QEP Resources, Inc.

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SEC Filings

10-Q
QEP RESOURCES, INC. filed this Form 10-Q on 04/25/2018
Entire Document
 



QEP Derivative Financial Statement Presentation
The following table identifies the Condensed Consolidated Balance Sheet location of QEP's outstanding derivative contracts on a gross contract basis as opposed to the net contract basis presentation on the Condensed Consolidated Balance Sheets and the related fair values at the balance sheet dates:
 
 
 
Gross asset derivative
instruments fair value
 
Gross liability derivative
instruments fair value
 
Balance Sheet line item
 
March 31,
2018
 
December 31,
2017
 
March 31,
2018
 
December 31,
2017
Current:
 
 
(in millions)
Commodity
Fair value of derivative contracts
 
$
16.3

 
$
20.6

 
$
130.0

 
$
120.8

Long-term:
 
 
 
 
 
 
 
 
 
Commodity
Fair value of derivative contracts
 
8.1

 
2.3

 
36.4

 
34.0

Total derivative instruments
 
$
24.4

 
$
22.9

 
$
166.4

 
$
154.8


The effects of the change in fair value and settlement of QEP's derivative contracts recorded in "Realized and unrealized gains (losses) on derivative contracts" on the Condensed Consolidated Statements of Operations are summarized in the following table:
 
Three Months Ended
Derivative contracts not designated as cash flow hedges
March 31,
2018
 
2017
Realized gains (losses) on commodity derivative contracts
(in millions)
Production
 
 
 
Oil derivative contracts
$
(44.3
)
 
$
(2.0
)
Gas derivative contracts
0.9

 
(14.2
)
Gas Storage
 
 
 
Gas derivative contracts
0.2

 
(0.2
)
Realized gains (losses) on commodity derivative contracts
(43.2
)
 
(16.4
)
Unrealized gains (losses) on commodity derivative contracts
 
 
 
Production
 
 
 
Oil derivative contracts
(6.9
)
 
104.3

Gas derivative contracts
(2.8
)
 
71.1

Gas Storage
 
 
 
Gas derivative contracts
(0.3
)
 
1.9

Unrealized gains (losses) on commodity derivative contracts
(10.0
)
 
177.3

Total realized and unrealized gains (losses) on commodity derivative contracts
$
(53.2
)
 
$
160.9


Note 8 – Restructuring

On February 28, 2018, QEP announced its intention to become a pure-play Permian Basin company, which includes plans to market its assets in the Williston Basin, the Uinta Basin and Haynesville/Cotton Valley. As a part of the Strategic Initiatives, QEP has incurred or expects to incur costs associated with contractual termination benefits including severance and accelerated vesting of share-based compensation. These termination benefits will be accounted for under ASC 712, Compensation - Nonretirement Postemployment Benefits and ASC 718, Compensation - Stock Compensation. During the first quarter of 2018, the Company incurred but has not yet paid $6.2 million of costs associated with these termination benefits, including $3.4 million of severance and $2.8 million of accelerated share-based compensation, recorded in "Accounts payable and accrued expenses" and "General and administrative" expense in the Condensed Consolidated Financial Statements. Due to the nature of the Strategic Initiatives and uncertain factors such as timing and terms of the potential divestitures, the Company is not able to reasonably estimate the total cost to be incurred as a part of this restructuring.

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