QEP Resources, Inc. (NYSE:QEP) (QEP or the Company) today reported
second quarter 2019 financial and operating results and announced
the outcome of its strategic alternatives review process.
HIGHLIGHTS
- QEP’s Board of Directors concluded formal strategic
alternatives review process
- Go forward strategy focuses on free cash flow, reducing
leverage and returning capital to shareholders
- Announced reinstatement of quarterly dividend of $0.02 per
share
- Increased full-year production guidance for crude oil, natural
gas and NGL
- Lowered mid-point of capital expenditure guidance by $50
million, or 8%, reflecting lower drilling and completion costs
- Lowered quarterly general and administrative expense to $32
million, a 50% decrease compared with first quarter 2019
- Poised to deliver Free Cash Flow in second half of 2019 and in
2020 at $50 oil while growing oil production 6% year over year
- Announced plans to add two new independent directors and form
an Operations Committee of the Board
"QEP delivered solid performance in the second quarter,
demonstrating significant progress on a number of fronts. The
Company has completed its formal strategic review process and
accelerated its transition to a high-performance, low-cost operator
focused on free cash flow generation and returning capital to
shareholders. We have increased annual production guidance for
crude oil, natural gas and NGL, lowered CAPEX guidance by $50
million and reduced G&A expense by 50% - over $30 million -
compared with the first quarter," commented Tim Cutt, President and
CEO of QEP.
"Following a comprehensive review of strategic alternatives that
began in February of this year, our Board has determined that the
best path to create superior value for our shareholders is to move
forward as an independent company. By continuing to improve
operations and reduce costs, we will have the ability to generate
meaningful free cash flow, which we will deploy to strengthen our
balance sheet and return capital to shareholders, beginning with
our reinstated quarterly dividend. The Board remains open to
shareholder input and committed to all steps to maximize
shareholder value, and has decided to add two new independent
directors and form an Operations Committee to build on the progress
we have made to-date, and continue to improve operational
performance."
The Company has posted to its website www.qepres.com a
presentation that supplements the information provided in this
release.
QEP SECOND QUARTER 2019 Financial Results
The Company reported net income of $48.8 million for the second
quarter 2019, or $0.20 per diluted share, compared with a net loss
of $336.0 million, or $1.42 per diluted share, for the second
quarter 2018. The Company generated more income in the second
quarter 2019 than in 2018 primarily due to a $403.7 million
impairment expense in the second quarter 2018. See below for
additional discussions on our production and operating
expenses.
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 second quarter 2019
Adjusted Net Loss (a non-GAAP measure) was $7.3 million, or $0.04
per diluted share, compared with an Adjusted Net Income of $13.8
million, or $0.06 per diluted share, for the second quarter
2018.
Adjusted EBITDA (a non-GAAP measure) for the second quarter 2019
was $166.5 million compared with $282.6 million for the second
quarter 2018, primarily due to the Haynesville/Cotton Valley and
Uinta Basin divestitures, lower production in the Williston Basin
and an 11% decrease in average field-level oil prices, partially
offset by a 13% increase in production in the Permian, a $29.5
million decrease in realized derivative losses and a $24.3 million
decrease in general and administrative expenses.
The definitions and reconciliations of Adjusted Net Income
(Loss) 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 3.3
million barrels (MMbbl) in the second quarter 2019, an increase of
2% compared with the second quarter of 2018. The production
increase was offset by lower volumes in the Williston Basin due to
the lack of new well completions in 2019 and a loss of volumes as a
result of the Uinta Basin divestiture.
Oil equivalent production was 7.5 million barrels of oil
equivalent (MMboe) in the second quarter 2019, a decrease of 47%
compared with the second quarter 2018. The decrease in oil
equivalent production was primarily the result of the loss of 5.6
MMboe of equivalent production associated with the assets sold in
the Haynesville/Cotton Valley and Uinta Basin divestitures.
Operating Expenses
During the second quarter 2019, lease operating expense (LOE)
was $45.7 million, a decrease of 31% compared with the second
quarter 2018. The decrease is primarily due to the
Haynesville/Cotton Valley and Uinta Basin divestitures. Excluding
those divestitures, LOE decreased $5.8 million, driven by a
decrease in maintenance and repair expenses, labor and water
disposal in the Williston Basin.
During the second quarter of 2019, LOE was $6.06 per Boe, an
increase of 29% compared to the second quarter of 2018, but was
flat excluding the loss of lower LOE production due to the
Haynesville/Cotton Valley and Uinta Basin divestitures. The
flat per BOE rate was related to lower cost production from the
recent horizontal well completions in the Permian Basin offset by
decreased production in the Williston Basin.
During the second quarter 2019, Transportation and Processing
(T&P) Costs were $9.9 million, a decrease of 68% compared with
the second quarter 2018. Adjusted T&P Costs (a non-GAAP
measure) were $22.6 million, a decrease of 48% of T&P costs
compared with the second quarter 2018, primarily due to the
Haynesville/Cotton Valley and Uinta Basin divestitures. Excluding
those divestitures, Adjusted T&P Costs decreased $1.7 million,
primarily due to decreased production in the Williston Basin,
partially offset by increased production in the Permian Basin.
During the second quarter of 2019, T&P Costs decreased by
$0.90 per Boe, or 41%, compared with the second quarter 2018.
Adjusted T&P costs decreased $0.09 per Boe, or 3%, during the
second quarter of 2019 compared to the second quarter of 2018. The
decrease was primarily due to the Haynesville/Cotton Valley and
Uinta Basin divestitures, which had higher Adjusted T&P Costs
per Boe. Excluding the Haynesville/Cotton Valley and Uinta Basin
divestitures, Adjusted T&P Costs per Boe were up 5% due to
increased gas and NGL production, which has higher T&P Costs
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 second quarter 2019, general and administrative
(G&A) expense was $31.5 million, a decrease of 44% compared to
the second quarter 2018. During the second quarter of 2019 and
2018, QEP incurred $7.2 million and $13.0 million, respectively, in
costs associated with the implementation of our strategic
initiatives, of which $6.0 million and $9.5 million, respectively,
related to restructuring costs. Excluding these costs, G&A
expense decreased by $18.7 million, primarily due to $19.1 million
lower labor, benefits and other associated costs due to the
reduction in our workforce, partially offset by a $2.3 million
decrease in overhead recoveries, primarily associated with our
Haynesville/Cotton Valley and Uinta Basin divestitures.
During the second quarter 2019, production and property taxes
were $23.6 million, a decrease of 37% compared to the second
quarter 2018. The decrease in production and property taxes was
primarily due to decreased revenues in the Williston Basin as well
as the Haynesville/Cotton Valley and Uinta Basin divestitures.
During the second quarter of 2019, production and property taxes
were $3.13 per Boe, an increase of 18% compared to the second
quarter of 2018, but decreased 16% excluding the Haynesville/Cotton
Valley and Uinta Basin divestitures. The 16% decrease was due to a
decrease in average field-level equivalent prices in the Permian
and Williston basins, partially offset by higher ad valorem charges
per Boe in the Permian Basin.
Capital Investment
Capital investment, excluding property acquisitions, was $169.9
million (on an accrual basis) for the second quarter 2019, compared
with $365.7 million for the second quarter 2018, of which $155.1
million related to the drilling, completion and equipping of wells
and $14.8 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
QEP closed on the sale of several assets during the second
quarter 2019 for total net cash proceeds of approximately $37.6
million.
Liquidity
Net Cash Provided by Operating Activities for the second quarter
2019 was $117.4 million, compared with $216.5 million for the
second quarter 2018. Free Cash Flow (a non-GAAP measure) was
negative $15.5 million for the second quarter 2019, compared with
negative $150.3 million for the second quarter 2018. Free Cash Flow
was negative $84.4 million for the first half of 2019 compared with
negative $402.1 million for the first half of 2018. Although we had
negative Free Cash Flow during the first half of 2019, it was
offset by our $666.7 million of proceeds from the disposition of
assets. We expect to generate Free Cash Flow during the second half
of 2019 and for the full year 2020.
The definition and reconciliation of Free Cash Flow is provided
under the heading Non-GAAP Measures at the end of this release.
As of June 30, 2019, the Company had $97.1 million in cash
and cash equivalents, no borrowings under its revolving credit
facility and $2.9 million in letters of credit outstanding. The
Company estimates that as of June 30, 2019, it could incur
additional indebtedness of approximately $551.1 million and be in
compliance with the covenants contained in its revolving credit
facility.
2019 Updated Guidance
QEP's third quarter and full year 2019 guidance assumes: (1) an
oil price of $55 per barrel and a natural gas price of $2.50 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 (4) includes
approximately 10 days of production activity in the Haynesville /
Cotton Valley and (5) includes the impact of lower flare volume and
higher gas and NGL capture in the Permian Basin.
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 arrived in the first quarter 2019 to
drill seven gross operated wells
Wells Put on Production:
- Permian Basin: approximately 59 net operated wells
- Williston Basin: approximately six net operated wells
|
2019 Guidance |
|
3Q 2019 |
2019 |
2019 |
|
Guidance |
PreviousGuidance |
UpdatedGuidance |
Oil & condensate
production (MMbbl) |
5.2 - 5.4 |
20.5 - 21.5 |
21.0 - 21.5 |
Gas production (Bcf) |
5.8 - 6.2 |
25.5 - 27.5 |
28.0 - 30.0 |
NGL
production (MMbbl) |
0.9 - 1.1 |
3.7 - 4.2 |
4.25 - 4.50 |
Total oil equivalent production (MMboe) |
7.1 - 7.5 |
28.5 - 30.3 |
29.9 - 31.0 |
|
|
|
|
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) |
Total general and administrative expense(2) |
|
$165.0 - $175.0 |
$160.0 - $170.0 |
Less:
Special general & administrative expense(3) |
|
$54.0 |
$54.0 |
Total General and administrative expense (excluding special general
& administrative expense) |
|
$113.0 - $119.0 |
$106.0 - $116.0 |
|
|
|
|
Capital investment (excluding
property acquisitions) |
|
|
|
Drilling, Completion and Equip(4) |
|
$540.0 - $590.0 |
$520.0 - $540.0 |
Midstream Infrastructure(5) |
|
$70.0 |
$55.0 |
Corporate |
|
$5.0 |
$5.0 |
Total capital investment (excluding property acquisitions) |
$150.0 - $160.0 |
$615.0 - $665.0 |
$580.0 - $600.0 |
|
|
|
|
Wells put on production (net) |
22 |
63 - 65 |
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 of G&A expense includes approximately
$32.0 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. |
(3) Special G&A expense also includes approximately $54.0
million of estimated expenses associated with our strategic
initiative process, primarily related to severance and retention
agreements, and includes approximately $11.0 million of accelerated
shared-based compensation expense that is included in the $32.0
million of expenses related to non-cash, share-based compensation
and other mark-to-market liabilities. |
(4) Drilling, Completion and Equip includes approximately
$24.0 million of non-operated well completion costs. |
(5) 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 June 30, 2019 |
|
Gross |
|
Net |
|
Gross |
|
Net |
Well
Progress |
|
|
|
|
|
|
|
Drilling |
5 |
|
|
5.0 |
|
|
2 |
|
|
2.0 |
|
|
|
|
|
|
|
|
|
At total depth - under
drilling rig |
6 |
|
|
6.0 |
|
|
— |
|
|
— |
|
Waiting to be completed |
22 |
|
|
22.0 |
|
|
5 |
|
|
4.4 |
|
Undergoing completion |
4 |
|
|
4.0 |
|
|
— |
|
|
— |
|
Completed, awaiting
production |
12 |
|
|
12.0 |
|
|
— |
|
|
— |
|
Waiting on completion |
44 |
|
|
44.0 |
|
|
5 |
|
|
4.4 |
|
|
|
|
|
|
|
|
|
Put on production(1) |
23 |
|
|
23.0 |
|
|
— |
|
|
— |
|
_______________________ |
(1) Total
wells put on production during the three months ended June 30,
2019. |
|
Permian Basin
Permian Basin net oil equivalent production averaged
approximately 50.0 Mboed (86% liquids) during the second quarter
2019, a 10% increase compared with the first quarter 2019 primarily
due to a greater number of wells being put on production during the
quarter, and a 13% increase compared with the second quarter 2018.
A portion of the quarter-over-quarter and year-over-year increase
is driven by higher gas capture rates compared with prior quarters,
primarily as a result of completion of midstream infrastructure.
Oil and condensate production in the Permian Basin was 3.3 MMbbl in
the second quarter 2019, a 2% increase compared with the second
quarter of 2018.
In the second quarter 2019, the Company put on production 23
gross-operated horizontal wells, all on Mustang Springs (average
working interest 100%).
At the end of the second quarter 2019, of the 23 wells put on
production during the quarter, six wells had reached peak
production rates and 17 wells were still in the process of cleaning
up. The wells put on production during the second quarter 2019 have
an average lateral length of 10,459 feet.
At the end of the second quarter 2019, the Company had five
gross-operated horizontal wells in process of being drilled (of
which all had surface casing set, but had no drilling rig present)
(average working interest 100%), six horizontal wells at total
depth under drilling rigs, 22 horizontal wells waiting to be
completed (average working interest 100%), four horizontal wells
undergoing completion (average working interest 100%), and 12 fully
completed horizontal wells awaiting first production, which were
part of a tank "pressure wall" (average working interest 100%).
At the end of the second quarter 2019, the Company had two
operated rigs in the Permian Basin.
Williston Basin
Williston Basin net oil equivalent production averaged
approximately 32.6 Mboed (81% liquids) during the second quarter
2019, a 13% decrease compared with the first quarter 2019 and a 33%
decrease compared with the second quarter 2018, primarily due to
the lack of new well completions partially offset by higher gas
capture rates.
During the second quarter 2019 the Company commenced drilling on
a seven well (gross) pad on South Antelope. As of the end of
quarter, five of the seven wells were waiting on completion. These
wells are expected to be completed during the fourth quarter
2019.
At the end of the second quarter 2019, the Company had one
drilling rig in the Williston Basin.
Second Quarter 2019 Results Conference Call
QEP’s management will discuss second quarter 2019 results in a
conference call today, August 7, 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 August 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 #13692793. In addition,
QEP’s slides for the second quarter 2019 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: ability to generate free cash flow in
the second half of 2019 and 2020; ability to strengthen our balance
sheet; ability to execute on our development programs and capture
opportunities to create shareholder value; actively managing and
improving our cost structure; reducing G&A expense; plans for
development of our Permian Basin and Williston Basin assets;
operating our business safely; 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 expense and 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; third 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;
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 and Quarterly Report
on Form 10-Q for the quarter ended March 31, 2019. 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 |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
REVENUES |
(in millions, except per share amounts) |
Oil and condensate, gas and NGL sales |
$ |
294.6 |
|
|
$ |
520.3 |
|
|
$ |
570.2 |
|
|
$ |
930.1 |
|
Other revenues |
1.6 |
|
|
3.0 |
|
|
5.3 |
|
|
8.0 |
|
Purchased oil and gas sales |
— |
|
|
9.1 |
|
|
1.3 |
|
|
23.2 |
|
Total Revenues |
296.2 |
|
|
532.4 |
|
|
576.8 |
|
|
961.3 |
|
OPERATING
EXPENSES |
|
|
|
|
|
|
|
Purchased oil and gas expense |
— |
|
|
9.8 |
|
|
1.4 |
|
|
25.3 |
|
Lease operating expense |
45.7 |
|
|
66.5 |
|
|
97.2 |
|
|
139.0 |
|
Transportation and processing costs |
9.9 |
|
|
31.2 |
|
|
20.8 |
|
|
65.2 |
|
Gathering and other expense |
3.0 |
|
|
3.4 |
|
|
6.8 |
|
|
6.2 |
|
General and administrative |
31.5 |
|
|
55.8 |
|
|
94.8 |
|
|
115.9 |
|
Production and property taxes |
23.6 |
|
|
37.6 |
|
|
47.6 |
|
|
66.5 |
|
Depreciation, depletion and amortization |
128.0 |
|
|
242.2 |
|
|
251.3 |
|
|
438.7 |
|
Exploration expenses |
— |
|
|
0.1 |
|
|
— |
|
|
0.1 |
|
Impairment |
— |
|
|
403.7 |
|
|
5.0 |
|
|
404.4 |
|
Total Operating Expenses |
241.7 |
|
|
850.3 |
|
|
524.9 |
|
|
1,261.3 |
|
Net gain (loss) from asset
sales, inclusive of restructuring costs |
17.8 |
|
|
(3.9 |
) |
|
4.6 |
|
|
(0.4 |
) |
OPERATING INCOME (LOSS) |
72.3 |
|
|
(321.8 |
) |
|
56.5 |
|
|
(300.4 |
) |
Realized and unrealized gains
(losses) on derivative contracts |
38.5 |
|
|
(79.1 |
) |
|
(143.2 |
) |
|
(132.3 |
) |
Interest and other income
(expense) |
0.9 |
|
|
(3.1 |
) |
|
3.7 |
|
|
(3.8 |
) |
Interest expense |
(33.2 |
) |
|
(38.2 |
) |
|
(67.2 |
) |
|
(73.2 |
) |
INCOME (LOSS) BEFORE INCOME TAXES |
78.5 |
|
|
(442.2 |
) |
|
(150.2 |
) |
|
(509.7 |
) |
Income tax (provision)
benefit |
(29.7 |
) |
|
106.2 |
|
|
82.3 |
|
|
120.1 |
|
NET INCOME (LOSS) |
$ |
48.8 |
|
|
$ |
(336.0 |
) |
|
$ |
(67.9 |
) |
|
$ |
(389.6 |
) |
|
|
|
|
|
|
|
|
Earnings (loss) per common
share |
|
|
|
|
|
|
|
Basic |
$ |
0.20 |
|
|
$ |
(1.42 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.63 |
) |
Diluted |
$ |
0.20 |
|
|
$ |
(1.42 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.63 |
) |
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding |
|
|
|
|
|
|
|
Used in basic calculation |
238.0 |
|
|
237.0 |
|
|
237.5 |
|
|
238.9 |
|
Used in diluted calculation |
238.0 |
|
|
237.0 |
|
|
237.5 |
|
|
238.9 |
|
QEP
RESOURCES, INC. |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
|
|
June 30,2019 |
|
December 31,2018 |
|
|
|
|
ASSETS |
(in millions) |
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
97.1 |
|
|
$ |
— |
|
Accounts receivable, net |
93.5 |
|
|
104.3 |
|
Income tax receivable |
70.8 |
|
|
75.9 |
|
Fair value of derivative contracts |
2.7 |
|
|
87.5 |
|
Prepaid expenses |
7.1 |
|
|
12.7 |
|
Other current assets |
0.2 |
|
|
0.2 |
|
Total Current Assets |
271.4 |
|
|
280.6 |
|
Property, Plant and Equipment
(successful efforts method for oil and gas properties) |
|
|
|
Proved properties |
9,316.0 |
|
|
9,096.9 |
|
Unproved properties |
706.6 |
|
|
705.5 |
|
Gathering and other |
169.1 |
|
|
167.7 |
|
Materials and supplies |
20.9 |
|
|
29.9 |
|
Total Property, Plant and Equipment |
10,212.6 |
|
|
10,000.0 |
|
Less Accumulated Depreciation,
Depletion and Amortization |
|
|
|
Exploration and production |
5,050.9 |
|
|
4,882.4 |
|
Gathering and other |
58.4 |
|
|
58.1 |
|
Total Accumulated Depreciation, Depletion and Amortization |
5,109.3 |
|
|
4,940.5 |
|
Net Property, Plant and Equipment |
5,103.3 |
|
|
5,059.5 |
|
Fair value of derivative
contracts |
15.2 |
|
|
35.4 |
|
Operating lease right-of-use
assets, net |
60.2 |
|
|
— |
|
Other noncurrent assets |
54.2 |
|
|
49.6 |
|
Noncurrent assets held for
sale |
— |
|
|
692.7 |
|
TOTAL ASSETS |
$ |
5,504.3 |
|
|
$ |
6,117.8 |
|
LIABILITIES AND
EQUITY |
|
|
|
Current Liabilities |
|
|
|
Checks outstanding in excess of cash balances |
$ |
5.3 |
|
|
$ |
14.6 |
|
Accounts payable and accrued expenses |
227.9 |
|
|
258.1 |
|
Production and property taxes |
15.9 |
|
|
24.1 |
|
Current portion of long term debt |
51.7 |
|
|
— |
|
Interest payable |
32.5 |
|
|
32.4 |
|
Fair value of derivative contracts |
17.6 |
|
|
— |
|
Current operating lease liabilities |
18.8 |
|
|
— |
|
Asset retirement obligations |
6.8 |
|
|
5.1 |
|
Total Current Liabilities |
376.5 |
|
|
334.3 |
|
Long-term debt |
2,028.1 |
|
|
2,507.1 |
|
Deferred income taxes |
181.4 |
|
|
269.2 |
|
Asset retirement
obligations |
94.6 |
|
|
96.9 |
|
Fair value of derivative
contracts |
0.9 |
|
|
0.7 |
|
Operating lease
liabilities |
47.9 |
|
|
— |
|
Other long-term
liabilities |
85.6 |
|
|
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 – 4.1 million and 3.1 million shares,
respectively |
(53.6 |
) |
|
(45.6 |
) |
Additional paid-in capital |
1,446.3 |
|
|
1,431.9 |
|
Retained earnings |
1,308.6 |
|
|
1,376.5 |
|
Accumulated other comprehensive income (loss) |
(14.4 |
) |
|
(14.3 |
) |
Total Common Shareholders' Equity |
2,689.3 |
|
|
2,750.9 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
5,504.3 |
|
|
$ |
6,117.8 |
|
QEP
RESOURCES, INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
(in millions) |
Net income (loss) |
$ |
48.8 |
|
|
$ |
(336.0 |
) |
|
$ |
(67.9 |
) |
|
$ |
(389.6 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
128.0 |
|
|
242.2 |
|
|
251.3 |
|
|
438.7 |
|
Deferred income taxes (benefit) |
30.2 |
|
|
(106.4 |
) |
|
(87.7 |
) |
|
(120.5 |
) |
Impairment |
— |
|
|
403.7 |
|
|
5.0 |
|
|
404.4 |
|
Non-cash share-based compensation |
3.2 |
|
|
7.1 |
|
|
11.2 |
|
|
16.3 |
|
Amortization of debt issuance costs and discounts |
1.4 |
|
|
1.3 |
|
|
2.7 |
|
|
2.6 |
|
Net (gain) loss from asset sales, inclusive of restructuring
costs |
(17.8 |
) |
|
3.9 |
|
|
(4.6 |
) |
|
0.4 |
|
Unrealized (gains) losses on marketable securities |
(0.8 |
) |
|
(0.5 |
) |
|
(2.7 |
) |
|
(0.4 |
) |
Unrealized (gains) losses on derivative contracts |
(54.5 |
) |
|
33.6 |
|
|
121.3 |
|
|
43.6 |
|
Changes in operating assets and liabilities |
(21.1 |
) |
|
(32.4 |
) |
|
(32.9 |
) |
|
(18.6 |
) |
Net Cash Provided by (Used in) Operating Activities |
117.4 |
|
|
216.5 |
|
|
195.7 |
|
|
376.9 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Property acquisitions |
(1.2 |
) |
|
(8.9 |
) |
|
(1.8 |
) |
|
(45.1 |
) |
Property, plant and equipment,
including exploratory well expense |
(152.2 |
) |
|
(393.6 |
) |
|
(316.8 |
) |
|
(764.3 |
) |
Proceeds from disposition of
assets |
49.3 |
|
|
15.5 |
|
|
666.7 |
|
|
48.8 |
|
Net Cash Provided by (Used in) Investing Activities |
(104.1 |
) |
|
(387.0 |
) |
|
348.1 |
|
|
(760.6 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Checks outstanding in excess
of cash balances |
(5.0 |
) |
|
(11.3 |
) |
|
(9.3 |
) |
|
(35.5 |
) |
Proceeds from credit
facility |
11.5 |
|
|
961.0 |
|
|
56.0 |
|
|
2,029.5 |
|
Repayments of credit
facility |
(11.5 |
) |
|
(771.0 |
) |
|
(486.0 |
) |
|
(1,543.5 |
) |
Common stock repurchased and
retired |
— |
|
|
(5.6 |
) |
|
— |
|
|
(58.4 |
) |
Treasury stock
repurchases |
(0.5 |
) |
|
(1.2 |
) |
|
(6.3 |
) |
|
(5.9 |
) |
Other capital
contributions |
— |
|
|
0.2 |
|
|
— |
|
|
0.2 |
|
Net Cash Provided by (Used in) Financing Activities |
(5.5 |
) |
|
172.1 |
|
|
(445.6 |
) |
|
386.4 |
|
Change in cash, cash
equivalents and restricted cash |
7.8 |
|
|
1.6 |
|
|
98.2 |
|
|
2.7 |
|
Beginning cash, cash
equivalents and restricted cash |
118.5 |
|
|
24.5 |
|
|
28.1 |
|
|
23.4 |
|
Ending cash, cash equivalents
and restricted cash |
$ |
126.3 |
|
|
$ |
26.1 |
|
|
$ |
126.3 |
|
|
$ |
26.1 |
|
|
Production by Region |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Mboe) |
Northern
Region |
|
|
|
|
|
|
|
|
|
|
|
Williston Basin |
2,962.4 |
|
|
4,459.7 |
|
|
(34 |
)% |
|
6,339.4 |
|
|
8,189.4 |
|
|
(23 |
)% |
Uinta Basin |
— |
|
|
821.7 |
|
|
(100 |
)% |
|
— |
|
|
1,626.2 |
|
|
(100 |
)% |
Other Northern |
21.0 |
|
|
42.8 |
|
|
(51 |
)% |
|
45.7 |
|
|
148.3 |
|
|
(69 |
)% |
Total Northern Region |
2,983.4 |
|
|
5,324.2 |
|
|
(44 |
)% |
|
6,385.1 |
|
|
9,963.9 |
|
|
(36 |
)% |
Southern
Region |
|
|
|
|
|
|
|
|
|
|
|
Permian Basin |
4,552.4 |
|
|
4,016.2 |
|
|
13 |
% |
|
8,634.7 |
|
|
6,799.1 |
|
|
27 |
% |
Haynesville/Cotton Valley |
(6.3 |
) |
|
4,761.3 |
|
|
(100 |
)% |
|
310.9 |
|
|
9,051.8 |
|
|
(97 |
)% |
Other Southern |
5.2 |
|
|
4.4 |
|
|
18 |
% |
|
10.3 |
|
|
15.9 |
|
|
(35 |
)% |
Total Southern Region |
4,551.3 |
|
|
8,781.9 |
|
|
(48 |
)% |
|
8,955.9 |
|
|
15,866.8 |
|
|
(44 |
)% |
Total production |
7,534.7 |
|
|
14,106.1 |
|
|
(47 |
)% |
|
15,341.0 |
|
|
25,830.7 |
|
|
(41 |
)% |
|
Total Production |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
Oil and condensate (Mbbl) |
5,150.3 |
|
|
6,567.6 |
|
|
(22 |
)% |
|
10,233.9 |
|
|
11,541.6 |
|
|
(11 |
)% |
Gas (Bcf) |
7.2 |
|
|
38.3 |
|
|
(81 |
)% |
|
16.4 |
|
|
73.4 |
|
|
(78 |
)% |
NGL (Mbbl) |
1,186.0 |
|
|
1,152.8 |
|
|
3 |
% |
|
2,364.8 |
|
|
2,057.2 |
|
|
15 |
% |
Total production (Mboe) |
7,534.7 |
|
|
14,106.1 |
|
|
(47 |
)% |
|
15,341.0 |
|
|
25,830.7 |
|
|
(41 |
)% |
Average daily production (Mboe) |
82.8 |
|
|
155.0 |
|
|
(47 |
)% |
|
84.8 |
|
|
142.7 |
|
|
(41 |
)% |
|
Prices |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
Oil (per
bbl) |
|
|
|
|
|
|
|
|
|
|
|
Average field-level price |
$ |
55.46 |
|
|
$ |
62.21 |
|
|
|
|
$ |
52.30 |
|
|
$ |
61.45 |
|
|
|
Commodity derivative impact |
(3.11 |
) |
|
(7.91 |
) |
|
|
|
(1.85 |
) |
|
(8.34 |
) |
|
|
Net realized price |
$ |
52.35 |
|
|
$ |
54.30 |
|
|
(4 |
)% |
|
$ |
50.45 |
|
|
$ |
53.11 |
|
|
(5 |
)% |
Gas (per
Mcf) |
|
|
|
|
|
|
|
|
|
|
|
Average field-level price |
$ |
1.01 |
|
|
$ |
2.55 |
|
|
|
|
$ |
1.84 |
|
|
$ |
2.72 |
|
|
|
Commodity derivative impact |
— |
|
|
0.17 |
|
|
|
|
(0.18 |
) |
|
0.10 |
|
|
|
Net realized price |
$ |
1.01 |
|
|
$ |
2.72 |
|
|
(63 |
)% |
|
$ |
1.66 |
|
|
$ |
2.82 |
|
|
(41 |
)% |
NGL (per
bbl) |
|
|
|
|
|
|
|
|
|
|
|
Average field-level price |
$ |
12.06 |
|
|
$ |
22.84 |
|
|
|
|
$ |
13.18 |
|
|
$ |
22.47 |
|
|
|
Commodity derivative impact |
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
Net realized price |
$ |
12.06 |
|
|
$ |
22.84 |
|
|
(47 |
)% |
|
$ |
13.18 |
|
|
$ |
22.47 |
|
|
(41 |
)% |
Average net equivalent
price (per Boe) |
|
|
|
|
|
|
|
|
|
|
|
Average field-level equivalent price |
$ |
40.77 |
|
|
$ |
37.77 |
|
|
|
|
$ |
38.89 |
|
|
$ |
36.98 |
|
|
|
Commodity derivative impact |
(2.13 |
) |
|
(3.23 |
) |
|
|
|
(1.43 |
) |
|
(3.45 |
) |
|
|
Net realized equivalent price |
$ |
38.64 |
|
|
$ |
34.54 |
|
|
12 |
% |
|
$ |
37.46 |
|
|
$ |
33.53 |
|
|
12 |
% |
|
Operating Expenses |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Lease operating expense |
$ |
45.7 |
|
|
$ |
66.5 |
|
|
(31 |
)% |
|
$ |
97.2 |
|
|
$ |
139.0 |
|
|
(30 |
)% |
Adjusted transportation and
processing costs(1) |
22.6 |
|
|
43.6 |
|
|
(48 |
)% |
|
47.3 |
|
|
90.3 |
|
|
(48 |
)% |
Production and property
taxes |
23.6 |
|
|
37.6 |
|
|
(37 |
)% |
|
47.6 |
|
|
66.5 |
|
|
(28 |
)% |
Total production costs |
$ |
91.9 |
|
|
$ |
147.7 |
|
|
(38 |
)% |
|
$ |
192.1 |
|
|
$ |
295.8 |
|
|
(35 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(per Boe) |
Lease operating expense |
$ |
6.06 |
|
|
$ |
4.71 |
|
|
29 |
% |
|
$ |
6.34 |
|
|
$ |
5.38 |
|
|
18 |
% |
Adjusted transportation and
processing costs(1) |
3.00 |
|
|
3.09 |
|
|
(3 |
)% |
|
3.09 |
|
|
3.49 |
|
|
(11 |
)% |
Production and property
taxes |
3.13 |
|
|
2.66 |
|
|
18 |
% |
|
3.10 |
|
|
2.57 |
|
|
21 |
% |
Total production costs |
$ |
12.19 |
|
|
$ |
10.46 |
|
|
17 |
% |
|
$ |
12.53 |
|
|
$ |
11.44 |
|
|
10 |
% |
____________________________ |
(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 |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
(in millions) |
Net income (loss) |
$ |
48.8 |
|
|
$ |
(336.0 |
) |
|
$ |
(67.9 |
) |
|
$ |
(389.6 |
) |
Interest expense |
33.2 |
|
|
38.2 |
|
|
67.2 |
|
|
73.2 |
|
Interest and other (income)
expense |
(0.9 |
) |
|
3.1 |
|
|
(3.7 |
) |
|
3.8 |
|
Income tax provision
(benefit) |
29.7 |
|
|
(106.2 |
) |
|
(82.3 |
) |
|
(120.1 |
) |
Depreciation, depletion and
amortization |
128.0 |
|
|
242.2 |
|
|
251.3 |
|
|
438.7 |
|
Unrealized (gains) losses on
derivative contracts |
(54.5 |
) |
|
33.6 |
|
|
121.3 |
|
|
43.6 |
|
Exploration expenses |
— |
|
|
0.1 |
|
|
— |
|
|
0.1 |
|
Net (gain) loss from asset
sales, inclusive of restructuring costs |
(17.8 |
) |
|
3.9 |
|
|
(4.6 |
) |
|
0.4 |
|
Impairment |
— |
|
|
403.7 |
|
|
5.0 |
|
|
404.4 |
|
Adjusted EBITDA |
$ |
166.5 |
|
|
$ |
282.6 |
|
|
$ |
286.3 |
|
|
$ |
454.5 |
|
|
Free Cash Flow
This release contains references to non-GAAP measures of
Adjusted EBITDA and Free Cash Flow.
The Company defines Free Cash Flow as Adjusted EBITDA plus
non-cash share-based compensation less cash interest expense,
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 pay dividends, repay debt 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 |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
(in millions) |
Cash Flow
Information: |
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Operating Activities |
$ |
117.4 |
|
|
$ |
216.5 |
|
|
$ |
195.7 |
|
|
$ |
376.9 |
|
Net Cash Provided by (Used in)
Investing Activities |
(104.1 |
) |
|
(387.0 |
) |
|
348.1 |
|
|
(760.6 |
) |
Net Cash Provided by (Used in)
Financing Activities |
(5.5 |
) |
|
172.1 |
|
|
(445.6 |
) |
|
386.4 |
|
|
|
|
|
|
|
|
|
Free Cash
Flow |
|
|
|
|
|
|
|
Net Cash Provided by (Used in)
Operating Activities |
$ |
117.4 |
|
|
$ |
216.5 |
|
|
$ |
195.7 |
|
|
$ |
376.9 |
|
Amortization of debt issuance
costs and discounts |
(1.4 |
) |
|
(1.3 |
) |
|
(2.7 |
) |
|
(2.6 |
) |
Interest expense |
33.2 |
|
|
38.2 |
|
|
67.2 |
|
|
73.2 |
|
Unrealized (gains) losses on
marketable securities |
0.8 |
|
|
0.5 |
|
|
2.7 |
|
|
0.4 |
|
Interest and other income
(expense) |
(0.9 |
) |
|
3.1 |
|
|
(3.7 |
) |
|
3.8 |
|
Deferred income taxes
(benefit) |
(30.2 |
) |
|
106.4 |
|
|
87.7 |
|
|
120.5 |
|
Income tax (provision)
benefit |
29.7 |
|
|
(106.2 |
) |
|
(82.3 |
) |
|
(120.1 |
) |
Non-cash share-based
compensation |
(3.2 |
) |
|
(7.1 |
) |
|
(11.2 |
) |
|
(16.3 |
) |
Changes in operating assets
and liabilities |
21.1 |
|
|
32.5 |
|
|
32.9 |
|
|
18.7 |
|
Adjusted EBITDA |
166.5 |
|
|
282.6 |
|
|
286.3 |
|
|
454.5 |
|
Non-cash share-based
compensation |
3.2 |
|
|
7.1 |
|
|
11.2 |
|
|
16.3 |
|
Cash interest expense |
(31.8 |
) |
|
(37.5 |
) |
|
(63.3 |
) |
|
(63.5 |
) |
Property acquisitions |
(1.2 |
) |
|
(8.9 |
) |
|
(1.8 |
) |
|
(45.1 |
) |
Property, plant and equipment,
including exploratory well expense |
(152.2 |
) |
|
(393.6 |
) |
|
(316.8 |
) |
|
(764.3 |
) |
Free Cash Flow |
$ |
(15.5 |
) |
|
$ |
(150.3 |
) |
|
$ |
(84.4 |
) |
|
$ |
(402.1 |
) |
|
Slide 4 of our July 2019 Investor Presentation includes a Free
Cash Flow estimate for 2020 and relative sensitivity analysis. We
are unable, however, to prove 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 June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
(in millions, except earnings per share) |
Net income (loss) |
$ |
48.8 |
|
|
$ |
(336.0 |
) |
|
$ |
(67.9 |
) |
|
$ |
(389.6 |
) |
Adjustments to net income
(loss) |
|
|
|
|
|
|
|
Unrealized (gains) losses on derivative contracts |
(54.5 |
) |
|
33.6 |
|
|
121.3 |
|
|
43.6 |
|
Income taxes on unrealized (gains) losses on derivative
contracts(1) |
12.2 |
|
|
(7.0 |
) |
|
(66.5 |
) |
|
(10.3 |
) |
Net (gain) loss from asset sales, inclusive of restructuring
costs |
(17.8 |
) |
|
3.9 |
|
|
(4.6 |
) |
|
0.4 |
|
Income taxes on net (gain) loss from asset sales, inclusive of
restructuring costs(1) |
4.0 |
|
|
(0.8 |
) |
|
2.5 |
|
|
(0.1 |
) |
Impairment |
— |
|
|
403.7 |
|
|
5.0 |
|
|
404.4 |
|
Income taxes on impairment(1) |
— |
|
|
(83.6 |
) |
|
(2.7 |
) |
|
(95.4 |
) |
Total after tax adjustments to
net income |
(56.1 |
) |
|
349.8 |
|
|
55.0 |
|
|
342.6 |
|
Adjusted Net Income
(Loss) |
$ |
(7.3 |
) |
|
$ |
13.8 |
|
|
$ |
(12.9 |
) |
|
$ |
(47.0 |
) |
|
|
|
|
|
|
|
|
Earnings (Loss) per Common
Share |
|
|
|
|
|
|
|
Diluted earnings per share |
$ |
0.20 |
|
|
$ |
(1.42 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.63 |
) |
Diluted after-tax adjustments to net income (loss) per share |
(0.24 |
) |
|
1.48 |
|
|
0.23 |
|
|
1.43 |
|
Diluted Adjusted Net Income per share |
$ |
(0.04 |
) |
|
$ |
0.06 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.20 |
) |
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding |
|
|
|
|
|
|
|
Diluted |
238.0 |
|
|
237.0 |
|
|
237.5 |
|
|
238.9 |
|
____________________________ |
(1) Income
tax impact of adjustments is calculated using QEP’s statutory rate
of 22.4% and 20.7% for the three months ended June 30, 2019
and 2018, respectively and QEP's effective tax rate of 54.8% and
23.6% for the six months ended June 30, 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 June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Transportation and processing costs, as presented |
$ |
9.9 |
|
|
$ |
31.2 |
|
|
$ |
(21.3 |
) |
|
$ |
20.8 |
|
|
$ |
65.2 |
|
|
$ |
(44.4 |
) |
Transportation and processing
costs deducted from oil and condensate, gas and NGL sales |
12.7 |
|
|
12.4 |
|
|
0.3 |
|
|
26.5 |
|
|
25.1 |
|
|
1.4 |
|
Adjusted transportation and processing costs |
$ |
22.6 |
|
|
$ |
43.6 |
|
|
$ |
(21.0 |
) |
|
$ |
47.3 |
|
|
$ |
90.3 |
|
|
$ |
(43.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(per Boe) |
Transportation and processing
costs, as presented |
$ |
1.31 |
|
|
$ |
2.21 |
|
|
$ |
(0.90 |
) |
|
$ |
1.36 |
|
|
$ |
2.52 |
|
|
$ |
(1.16 |
) |
Transportation and processing
costs deducted from oil and condensate, gas and NGL sales |
1.69 |
|
|
0.88 |
|
|
0.81 |
|
|
1.73 |
|
|
0.97 |
|
|
0.76 |
|
Adjusted transportation and processing costs |
$ |
3.00 |
|
|
$ |
3.09 |
|
|
$ |
(0.09 |
) |
|
$ |
3.09 |
|
|
$ |
3.49 |
|
|
$ |
(0.40 |
) |
|
2019 Updated Guidance includes a Lease operating expense and
Adjusted Transportation and Processing Costs estimate for 2019. We
are unable, however, to prove 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.
The following tables present QEP's volumes and average prices
for its open derivative positions as of July 19, 2019:
|
Production Commodity Derivative Swaps |
Year |
|
Index |
|
Total Volumes |
|
Average Swap Priceper Unit |
|
|
|
|
(in millions) |
|
|
Oil
sales |
|
|
|
(bbls) |
|
|
($/bbl) |
|
2019 |
|
NYMEX WTI |
|
6.6 |
|
|
$ |
55.24 |
|
2019 |
|
ICE Brent |
|
0.9 |
|
|
$ |
66.73 |
|
2019 |
|
Argus WTI Houston |
|
0.2 |
|
|
$ |
65.70 |
|
2020 |
|
NYMEX WTI |
|
7.5 |
|
|
$ |
59.70 |
|
2020 |
|
Argus WTI Midland |
|
0.7 |
|
|
$ |
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 |
|
3.3 |
|
|
$ |
(2.22 |
) |
2019 |
|
NYMEX WTI |
|
Argus WTI Houston |
|
0.9 |
|
|
$ |
3.69 |
|
2020 |
|
NYMEX WTI |
|
Argus WTI Midland |
|
4.4 |
|
|
$ |
(0.02 |
) |
2020 (January - June) |
|
NYMEX WTI |
|
Argus WTI Houston |
|
0.4 |
|
|
$ |
3.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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