|
|
|
(18.2 |
) |
|
|
— |
|
|
Unrealized (gains) losses on marketable securities |
(1.1 |
) |
|
|
(0.1 |
) |
|
|
(1.1 |
) |
|
|
(2.8 |
) |
|
Unrealized (gains) losses on derivative contracts |
103.8 |
|
|
|
(92.3 |
) |
|
|
(84.4 |
) |
|
|
29.0 |
|
|
Changes in operating assets and liabilities |
107.2 |
|
|
|
(21.4 |
) |
|
|
(75.9 |
) |
|
|
(54.3 |
) |
|
Net Cash Provided by (Used in) Operating Activities |
329.6 |
|
|
|
146.3 |
|
|
|
554.0 |
|
|
|
342.0 |
|
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Property acquisitions |
— |
|
|
|
(1.8 |
) |
|
|
(4.1 |
) |
|
|
(3.6 |
) |
|
Expenditures for property,
plant and equipment, including exploratory well expense |
(38.7 |
) |
|
|
(148.4 |
) |
|
|
(284.5 |
) |
|
|
(465.2 |
) |
|
Proceeds from disposition of
assets |
0.5 |
|
|
|
9.8 |
|
|
|
13.4 |
|
|
|
676.5 |
|
|
Net Cash Provided by (Used in) Investing Activities |
(38.2 |
) |
|
|
(140.4 |
) |
|
|
(275.2 |
) |
|
|
207.7 |
|
|
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Checks outstanding in excess
of cash balances |
(2.4 |
) |
|
|
(4.6 |
) |
|
|
(18.3 |
) |
|
|
(13.9 |
) |
|
Long-term debt issuance costs
paid |
— |
|
|
|
— |
|
|
|
(0.5 |
) |
|
|
— |
|
|
Repurchases and redemption of
senior notes |
(282.6 |
) |
|
|
— |
|
|
|
(410.3 |
) |
|
|
— |
|
|
Proceeds from credit
facility |
21.1 |
|
|
|
— |
|
|
|
21.1 |
|
|
|
56.0 |
|
|
Repayments of credit
facility |
(21.1 |
) |
|
|
— |
|
|
|
(21.1 |
) |
|
|
(486.0 |
) |
|
Treasury stock
repurchases |
(0.1 |
) |
|
|
(0.7 |
) |
|
|
(0.8 |
) |
|
|
(7.0 |
) |
|
Dividends paid |
— |
|
|
|
(4.8 |
) |
|
|
(4.8 |
) |
|
|
(4.8 |
) |
|
Net Cash Provided by (Used in) Financing Activities |
(285.1 |
) |
|
|
(10.1 |
) |
|
|
(434.7 |
) |
|
|
(455.7 |
) |
|
Change in cash, cash
equivalents and restricted cash |
6.3 |
|
|
|
(4.2 |
) |
|
|
(155.9 |
) |
|
|
94.0 |
|
|
Beginning cash, cash
equivalents and restricted cash |
34.2 |
|
|
|
126.3 |
|
|
|
196.4 |
|
|
|
28.1 |
|
|
Ending cash, cash equivalents
and restricted cash |
$ |
40.5 |
|
|
|
$ |
122.1 |
|
|
|
$ |
40.5 |
|
|
|
$ |
122.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production by Region |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
|
|
(in Mboe) |
Northern Region |
|
|
|
|
|
|
|
|
|
|
|
Williston Basin |
2,680.6 |
|
|
2,722.5 |
|
|
|
(2) |
% |
|
8,173.7 |
|
|
9,061.9 |
|
|
(10) |
% |
Other Northern |
0.1 |
|
|
19.4 |
|
|
|
(99) |
% |
|
7.1 |
|
|
65.1 |
|
|
(89) |
% |
Total Northern Region |
2,680.7 |
|
|
2,741.9 |
|
|
|
(2) |
% |
|
8,180.8 |
|
|
9,127.0 |
|
|
(10) |
% |
Southern Region |
|
|
|
|
|
|
|
|
|
|
|
Permian Basin |
4,376.2 |
|
|
5,658.5 |
|
|
|
(23) |
% |
|
14,776.1 |
|
|
14,293.2 |
|
|
3 |
% |
Haynesville/Cotton Valley |
— |
|
|
(0.4 |
) |
|
|
(100) |
% |
|
— |
|
|
310.5 |
|
|
(100) |
% |
Other Southern |
0.1 |
|
|
4.0 |
|
|
|
(98) |
% |
|
3.9 |
|
|
14.3 |
|
|
(73) |
% |
Total Southern Region |
4,376.3 |
|
|
5,662.1 |
|
|
|
(23) |
% |
|
14,780.0 |
|
|
14,618.0 |
|
|
1 |
% |
Total production |
7,057.0 |
|
|
8,404.0 |
|
|
|
(16) |
% |
|
22,960.8 |
|
|
23,745.0 |
|
|
(3) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Production |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
Oil and condensate (Mbbl) |
4,447.3 |
|
|
5,670.5 |
|
|
(22) |
% |
|
15,124.9 |
|
|
15,904.4 |
|
|
(5) |
% |
Gas (Bcf) |
7.8 |
|
|
8.2 |
|
|
(5) |
% |
|
24.0 |
|
|
24.6 |
|
|
(2) |
% |
NGL (Mbbl) |
1,287.1 |
|
|
1,383.0 |
|
|
(7) |
% |
|
3,820.8 |
|
|
3,747.8 |
|
|
2 |
% |
Total production (Mboe) |
7,057.0 |
|
|
8,404.0 |
|
|
(16) |
% |
|
22,960.8 |
|
|
23,745.0 |
|
|
(3) |
% |
Average daily production (Mboe) |
76.7 |
|
|
91.3 |
|
|
(16) |
% |
|
83.8 |
|
|
87.0 |
|
|
(4) |
% |
|
Prices |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
Oil (per
bbl) |
|
|
|
|
|
|
|
|
|
|
|
Average field-level price |
$ |
38.07 |
|
|
$ |
52.70 |
|
|
|
|
$ |
33.58 |
|
|
$ |
52.44 |
|
|
|
Commodity derivative impact |
15.82 |
|
|
(0.87) |
|
|
|
|
15.41 |
|
|
(1.50) |
|
|
|
Net realized price |
$ |
53.89 |
|
|
$ |
51.83 |
|
|
4 |
% |
|
$ |
48.99 |
|
|
$ |
50.94 |
|
|
(4) |
% |
Gas (per
Mcf) |
|
|
|
|
|
|
|
|
|
|
|
Average field-level price |
$ |
1.17 |
|
|
$ |
1.13 |
|
|
|
|
$ |
1.02 |
|
|
$ |
1.61 |
|
|
|
Commodity derivative impact |
(0.10) |
|
|
— |
|
|
|
|
(0.02) |
|
|
(0.12) |
|
|
|
Net realized price |
$ |
1.07 |
|
|
$ |
1.13 |
|
|
(5) |
% |
|
$ |
1.00 |
|
|
$ |
1.49 |
|
|
(33) |
% |
NGL (per
bbl) |
|
|
|
|
|
|
|
|
|
|
|
Average field-level price |
$ |
10.23 |
|
|
$ |
8.63 |
|
|
|
|
$ |
7.62 |
|
|
$ |
11.50 |
|
|
|
Commodity derivative impact |
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
Net realized price |
$ |
10.23 |
|
|
$ |
8.63 |
|
|
19 |
% |
|
$ |
7.62 |
|
|
$ |
11.50 |
|
|
(34) |
% |
Average net equivalent
price (per Boe) |
|
|
|
|
|
|
|
|
|
|
|
Average field-level equivalent price |
$ |
27.17 |
|
|
$ |
38.06 |
|
|
|
|
$ |
24.46 |
|
|
$ |
38.60 |
|
|
|
Commodity derivative impact |
9.86 |
|
|
(0.59) |
|
|
|
|
10.13 |
|
|
(1.13) |
|
|
|
Net realized equivalent price |
$ |
37.03 |
|
|
$ |
37.47 |
|
|
(1) |
% |
|
$ |
34.59 |
|
|
$ |
37.47 |
|
|
(8) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
|
|
(in millions) |
Lease operating expense |
$ |
35.5 |
|
|
$ |
38.3 |
|
|
(7) |
% |
|
$ |
104.5 |
|
|
$ |
135.5 |
|
|
(23) |
% |
Adjusted transportation and
processing costs(1) |
28.4 |
|
|
32.2 |
|
|
(12) |
% |
|
83.8 |
|
|
79.5 |
|
|
5 |
% |
Production and property
taxes |
14.0 |
|
|
20.0 |
|
|
(30) |
% |
|
42.3 |
|
|
67.6 |
|
|
(37) |
% |
Total production costs |
$ |
77.9 |
|
|
$ |
90.5 |
|
|
(14) |
% |
|
$ |
230.6 |
|
|
$ |
282.6 |
|
|
(18) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(per Boe) |
Lease operating expense |
$ |
5.03 |
|
|
$ |
4.56 |
|
|
10 |
% |
|
$ |
4.55 |
|
|
$ |
5.71 |
|
|
(20) |
% |
Adjusted transportation and
processing costs(1) |
4.04 |
|
|
3.83 |
|
|
5 |
% |
|
3.65 |
|
|
3.34 |
|
|
9 |
% |
Production and property
taxes |
1.98 |
|
|
2.38 |
|
|
(17) |
% |
|
1.84 |
|
|
2.85 |
|
|
(35) |
% |
Total production costs |
$ |
11.05 |
|
|
$ |
10.77 |
|
|
3 |
% |
|
$ |
10.04 |
|
|
$ |
11.90 |
|
|
(16) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
(1) Adjusted transportation and processing
costs is a non-GAAP measure. The definition and reconciliation of
Adjusted transportation and processing costs to transportation and
processing costs, as presented, are provided within Non-GAAP
Measures at the end of this release.
|
General and Administrative Expenses |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
|
|
(in millions) |
General and administrative (excluding share-based and deferred
compensation) |
$ |
16.5 |
|
|
$ |
28.6 |
|
|
$ |
(12.1 |
) |
|
$ |
54.8 |
|
|
$ |
102.8 |
|
|
$ |
(48.0 |
) |
|
General and administrative
(share-based and deferred compensation): |
|
|
|
|
|
|
|
|
|
|
|
Cash share-based compensation (1) |
1.0 |
|
|
(0.9 |
) |
|
$ |
1.9 |
|
|
1.7 |
|
|
4.8 |
|
|
(3.1 |
) |
|
Non-cash share-based compensation (1) |
2.9 |
|
|
5.0 |
|
|
$ |
(2.1 |
) |
|
9.3 |
|
|
16.2 |
|
|
(6.9 |
) |
|
Deferred compensation mark-to-market adjustments (2) |
0.5 |
|
|
(3.1 |
) |
|
$ |
3.6 |
|
|
(2.7 |
) |
|
0.6 |
|
|
(3.3 |
) |
|
Total General and
administrative |
$ |
20.9 |
|
|
$ |
29.6 |
|
|
$ |
(8.7 |
) |
|
$ |
63.1 |
|
|
$ |
124.4 |
|
|
$ |
(61.3 |
) |
|
|
|
|
(per Boe) |
General and administrative
(excluding share-based and deferred compensation) |
$ |
2.34 |
|
|
$ |
3.40 |
|
|
$ |
(1.06 |
) |
|
$ |
2.39 |
|
|
$ |
4.33 |
|
|
$ |
(1.94 |
) |
|
General and administrative
(share-based and deferred compensation): |
|
|
|
|
|
|
|
|
|
|
|
Cash share-based compensation (1) |
0.14 |
|
|
(0.11 |
) |
|
0.25 |
|
|
0.07 |
|
|
0.20 |
|
|
(0.13 |
) |
|
Non-cash share-based compensation (1) |
0.41 |
|
|
0.59 |
|
|
(0.18 |
) |
|
0.41 |
|
|
0.68 |
|
|
(0.27 |
) |
|
Deferred compensation mark-to-market adjustments (2) |
0.07 |
|
|
(0.37 |
) |
|
0.44 |
|
|
(0.12 |
) |
|
0.03 |
|
|
(0.15 |
) |
|
Total General and
administrative |
$ |
2.96 |
|
|
$ |
3.51 |
|
|
$ |
(0.55 |
) |
|
$ |
2.75 |
|
|
$ |
5.24 |
|
|
$ |
(2.49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________
(1) Cash share-based compensation
represents restricted cash awards, performance share units and
restricted share units recorded under the Company's Long-Term
Incentive and Cash Incentive Plan. Non-cash share-based
compensation represents stock options and restricted share awards
recorded under the Company's Long-Term Incentive Plan. Refer to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
2020 for more information on share-based
compensation.(2) Deferred compensation mark-to-market
adjustments represents mark-to-market adjustments of the Company's
nonqualified, unfunded deferred compensation wrap plan (Wrap Plan).
Refer to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020 for more information on the Wrap Plan.
QEP RESOURCES, INC.NON-GAAP
MEASURES(Unaudited)
Adjusted EBITDA
This release contains references to the non-GAAP measure of
Adjusted EBITDA. Management defines Adjusted EBITDA as earnings
before interest, income taxes, depreciation, depletion and
amortization (EBITDA), adjusted to exclude changes in fair value of
derivative contracts, exploration expenses, gains and losses from
asset sales, impairment, loss from early extinguishment of debt and
certain other items. Management uses Adjusted EBITDA to evaluate
QEP’s financial performance and trends, make operating decisions,
and allocate resources. Management believes the measure is useful
supplemental information for investors because it eliminates the
impact of certain nonrecurring, non-cash and/or other items that
management does not consider as indicative of QEP’s performance
from period to period. QEP’s Adjusted EBITDA may be determined or
calculated differently than similarly titled measures of other
companies in our industry, which would reduce the usefulness of
this non-GAAP financial measure when comparing our performance to
that of other companies.
Below is a reconciliation of Net Income (Loss) (a GAAP measure)
to Adjusted EBITDA. This non-GAAP measure should be considered by
the reader in addition to, but not instead of, the financial
statements prepared in accordance with GAAP.
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
(in millions) |
Net income (loss) |
$ |
(49.2 |
) |
|
|
$ |
81.0 |
|
|
|
$ |
133.8 |
|
|
|
$ |
13.1 |
|
|
Interest expense |
28.4 |
|
|
|
32.8 |
|
|
|
89.8 |
|
|
|
100.0 |
|
|
Interest and other (income)
expense |
(7.7 |
) |
|
|
(0.9 |
) |
|
|
(7.7 |
) |
|
|
(4.6 |
) |
|
Income tax provision
(benefit) |
(55.2 |
) |
|
|
26.6 |
|
|
|
(42.5 |
) |
|
|
(55.7 |
) |
|
Depreciation, depletion and
amortization |
133.0 |
|
|
|
144.2 |
|
|
|
424.6 |
|
|
|
395.5 |
|
|
Unrealized (gains) losses on
derivative contracts |
103.8 |
|
|
|
(92.3 |
) |
|
|
(84.4 |
) |
|
|
29.0 |
|
|
(Gain)/loss from early
extinguishment of debt |
7.4 |
|
|
|
— |
|
|
|
(18.2 |
) |
|
|
— |
|
|
Net (gain) loss from asset
sales, inclusive of restructuring costs |
(0.1 |
) |
|
|
2.1 |
|
|
|
(3.8 |
) |
|
|
(2.5 |
) |
|
Impairment |
— |
|
|
|
— |
|
|
|
— |
|
|
|
5.0 |
|
|
Adjusted EBITDA |
$ |
160.4 |
|
|
|
$ |
193.5 |
|
|
|
$ |
491.6 |
|
|
|
$ |
479.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
This release contains references to the non-GAAP measure of Free
Cash Flow. Management defines Free Cash Flow as Adjusted EBITDA
plus certain non-cash items that are included in Net Cash Provided
by (Used in) Operating Activities but excluded from Adjusted EBITDA
less interest expense, excluding amortization of debt issuance
costs and discounts, and accrued property, plant and equipment
capital expenditures. Management believes that this measure is
useful to management and investors for analysis of the Company's
ability to repay debt, fund acquisitions or repurchase stock.
Below is a reconciliation of Net Cash Provided by (Used in)
Operating Activities (the most comparable GAAP measure) to Free
Cash Flow. This non-GAAP measure should be considered by the reader
in addition to, but not instead of, the financial statements
prepared in accordance with GAAP.
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
(in millions) |
Cash Flow
Information: |
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Operating Activities |
$ |
329.6 |
|
|
|
$ |
146.3 |
|
|
|
$ |
554.0 |
|
|
|
$ |
342.0 |
|
|
Net Cash Provided by (Used in)
Investing Activities |
(38.2 |
) |
|
|
(140.4 |
) |
|
|
(275.2 |
) |
|
|
207.7 |
|
|
Net Cash Provided by (Used in)
Financing Activities |
(285.1 |
) |
|
|
(10.1 |
) |
|
|
(434.7 |
) |
|
|
(455.7 |
) |
|
|
|
|
|
|
|
|
|
Free Cash
Flow |
|
|
|
|
|
|
|
Net Cash Provided by (Used in)
Operating Activities |
$ |
329.6 |
|
|
|
$ |
146.3 |
|
|
|
$ |
554.0 |
|
|
|
$ |
342.0 |
|
|
Amortization of debt issuance costs and discounts |
(1.1 |
) |
|
|
(1.3 |
) |
|
|
(3.7 |
) |
|
|
(4.0 |
) |
|
Interest expense |
28.4 |
|
|
|
32.8 |
|
|
|
89.8 |
|
|
|
100.0 |
|
|
Unrealized gains (losses) on
marketable securities |
1.1 |
|
|
|
0.1 |
|
|
|
1.1 |
|
|
|
2.8 |
|
|
Interest and other (income)
expense |
(7.7 |
) |
|
|
(0.9 |
) |
|
|
(7.7 |
) |
|
|
(4.6 |
) |
|
Deferred income taxes |
(23.9 |
) |
|
|
(26.5 |
) |
|
|
(165.3 |
) |
|
|
61.2 |
|
|
Income tax provision
(benefit) |
(55.2 |
) |
|
|
26.6 |
|
|
|
(42.5 |
) |
|
|
(55.7 |
) |
|
Non-cash share-based
compensation |
(2.9 |
) |
|
|
(5.0 |
) |
|
|
(9.3 |
) |
|
|
(16.2 |
) |
|
Non-cash gain (loss) from
warehouse inventory |
(0.7 |
) |
|
|
— |
|
|
|
(0.7 |
) |
|
|
— |
|
|
Changes in operating assets
and liabilities |
(107.2 |
) |
|
|
21.4 |
|
|
|
75.9 |
|
|
|
54.3 |
|
|
Adjusted EBITDA |
160.4 |
|
|
|
193.5 |
|
|
|
491.6 |
|
|
|
479.8 |
|
|
Non-cash share-based
compensation |
2.9 |
|
|
|
5.0 |
|
|
|
9.3 |
|
|
|
16.2 |
|
|
Non-cash (gain) loss from
warehouse inventory |
0.7 |
|
|
|
— |
|
|
|
0.7 |
|
|
|
— |
|
|
Interest expense, excluding
amortization of debt issuance costs and discounts |
(27.3 |
) |
|
|
(31.5 |
) |
|
|
(86.1 |
) |
|
|
(96.0 |
) |
|
Accrued property, plant and
equipment capital expenditures |
(38.4 |
) |
|
|
(128.9 |
) |
|
|
(253.5 |
) |
|
|
(466.0 |
) |
|
Free Cash Flow |
$ |
98.3 |
|
|
|
$ |
38.1 |
|
|
|
$ |
162.0 |
|
|
|
$ |
(66.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This release includes a Free Cash Flow estimate for 2020. We are
unable, however, to provide a quantitative reconciliation of the
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.
Adjusted Net Income (Loss)
This release also contains references to the non-GAAP measure of
Adjusted Net Income (Loss). Management defines Adjusted Net Income
(Loss) as earnings excluding changes in fair value of derivative
contracts, gains and losses from asset sales, impairment and
certain other items. Management uses Adjusted Net Income (Loss) to
evaluate QEP’s financial performance and trends, make operating
decisions, and allocate resources. Management believes the measure
is useful supplemental information for investors because it
eliminates the impact of certain nonrecurring, non-cash and/or
other items that management does not consider as indicative of
QEP’s performance from period to period. QEP’s Adjusted Net Income
(Loss) may be determined or calculated differently than similarly
titled measures of other companies in our industry, which would
reduce the usefulness of this non-GAAP financial measure when
comparing our performance to that of other companies.
Below is a reconciliation of Net Income (Loss) (the most
comparable GAAP measure) to Adjusted Net Income (Loss). This
non-GAAP measure should be considered by the reader in addition to,
but not instead of, the financial measure prepared in accordance
with GAAP.
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
(in millions, except earnings per share) |
Net income (loss) |
$ |
(49.2 |
) |
|
|
$ |
81.0 |
|
|
|
$ |
133.8 |
|
|
|
$ |
13.1 |
|
|
Adjustments to net income
(loss) |
|
|
|
|
|
|
|
Unrealized (gains) losses on derivative contracts |
103.8 |
|
|
|
(92.3 |
) |
|
|
(84.4 |
) |
|
|
29.0 |
|
|
Income taxes on unrealized (gains) losses on derivative
contracts(1) |
(23.3 |
) |
|
|
20.7 |
|
|
|
(39.2 |
) |
|
|
(37.9 |
) |
|
Net (gain) loss from asset sales, inclusive of restructuring
costs |
(0.1 |
) |
|
|
2.1 |
|
|
|
(3.8 |
) |
|
|
(2.5 |
) |
|
Income taxes on net (gain) loss from asset sales, inclusive of
restructuring costs(1) |
— |
|
|
|
(0.5 |
) |
|
|
(1.8 |
) |
|
|
3.3 |
|
|
Impairment |
— |
|
|
|
— |
|
|
|
— |
|
|
|
5.0 |
|
|
Income taxes on impairment(1) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6.5 |
) |
|
Total after tax adjustments to
net income |
$ |
80.4 |
|
|
|
$ |
(70.0 |
) |
|
|
$ |
(129.2 |
) |
|
|
$ |
(9.6 |
) |
|
Adjusted Net Income
(Loss) |
$ |
31.2 |
|
|
|
$ |
11.0 |
|
|
|
$ |
4.6 |
|
|
|
$ |
3.5 |
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per Common
Share |
|
|
|
|
|
|
|
Diluted earnings per share |
$ |
(0.20 |
) |
|
|
$ |
0.34 |
|
|
|
$ |
0.55 |
|
|
|
$ |
0.06 |
|
|
Diluted after-tax adjustments to net income (loss) per share |
0.33 |
|
|
|
(0.29 |
) |
|
|
(0.54 |
) |
|
|
(0.04 |
) |
|
Diluted Adjusted Net Income per share |
$ |
0.13 |
|
|
|
$ |
0.05 |
|
|
|
$ |
0.01 |
|
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding |
|
|
|
|
|
|
|
Diluted |
242.3 |
|
|
|
237.9 |
|
|
|
241.2 |
|
|
|
237.7 |
|
|
__________________
(1) Income tax impact of adjustments is calculated using
QEP’s statutory rate of 22.4% for the three months ended
September 30, 2020 and 2019, and QEP's effective tax rate of
negative 46.5% and 130.8% for the nine months ended
September 30, 2020 and 2019, respectively.
Adjusted Transportation and Processing
Costs
This release contains references to the non-GAAP measure of
Adjusted transportation and processing costs. Management defines
Adjusted transportation and processing costs as transportation and
processing costs presented on the Condensed Consolidated Statements
of Operations and transportation and processing costs that are
included as part of "Oil and condensate, gas and NGL sales" on the
Condensed Consolidated Statements of Operations. These costs are
added together to reflect the total transportation and processing
costs associated with QEP's production. Management believes that
Adjusted transportation and processing costs is useful supplemental
information for investors as this non-GAAP measure, collectively
with the Company’s lease operating expenses and production and
severance taxes, more completely reflect the Company’s total
production costs required to operate the wells for the period.
Below is a reconciliation of Adjusted transportation and
processing costs to transportation and processing costs as
presented on the Condensed Consolidated Statements of Operations
(the most comparable GAAP measure). This non-GAAP measure should be
considered by the reader in addition to but not instead of, the
financial statements prepared in accordance with GAAP.
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
|
|
(in millions) |
Transportation and processing costs, as presented |
$ |
12.4 |
|
|
$ |
18.0 |
|
|
$ |
(5.6 |
) |
|
|
$ |
38.2 |
|
|
$ |
38.8 |
|
|
$ |
(0.6 |
) |
|
Transportation and processing
costs deducted from oil and condensate, gas and NGL sales |
16.0 |
|
|
14.2 |
|
|
1.8 |
|
|
|
45.6 |
|
|
40.7 |
|
|
4.9 |
|
|
Adjusted transportation and processing costs |
$ |
28.4 |
|
|
$ |
32.2 |
|
|
$ |
(3.8 |
) |
|
|
$ |
83.8 |
|
|
$ |
79.5 |
|
|
$ |
4.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(per Boe) |
Transportation and processing
costs, as presented |
$ |
1.77 |
|
|
$ |
2.14 |
|
|
$ |
(0.37 |
) |
|
|
$ |
1.66 |
|
|
$ |
1.63 |
|
|
$ |
0.03 |
|
|
Transportation and processing
costs deducted from oil and condensate, gas and NGL sales |
2.27 |
|
|
1.69 |
|
|
0.58 |
|
|
|
1.99 |
|
|
1.71 |
|
|
0.28 |
|
|
Adjusted transportation and processing costs |
$ |
4.04 |
|
|
$ |
3.83 |
|
|
$ |
0.21 |
|
|
|
$ |
3.65 |
|
|
$ |
3.34 |
|
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This release includes a 2020 estimate for Adjusted
transportation and processing costs. We are unable, however, to
provide a quantitative reconciliation of the 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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