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
 


Operating Expenses

The following table presents QEP production costs and production costs on a per unit of production basis:

 
Three Months Ended March 31,
 
2018
 
2017
 
Change
 
(in millions)
Lease operating expense
$
72.5

 
$
69.2

 
$
3.3

Adjusted transportation and processing costs(1)
46.7

 
70.2

 
(23.5
)
Production and property taxes
28.9

 
29.1

 
(0.2
)
Total production costs
$
148.1

 
$
168.5

 
$
(20.4
)
 
(per Boe)
Lease operating expense
$
6.18

 
$
5.29

 
$
0.89

Adjusted transportation and processing costs(1)
3.98

 
5.36

 
(1.38
)
Production and property taxes
2.47

 
2.23

 
0.24

Total production costs
$
12.63

 
$
12.88

 
$
(0.25
)
 ____________________________
(1) 
Below are reconciliations of transportation and processing costs (a GAAP measure) as presented on the Condensed Consolidated Statements of Operations and on a unit of production basis to adjusted transportation and processing costs. Adjusted transportation and processing costs includes transportation and processing costs that are reflected as part of "Oil and condensate, gas and NGL sales" on the Condensed Consolidated Statements of Operations. Management adds these costs together with transportation and processing costs reflected on the Condensed Consolidated Statements of Operations to reflect the total operating costs associated with its production. Management believes that this non-GAAP measure is useful supplemental information for investors as it is reflective of the total production costs required to operate the wells for the period and is a more comparable measure to the operating costs of its peers. 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. Refer to Note 2 – Revenue in Part 1, Item I of this Quarterly Report on Form 10-Q.
 
Three Months Ended March 31,
 
2018
 
2017(1)
 
Change
 
(in millions)
Adjusted transportation and processing costs
$
46.7

 
$
70.2

 
$
(23.5
)
Transportation and processing costs deducted from oil and condensate, gas and NGL sales
(12.7
)
 

 
(12.7
)
Transportation and processing costs, as presented
$
34.0

 
$
70.2

 
$
(36.2
)
 
(per Boe)
Adjusted transportation and processing costs
$
3.98

 
$
5.36

 
$
(1.38
)
Transportation and processing costs deducted from oil and condensate, gas and NGL sales
(1.08
)
 

 
(1.08
)
Transportation and processing costs, as presented
$
2.90

 
$
5.36

 
$
(2.46
)
 ____________________________
(1) 
Prior period amounts have not been adjusted under the modified retrospective method for the new revenue recognition rule. Refer to Note 2 – Revenue in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Lease operating expense (LOE). QEP's LOE increased $3.3 million, or 5%, in the first quarter of 2018 compared to the first quarter of 2017, primarily driven by an increases in the Permian and Williston basins. The Permian Basin increase relates to the 2017 Permian Basin Acquisition and costs associated with converting wells to gas lift. These increases were partially offset by the Pinedale Divestiture and Other Northern divestitures of properties.


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