QEP Resources, Inc. (NYSE:QEP) (QEP or the Company) today reported
first quarter 2019 financial and operating results.
FIRST QUARTER 2019 OPERATING HIGHLIGHTS
- Delivered oil and condensate production of 2.9 million barrels
in the Permian Basin, a 35% year-over-year
increase
- Initiated plan to significantly reduce corporate general and
administrative expense by approximately 45%
- Closed previously announced Haynesville divestiture in January
2019 for net cash proceeds of $615.3 million
"QEP’s assets performed as expected in all categories during the
first quarter 2019. Our drilling and completions teams continue to
deliver efficiency and cost improvements which positively impacted
cycle time and capital intensity. These cost savings, along with
other efficiency projects, are expected to free up enough capital
to allow us to drill and complete an additional 10 to 12 wells in
the Permian in 2019, while still living within our original 2019
capital guidance," commented Tim Cutt, President and CEO of
QEP.
"During the quarter we initiated our previously announced plan
to reset our general and administrative expense with a goal of
reducing ‘normalized’ expense by approximately 45% between year-end
2018 and 2020. We expect to be operating at our go-forward staffing
levels by mid-year 2019, at which point we will have reduced our
total workforce by approximately 60% since the announcement of our
strategic initiatives in February 2018. Although we have been
aggressive with both employee and non-employee expense reductions,
we are confident that we have retained the core business, technical
and operating staff and systems required to execute our forward
plans."
"With our focus on cost reduction and volume delivery, we remain
confident in our ability to achieve cash flow neutrality before
year-end at commodity prices of $55 for crude oil and $2.75 for
natural gas."
The Company has posted to its website www.qepres.com a
presentation that supplements the information provided in this
release.
QEP First Quarter 2019 Financial Results
The Company reported a net loss of $116.7 million for the first
quarter 2019, or $0.49 per diluted share, compared with a net loss
of $53.6 million, or $0.22 per diluted share, for the first
quarter 2018. The net loss in the first quarter 2019 was primarily
driven by (i) a $134.2 million decrease in oil and condensate, gas
and natural gas liquid (NGL) sales, primarily due to a 74% decrease
in gas production, primarily associated with the Haynesville/Cotton
Valley and Uinta Basin divestitures and a 19% decrease in average
field-level oil prices, and (ii) a $128.5 million increase in
realized and unrealized derivative losses. These changes were
partially offset by a $98.1 million increase in income tax benefit,
a decrease in depreciation, depletion and amortization expense of
$73.2 million and a decrease in both transportation and processing
costs and lease operating expense of $44.1 million due to the
Haynesville/Cotton Valley and Uinta Basin divestitures.
Net income or loss includes non-cash gains and losses associated
with the change in the fair value of derivative instruments, gains
and losses from asset sales, asset impairments and certain other
items. Excluding these items, the Company’s first quarter 2019
Adjusted Net Income (a non-GAAP measure) was $34.1 million, or
$0.15 per diluted share, compared with an Adjusted Net Loss of
$47.9 million, or $0.20 per diluted share, for the first quarter
2018.
Adjusted EBITDA (a non-GAAP measure) for the first quarter 2019
was $119.8 million compared with $171.9 million for the first
quarter 2018, primarily due to the Haynesville/Cotton Valley and
Uinta Basin divestitures and a 19% decrease in average field-level
oil prices. These changes were partially offset by a $37.3 million
decrease in realized derivative losses.
The definitions and reconciliations of Adjusted Net Income to
Net Income (Loss) and Adjusted EBITDA are provided under the
heading Non-GAAP measures at the end of this release.
Production
Oil and condensate production in the Permian Basin was 2.9
million barrels (MMbbl) in the first quarter 2019, an increase of
35% compared with the first quarter of 2018. The production
increase was partially offset by lower volumes in the Williston
Basin due to the lack of new well completions in the second half of
2018 while the asset was in a sales process and a loss of volumes
as a result of the Uinta Basin divestiture.
Oil equivalent production was 7.8 million barrels of oil
equivalent (MMboe) in the first quarter 2019, a decrease of 33%
compared with the first quarter 2018. The decrease in equivalent
production was primarily the result of the loss of 4.8 MMboe of
equivalent production associated with the assets sold in the
Haynesville/Cotton Valley and Uinta Basin divestitures.
Operating Expenses
During the first quarter 2019, lease operating expense (LOE) was
$51.5 million, or $6.60 per Boe, a decrease of 29% compared with
the first quarter 2018. The decrease in total LOE was primarily due
to the Haynesville/Cotton Valley and Uinta Basin divestitures.
Excluding those divestitures, LOE decreased $3.7 million, driven by
a decrease in workovers and maintenance and repair expenses in the
Williston Basin.
During the first quarter 2019, Adjusted Transportation and
Processing (T&P) Costs (a non-GAAP measure) were $24.7 million,
or $3.17 per Boe, a decrease of 47% of T&P costs compared with
the first quarter 2018, primarily due to the Haynesville/Cotton
Valley and Uinta Basin divestitures. Excluding those divestitures,
T&P Costs increased $0.6 million, primarily due to increased
production in the Permian Basin, partially offset by decreased
production in the Williston Basin.
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 first quarter 2019, general and administrative
(G&A) expense was $63.3 million, an increase of 5% compared
with the first quarter 2018. During the first quarter of 2019 and
2018, QEP incurred $26.0 million and $9.5 million, respectively, in
costs associated with the implementation of our strategic
initiatives, of which $20.3 million and $7.9 million, respectively,
related to restructuring costs. Excluding these costs, G&A
expense decreased by $13.2 million, primarily due to $10.0 million
lower labor, benefits and other associated costs due to the
reduction in our workforce, and $4.8 million in lower legal and
outside service costs. Overall G&A expense, not including any
mark-to-market liabilities, is expected to decrease substantially
throughout 2019.
During the first quarter 2019, production and property taxes
were $24.0 million, or $3.07 per Boe, a decrease of 17% compared
with the first quarter 2018. The decrease in production and
property taxes was primarily due to the Haynesville/Cotton Valley
and Uinta Basin divestitures. Excluding those divestitures,
production and property taxes increased $0.4 million, primarily due
to increased property taxes and revenues in the Permian Basin,
partially offset by decreased revenues in the Williston Basin.
Capital Investment
Capital investment, excluding property acquisitions, was $167.2
million (on an accrual basis) for the first quarter 2019, compared
with $418.8 million for the first quarter 2018, of which $149.1
million related to the drilling, completion and equipping of wells
and $18.1 million was related to midstream infrastructure
investment. The decrease in capital expenditures was primarily
related to decreased drilling and completion activity in the
Permian Basin and limited activity in the Williston Basin.
Asset Divestitures
In January 2019, QEP closed its previously announced divestiture
of its oil and gas assets and the gathering system in
Haynesville/Cotton Valley for net cash proceeds of $615.3 million,
subject to post-closing purchase price adjustments (the Haynesville
Divestiture) and recorded a pre-tax loss on sale of $18.0 million.
Of the $18.0 million pre-tax loss on sale, $15.0 million was
recognized during the first quarter of 2019, and $3.0 million was
recognized during the fourth quarter of 2018. As part of this
transaction the buyer assumed all firm gas transportation
agreements related to these assets. As of March 31, 2019, $22.1
million of the purchase price remained in escrow due to title
defects asserted prior to closing to be resolved pursuant to the
purchase and sale agreement's title dispute resolution
procedures.
In addition to the Haynesville Divestiture, QEP closed on the
sale of several assets during the first quarter 2019 for total net
cash proceeds of approximately $2.1 million.
Liquidity
Net Cash Provided by Operating Activities for the first quarter
2019 was $78.3 million, compared with $160.4 million for the first
quarter 2018. Discretionary Cash Flow (a non-GAAP measure) was
$90.1 million for the first quarter 2019, compared with $146.6
million for the first quarter 2018.
The definitions and reconciliations of Discretionary Cash Flow
and Discretionary Cash Flow in Excess of Capital Expenditures are
provided under the heading Non-GAAP Measures at the end of this
release.
As of March 31, 2019, the Company had $89.9 million in cash
and cash equivalents, no borrowings under its revolving credit
facility and $1.3 million in letters of credit outstanding. The
Company estimates that as of March 31, 2019, it could incur
additional indebtedness of approximately $552.7 million and be in
compliance with the covenants contained in its revolving credit
facility.
2019 Updated Guidance
QEP's second quarter and full year 2019 guidance assumes: (1) an
oil price of $55 per barrel and a natural gas price of $2.75 per
MMBtu, (2) that QEP will elect to recover ethane from its produced
gas in the Permian Basin where processing economics
support it, (3) no property acquisitions or divestitures, other
than the Haynesville / Cotton Valley Divestiture and (4) includes
approximately 10 days of production activity in the Haynesville /
Cotton Valley, which was excluded from previous guidance.
Rig Count:
- Permian Basin: average of three rigs for first half of 2019 and
two rigs for the second half of 2019
- Williston Basin: one rig arriving in the first quarter 2019 to
drill seven gross operated wells
Wells Put on Production:
- Permian Basin: approximately 57 - 59 net operated wells, an
increase of 10 - 12 wells from previous guidance
- Williston Basin: approximately six net operated wells
|
2019 Guidance |
|
2Q 2019 |
2019 |
2019 |
|
Guidance |
PreviousGuidance |
UpdatedGuidance |
Oil & condensate
production (MMbbl) |
4.95 -
5.15 |
20.5 - 21.5 |
20.5 - 21.5 |
Gas production
(Bcf) |
5.4 -
5.8 |
23.0 - 25.0 |
25.5 - 27.5 |
NGL
production (MMbbl) |
0.9 - 1.1 |
3.7 - 4.2 |
3.7 - 4.2 |
Total oil
equivalent production (MMboe) |
6.8 -
7.2 |
28.0 - 29.9 |
28.5 - 30.3 |
|
|
|
|
Lease operating expense
and Adjusted Transportation and Processing Costs (per Boe)(1) |
|
$9.00 - $10.00 |
$9.00 - $10.00 |
Depletion, depreciation
and amortization (per Boe) |
|
$16.75 - $17.75 |
$16.75 - $17.75 |
Production and property
taxes (% of field-level revenue) |
|
7.0% |
7.0% |
(in millions) |
General and
administrative expense(2) |
|
$170.0 - $180.0 |
$165.0 - $175.0 |
|
|
|
|
Capital investment
(excluding property acquisitions) |
|
|
|
Drilling,
Completion and Equip(3) |
|
$540.0 - $590.0 |
$540.0 - $590.0 |
Midstream
Infrastructure(4) |
|
$70.0 |
$70.0 |
Corporate |
|
$5.0 |
$5.0 |
Total
capital investment (excluding property acquisitions) |
$185.0
- $205.0 |
$615.0 - $665.0 |
$615.0 - $665.0 |
|
|
|
|
Wells put
on production (net) |
23 |
53 |
63 - 65 |
____________________________(1) Adjusted
Transportation and Processing Costs (per Boe) is a non-GAAP
measure. Refer to Non-GAAP Measures at the end of this
release.(2) The mid-point general and administrative expense
includes approximately $35.0 million of expenses related to
non-cash, share-based compensation and other mark-to-market
liabilities. Because these mark-to-market liabilities
fluctuate with stock price changes, the amount of actual expense
may vary from the forecasted amount. The mid-point general and
administrative expense also includes approximately $54.0 million of
estimated expenses related to our strategic initiatives, primarily
related to severance and retention agreements and includes
approximately $11.0 million of accelerated shared-based
compensation expense that is included in the $35.0 million of
expenses related to non-cash, share-based compensation and other
mark-to-market liabilities.(3) Drilling, Completion and Equip
includes approximately $37.0 million of non-operated well
completion costs.(4) Includes capital expenditures in the
Permian Basin associated with (a) water sourcing, gathering,
recycling and disposal and (b) crude oil and natural gas gathering
system.
Operations Summary |
|
|
|
Permian Basin |
|
Williston Basin |
|
|
|
|
|
As of March 31, 2019 |
|
Gross |
|
Net |
|
Gross |
|
Net |
Well
Progress |
|
|
|
|
|
|
|
Drilling |
11 |
|
|
11.0 |
|
|
7 |
|
|
6.4 |
|
|
|
|
|
|
|
|
|
At total depth - under
drilling rig |
3 |
|
|
3.0 |
|
|
— |
|
|
— |
|
Waiting to be
completed |
28 |
|
|
28.0 |
|
|
— |
|
|
— |
|
Undergoing
completion |
4 |
|
|
4.0 |
|
|
— |
|
|
— |
|
Completed, awaiting
production |
11 |
|
|
11.0 |
|
|
— |
|
|
— |
|
Waiting
on completion |
46 |
|
|
46.0 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
Put on production |
12 |
|
|
12.0 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Permian Basin
Permian Basin net oil equivalent production averaged
approximately 45.4 Mboed (86% liquids) during the first quarter
2019, a 4% decrease compared with the fourth quarter 2018 primarily
due to a lower number of wells and the timing of these wells being
put on production during the quarter, and a 47% increase compared
with the first quarter 2018. A portion of the year-over-year
increase is driven by higher gas capture rates compared with prior
quarters as a result of completion of midstream infrastructure. Oil
and condensate production in the Permian Basin was 2.9 MMbbl in the
first quarter 2019, an increase of 35% compared with the first
quarter of 2018.
In the first quarter 2019, the Company put on production 12
gross-operated horizontal wells, all on Mustang Springs, two more
than forecast for the first quarter 2019 (average working interest
100%).
At the end of the first quarter 2019, all of the 12 wells put on
production during the quarter were still in the process of cleaning
up and have an average lateral length of 12,886 feet.
At the end of the first quarter 2019, the Company had 11
gross-operated horizontal wells in process of being drilled (of
which nine had surface casing set, but had no drilling rig present)
(average working interest 100%), three horizontal wells at total
depth under drilling rigs, 28 horizontal wells waiting to be
completed (average working interest 100%), four horizontal wells
undergoing completion (average working interest 100%), and 11 fully
completed horizontal wells awaiting first production, which were
part of a tank "pressure wall" (average working interest 100%).
At the end of the first quarter 2019, the Company had three
operated rigs in the Permian Basin.
Slides 10-11 in the April 2019 Investor Presentation depict
QEP's acreage and activity in the Permian Basin.
Williston Basin
Williston Basin net oil equivalent production averaged
approximately 37.5 Mboed (81% liquids) during the first quarter
2019, an 8% decrease compared with the fourth quarter 2018 and a 9%
decrease compared with the first quarter 2018, primarily due to the
lack of new well completions partially offset by higher gas capture
rates.
At the end of the first quarter 2019, the Company had one
drilling rig in the Williston Basin.
Slides 12-13 in the April 2019 Investor Presentation depict
QEP's acreage and activity in the Williston Basin.
First Quarter 2019 Results Conference Call
QEP’s management will discuss first quarter 2019 results in a
conference call on Thursday April 25, 2019, 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 May 25, 2019, 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 #13689122.
In addition, QEP’s slides for the first quarter 2019, with updated
maps showing QEP’s leasehold and current activity for key operating
areas discussed in this release, 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 with operations 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: actively managing and improving our
cost structure; reducing G&A expense; lowering the capital
intensity of our business; aligning our activity and our production
profile to the current commodity price environment; reaching
cash-flow neutrality in 2019; goals and potential results of our
review of strategic alternatives; plans for development of our
Permian Basin and Williston Basin assets; operating our business
safely; delivering best in class capital and operating costs;
maintaining technical and operating excellence; receipt of the
portion of the purchase price for the Haynesville Divestiture
placed in escrow pursuant to title dispute resolution procedures;
the number and location of drilling rigs to be deployed and wells
to be put on production; forecast production amounts and related
assumptions; forecasted lease operating Adjusted Transportation and
Processing Expense, depletion, depreciation and amortization
expense, general and administrative expense, non-cash share-based
compensation expense, restructuring costs, production and property
taxes, and capital investment for 2019 and related assumptions for
such guidance; allocation of capital investment; first quarter
production guidance and assumptions for such guidance; plans
regarding ethane rejection and recovery; the amount of additional
indebtedness QEP could incur and be compliance with loan covenants;
estimated reserves; 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: 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 Elliott Management Corporation or other 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, 2018. QEP 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 |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
REVENUES |
(in millions, except per share amounts) |
Oil and condensate, gas
and NGL sales |
$ |
275.6 |
|
|
$ |
409.8 |
|
Other
revenues |
3.7 |
|
|
5.0 |
|
Purchased
oil and gas sales |
1.3 |
|
|
14.1 |
|
Total
Revenues |
280.6 |
|
|
428.9 |
|
OPERATING
EXPENSES |
|
|
|
Purchased
oil and gas expense |
1.4 |
|
|
15.5 |
|
Lease
operating expense |
51.5 |
|
|
72.5 |
|
Transportation and processing costs |
10.9 |
|
|
34.0 |
|
Gathering
and other expense |
3.8 |
|
|
2.8 |
|
General
and administrative |
63.3 |
|
|
60.1 |
|
Production and property taxes |
24.0 |
|
|
28.9 |
|
Depreciation, depletion and amortization |
123.3 |
|
|
196.5 |
|
Impairment |
5.0 |
|
|
0.7 |
|
Total
Operating Expenses |
283.2 |
|
|
411.0 |
|
Net gain (loss) from
asset sales, inclusive of restructuring costs |
(13.2 |
) |
|
3.5 |
|
OPERATING
INCOME (LOSS) |
(15.8 |
) |
|
21.4 |
|
Realized and unrealized
gains (losses) on derivative contracts |
(181.7 |
) |
|
(53.2 |
) |
Interest and other
income (expense) |
2.8 |
|
|
(0.7 |
) |
Interest expense |
(34.0 |
) |
|
(35.0 |
) |
INCOME
(LOSS) BEFORE INCOME TAXES |
(228.7 |
) |
|
(67.5 |
) |
Income tax (provision)
benefit |
112.0 |
|
|
13.9 |
|
NET
INCOME (LOSS) |
$ |
(116.7 |
) |
|
$ |
(53.6 |
) |
|
|
|
|
Earnings (loss) per
common share |
|
|
|
Basic |
$ |
(0.49 |
) |
|
$ |
(0.22 |
) |
Diluted |
$ |
(0.49 |
) |
|
$ |
(0.22 |
) |
|
|
|
|
Weighted-average common
shares outstanding |
|
|
|
Used in
basic calculation |
237.1 |
|
|
240.9 |
|
Used in
diluted calculation |
237.1 |
|
|
240.9 |
|
QEP RESOURCES, INC.CONDENSED
CONSOLIDATED BALANCE
SHEETS(Unaudited)
|
March 31, 2019 |
|
December 31, 2018 |
|
|
|
|
ASSETS |
(in millions) |
Current Assets |
|
|
|
Cash and cash
equivalents |
$ |
89.9 |
|
|
$ |
— |
|
Accounts
receivable, net |
80.2 |
|
|
104.3 |
|
Income
tax receivable |
68.8 |
|
|
75.9 |
|
Fair
value of derivative contracts |
— |
|
|
87.5 |
|
Prepaid
expenses |
7.3 |
|
|
12.7 |
|
Other
current assets |
0.2 |
|
|
0.2 |
|
Total
Current Assets |
246.4 |
|
|
280.6 |
|
Property, Plant and
Equipment (successful efforts method for oil and gas
properties) |
|
|
|
Proved
properties |
9,250.1 |
|
|
9,096.9 |
|
Unproved
properties |
706.5 |
|
|
705.5 |
|
Gathering
and other |
171.3 |
|
|
167.7 |
|
Materials
and supplies |
29.8 |
|
|
29.9 |
|
Total
Property, Plant and Equipment |
10,157.7 |
|
|
10,000.0 |
|
Less Accumulated
Depreciation, Depletion and Amortization |
|
|
|
Exploration and production |
4,994.3 |
|
|
4,882.4 |
|
Gathering
and other |
61.0 |
|
|
58.1 |
|
Total
Accumulated Depreciation, Depletion and Amortization |
5,055.3 |
|
|
4,940.5 |
|
Net
Property, Plant and Equipment |
5,102.4 |
|
|
5,059.5 |
|
Fair value of
derivative contracts |
6.7 |
|
|
35.4 |
|
Operating lease
right-of-use assets, net |
61.4 |
|
|
— |
|
Other noncurrent
assets |
53.3 |
|
|
49.6 |
|
Noncurrent assets held
for sale |
— |
|
|
$ |
692.7 |
|
TOTAL
ASSETS |
$ |
5,470.2 |
|
|
$ |
6,117.8 |
|
LIABILITIES AND
EQUITY |
|
|
|
Current
Liabilities |
|
|
|
Checks
outstanding in excess of cash balances |
$ |
10.3 |
|
|
$ |
14.6 |
|
Accounts
payable and accrued expenses |
216.0 |
|
|
258.1 |
|
Production and property taxes |
22.0 |
|
|
24.1 |
|
Current
portion of long term debt |
51.7 |
|
|
— |
|
Interest
payable |
33.0 |
|
|
32.4 |
|
Fair
value of derivative contracts |
60.3 |
|
|
— |
|
Current
operating lease liabilities |
20.1 |
|
|
— |
|
Asset
retirement obligations |
5.9 |
|
|
5.1 |
|
Total
Current Liabilities |
419.3 |
|
|
334.3 |
|
Long-term debt |
2,026.7 |
|
|
2,507.1 |
|
Deferred income
taxes |
151.2 |
|
|
269.2 |
|
Asset retirement
obligations |
96.2 |
|
|
96.9 |
|
Fair value of
derivative contracts |
1.5 |
|
|
0.7 |
|
Operating lease
liabilities |
49.4 |
|
|
— |
|
Other long-term
liabilities |
89.8 |
|
|
97.4 |
|
Other long-term
liabilities held for sale |
— |
|
|
61.3 |
|
Commitments and
contingencies |
|
|
|
EQUITY |
|
|
|
Common
stock – par value $0.01 per share; 500.0 million shares
authorized; 242.0 million and 239.8 million shares issued,
respectively |
2.4 |
|
|
2.4 |
|
Treasury
stock – 3.9 million and 3.1 million shares, respectively |
(51.8 |
) |
|
(45.6 |
) |
Additional paid-in capital |
1,440.2 |
|
|
1,431.9 |
|
Retained
earnings |
1,259.8 |
|
|
1,376.5 |
|
Accumulated other comprehensive income (loss) |
(14.5 |
) |
|
(14.3 |
) |
Total
Common Shareholders' Equity |
2,636.1 |
|
|
2,750.9 |
|
TOTAL
LIABILITIES AND EQUITY |
$ |
5,470.2 |
|
|
$ |
6,117.8 |
|
QEP RESOURCES, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)
|
Three Months Ended |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
OPERATING
ACTIVITIES |
(in millions) |
Net income (loss) |
$ |
(116.7 |
) |
|
$ |
(53.6 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities: |
|
|
|
Depreciation, depletion and amortization |
123.3 |
|
|
196.5 |
|
Deferred
income taxes (benefit) |
(117.9 |
) |
|
(14.1 |
) |
Impairment |
5.0 |
|
|
0.7 |
|
Non-cash
share-based compensation |
8.0 |
|
|
9.2 |
|
Amortization of debt issuance costs and discounts |
1.3 |
|
|
1.3 |
|
Net
(gain) loss from asset sales, inclusive of restructuring costs |
13.2 |
|
|
(3.5 |
) |
Unrealized (gains) losses on marketable securities |
(1.9 |
) |
|
0.1 |
|
Unrealized (gains) losses on derivative contracts |
175.8 |
|
|
10.0 |
|
Changes
in operating assets and liabilities |
(11.8 |
) |
|
13.8 |
|
Net Cash
Provided by (Used in) Operating Activities |
78.3 |
|
|
160.4 |
|
INVESTING
ACTIVITIES |
|
|
|
Property
acquisitions |
(0.6 |
) |
|
(36.2 |
) |
Property, plant and
equipment, including exploratory well expense |
(164.6 |
) |
|
(370.7 |
) |
Proceeds from
disposition of assets |
617.4 |
|
|
33.3 |
|
Net Cash
Provided by (Used in) Investing Activities |
452.2 |
|
|
(373.6 |
) |
FINANCING
ACTIVITIES |
|
|
|
Checks outstanding in
excess of cash balances |
(4.3 |
) |
|
(24.2 |
) |
Proceeds from credit
facility |
44.5 |
|
|
1,068.5 |
|
Repayments of credit
facility |
(474.5 |
) |
|
(772.5 |
) |
Common stock
repurchased and retired |
— |
|
|
(52.8 |
) |
Treasury stock
repurchases |
(5.8 |
) |
|
(4.7 |
) |
Net Cash
Provided by (Used in) Financing Activities |
(440.1 |
) |
|
214.3 |
|
Change in cash, cash
equivalents and restricted cash |
90.4 |
|
|
1.1 |
|
Beginning cash, cash
equivalents and restricted cash |
28.1 |
|
|
23.4 |
|
Ending cash, cash
equivalents and restricted cash |
$ |
118.5 |
|
|
$ |
24.5 |
|
|
|
Production by Region |
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Mboe) |
Northern
Region |
|
|
|
|
|
Williston Basin |
3,377.0 |
|
|
3,729.7 |
|
|
(9 |
)% |
Uinta
Basin |
— |
|
|
804.5 |
|
|
(100 |
)% |
Other
Northern |
24.7 |
|
|
105.5 |
|
|
(77 |
)% |
Total
Northern Region |
3,401.7 |
|
|
4,639.7 |
|
|
(27 |
)% |
Southern
Region |
|
|
|
|
|
Permian
Basin |
4,082.3 |
|
|
2,782.9 |
|
|
47 |
% |
Haynesville/Cotton Valley |
317.2 |
|
|
4,290.5 |
|
|
(93 |
)% |
Other
Southern |
5.1 |
|
|
11.5 |
|
|
(56 |
)% |
Total
Southern Region |
4,404.6 |
|
|
7,084.9 |
|
|
(38 |
)% |
Total production |
7,806.3 |
|
|
11,724.6 |
|
|
(33 |
)% |
|
Total Production |
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
Oil and condensate
(Mbbl) |
5,083.6 |
|
|
4,974.0 |
|
|
2 |
% |
Gas
(Bcf) |
9.2 |
|
|
35.1 |
|
|
(74 |
)% |
NGL
(Mbbl) |
1,178.8 |
|
|
904.4 |
|
|
30 |
% |
Total
production (Mboe) |
7,806.3 |
|
|
11,724.6 |
|
|
(33 |
)% |
Average
daily production (Mboe) |
86.7 |
|
|
130.3 |
|
|
(33 |
)% |
|
Prices |
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
Oil (per
bbl) |
|
|
|
|
|
Average
field-level price |
$ |
49.08 |
|
|
$ |
60.45 |
|
|
|
Commodity
derivative impact |
(0.58 |
) |
|
(8.91 |
) |
|
|
Net realized price |
$ |
48.50 |
|
|
$ |
51.54 |
|
|
(6 |
)% |
Gas (per
Mcf) |
|
|
|
|
|
Average
field-level price |
$ |
2.49 |
|
|
$ |
2.91 |
|
|
|
Commodity
derivative impact |
(0.31 |
) |
|
0.03 |
|
|
|
Net
realized price |
$ |
2.18 |
|
|
$ |
2.94 |
|
|
(26 |
)% |
NGL (per
bbl) |
|
|
|
|
|
Average
field-level price |
$ |
14.31 |
|
|
$ |
21.99 |
|
|
|
Commodity
derivative impact |
— |
|
|
— |
|
|
|
Net
realized price |
$ |
14.31 |
|
|
$ |
21.99 |
|
|
(35 |
)% |
Average net
equivalent price (per Boe) |
|
|
|
|
|
Average
field-level price |
$ |
37.08 |
|
|
$ |
36.04 |
|
|
|
Commodity
derivative impact |
(0.75 |
) |
|
(3.70 |
) |
|
|
Net
realized price |
$ |
36.33 |
|
|
$ |
32.34 |
|
|
12 |
% |
|
Operating Expenses |
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
(in millions) |
Lease operating
expense |
$ |
51.5 |
|
|
$ |
72.5 |
|
|
(29 |
)% |
Adjusted transportation
and processing costs(1) |
24.7 |
|
|
46.7 |
|
|
(47 |
)% |
Production and property
taxes |
24.0 |
|
|
28.9 |
|
|
(17 |
)% |
Total
production costs |
$ |
100.2 |
|
|
$ |
148.1 |
|
|
(32 |
)% |
|
|
|
|
|
|
|
(per Boe) |
Lease operating
expense |
$ |
6.60 |
|
|
$ |
6.18 |
|
|
7 |
% |
Adjusted transportation
and processing costs(1) |
3.17 |
|
|
3.98 |
|
|
(20 |
)% |
Production and property
taxes |
3.07 |
|
|
2.47 |
|
|
24 |
% |
Total
production costs |
$ |
12.84 |
|
|
$ |
12.63 |
|
|
2 |
% |
____________________________(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.
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 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) (the most
comparable GAAP measure) to Adjusted EBITDA. 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 |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(in millions) |
Net income (loss) |
$ |
(116.7 |
) |
|
$ |
(53.6 |
) |
Interest expense |
34.0 |
|
|
35.0 |
|
Interest and other
(income) expense |
(2.8 |
) |
|
0.7 |
|
Income tax provision
(benefit) |
(112.0 |
) |
|
(13.9 |
) |
Depreciation, depletion
and amortization |
123.3 |
|
|
196.5 |
|
Unrealized (gains)
losses on derivative contracts |
175.8 |
|
|
10.0 |
|
Net (gain) loss from
asset sales, inclusive of restructuring costs |
13.2 |
|
|
(3.5 |
) |
Impairment |
5.0 |
|
|
0.7 |
|
Adjusted
EBITDA |
$ |
119.8 |
|
|
$ |
171.9 |
|
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 March 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(in millions, except earnings per share) |
Net income (loss) |
$ |
(116.7 |
) |
|
$ |
(53.6 |
) |
Adjustments to net
income (loss) |
|
|
|
Unrealized (gains) losses on derivative contracts |
175.8 |
|
|
10.0 |
|
Income
taxes on unrealized (gains) losses on derivative contracts(1) |
(39.2 |
) |
|
(2.1 |
) |
Net
(gain) loss from asset sales, inclusive of restructuring costs |
13.2 |
|
|
(3.5 |
) |
Income
taxes on net (gain) loss from asset sales, inclusive of
restructuring costs(1) |
(2.9 |
) |
|
0.7 |
|
Impairment |
5.0 |
|
|
0.7 |
|
Income
taxes on impairment(1) |
(1.1 |
) |
|
(0.1 |
) |
Total after tax
adjustments to net income |
150.8 |
|
|
5.7 |
|
Adjusted Net Income
(Loss) |
$ |
34.1 |
|
|
$ |
(47.9 |
) |
|
|
|
|
Earnings (Loss) per
Common Share |
|
|
|
Diluted
earnings per share |
$ |
(0.49 |
) |
|
$ |
(0.22 |
) |
Diluted
after-tax adjustments to net income (loss) per share |
0.64 |
|
|
0.02 |
|
Diluted
Adjusted Net Income per share |
$ |
0.15 |
|
|
$ |
(0.20 |
) |
|
|
|
|
Weighted-average common
shares outstanding |
|
|
|
Diluted |
237.1 |
|
|
240.9 |
|
____________________________(1) Income tax
impact of adjustments is calculated using QEP’s statutory rate of
22.3% and 20.7% for the three months ended March 31, 2019 and
2018, 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 March 31, |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
(in millions) |
Transportation and
processing costs, as presented |
$ |
10.9 |
|
|
$ |
34.0 |
|
|
$ |
(23.1 |
) |
Transportation and
processing costs deducted from oil and condensate, gas and NGL
sales |
13.8 |
|
|
12.7 |
|
|
1.1 |
|
Adjusted
transportation and processing costs |
$ |
24.7 |
|
|
$ |
46.7 |
|
|
$ |
(22.0 |
) |
|
|
|
|
|
|
|
(per Boe) |
Transportation and
processing costs, as presented |
$ |
1.40 |
|
|
$ |
2.90 |
|
|
$ |
(1.50 |
) |
Transportation and
processing costs deducted from oil and condensate, gas and NGL
sales |
1.77 |
|
|
1.08 |
|
|
0.69 |
|
Adjusted
transportation and processing costs |
$ |
3.17 |
|
|
$ |
3.98 |
|
|
$ |
(0.81 |
) |
Discretionary Cash Flow and Discretionary Cash Flow in
Excess of Capital Expenditures
This release contains references to the non-GAAP measures of
Discretionary Cash Flow and Discretionary Cash Flow in Excess of
Capital Expenditures.
The Company defines Discretionary Cash Flow as net cash provided
by (used in) operating activities less the changes in operating
assets and liabilities. Management believes that this measure is
useful to management and investors as a measure of the Company's
ability to internally fund its capital expenditures and to service
or incur additional debt.
The Company defines Discretionary Cash Flow in Excess of Capital
Expenditures as Discretionary Cash Flow (defined above) less
property acquisitions and property, plant equipment, including
exploratory well expense. Management believes that this measure is
useful to management and investors for analysis of the Company's
ability to internally fund acquisitions, exploration and
development.
Below is a reconciliation of Net Cash Provided by (Used in)
Operating Activities (the most comparable GAAP measure) to
Discretionary Cash Flow and Discretionary Cash Flow in Excess of
Capital Expenditures. These non-GAAP measures should be considered
by the reader in addition to, but not instead of, the financial
statements prepared in accordance with GAAP.
|
|
|
|
|
|
|
Three Months Ended |
|
Three MonthsEnded |
|
Year Ended |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
2018 (1) |
|
2018 (1) |
|
|
|
|
|
|
|
|
|
(in millions) |
Cash Flow
Information: |
|
|
|
|
|
|
|
Net Cash Provided by
(Used in) Operating Activities |
$ |
78.3 |
|
|
$ |
160.4 |
|
|
$ |
141.3 |
|
|
$ |
816.2 |
|
Net Cash Provided by
(Used in) Investing Activities |
452.2 |
|
|
(373.6 |
) |
|
(193.2 |
) |
|
(1,056.1 |
) |
Net Cash Provided by
(Used in) Financing Activities |
(440.1 |
) |
|
214.3 |
|
|
52.8 |
|
|
244.6 |
|
|
|
|
|
|
|
|
|
Discretionary
Cash Flow: |
|
|
|
|
|
|
|
Net Cash Provided by
(Used in) Operating Activities |
$ |
78.3 |
|
|
$ |
160.4 |
|
|
$ |
141.3 |
|
|
$ |
816.2 |
|
Changes in operating
assets and liabilities |
11.8 |
|
|
(13.8 |
) |
|
95.9 |
|
|
114.8 |
|
Discretionary Cash Flow |
90.1 |
|
|
146.6 |
|
|
237.2 |
|
|
931.0 |
|
Property
acquisitions |
(0.6 |
) |
|
(36.2 |
) |
|
(17.3 |
) |
|
(65.6 |
) |
Property, plant and
equipment, including exploratory well expense |
(164.6 |
) |
|
(370.7 |
) |
|
(202.0 |
) |
|
(1,234.1 |
) |
Discretionary Cash Flow in Excess of Capital Expenditures |
$ |
(75.1 |
) |
|
$ |
(260.3 |
) |
|
$ |
17.9 |
|
|
$ |
(368.7 |
) |
____________________________(1) "Discretionary
Cash Flow" and "Discretionary Cash Flow in Excess of Capital
Expenditures" amounts have been corrected from the fourth quarter
of 2018.
The following tables present QEP's volumes and average prices
for its open derivative positions as of April 19, 2019:
Production Commodity Derivative
Swaps |
Year |
|
Index |
|
Total Volumes |
|
Average Swap Priceper Unit |
|
|
|
|
(in millions) |
|
|
Oil
sales |
|
|
|
(bbls) |
|
|
($/bbl) |
|
2019 |
|
NYMEX WTI |
|
9.5 |
|
|
$ |
54.93 |
|
2019 |
|
ICE
Brent |
|
1.4 |
|
|
$ |
66.73 |
|
2019 (May
through December) |
|
Argus
Houston MEH |
|
0.2 |
|
|
$ |
65.70 |
|
2020 |
|
NYMEX
WTI |
|
5.5 |
|
|
$ |
60.01 |
|
2020 |
|
Argus
WTI Midland |
|
0.4 |
|
|
$ |
60.00 |
|
Production Commodity Derivative Basis
Swaps |
Year |
|
Index |
|
Basis |
|
Total Volumes |
|
Weighted-AverageDifferential |
|
|
|
|
|
|
(in millions) |
|
|
Oil
sales |
|
|
|
|
|
(bbls) |
|
|
($/bbl |
) |
2019 |
|
NYMEX WTI |
|
Argus WTI Midland |
|
5.0 |
|
|
$ |
(2.22 |
) |
2019 |
|
NYMEX
WTI |
|
Argus
WTI Houston |
|
0.6 |
|
|
$ |
3.75 |
|
2020 |
|
NYMEX
WTI |
|
Argus
WTI Midland |
|
2.6 |
|
|
$ |
(0.46 |
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Qep Resources (NYSE:QEP)
Historical Stock Chart
From May 2024 to Jun 2024
Qep Resources (NYSE:QEP)
Historical Stock Chart
From Jun 2023 to Jun 2024