QEP Resources, Inc.

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SEC Filings

10-Q
QEP RESOURCES, INC. filed this Form 10-Q on 11/07/2018
Entire Document
 



In September 2017, QEP closed on the Pinedale Divestiture for net cash proceeds (after purchase price adjustments) of $718.2 million. During the nine months ended September 30, 2018, QEP recorded a pre-tax gain on sale of $1.2 million, due to post-closing purchase price adjustments, which was recorded within "Net gain (loss) from asset sales, inclusive of restructuring costs" on the Condensed Consolidated Statements of Operations. During the year ended December 31, 2017, QEP recorded a pre-tax gain on sale of $180.4 million, which was recorded within "Net gain (loss) from asset sales, inclusive of restructuring costs" on the Consolidated Statements of Operations. In connection with the Pinedale Divestiture, QEP agreed to reimburse the buyer for certain deficiency charges it incurs related to gas processing and NGL transportation and fractionation contracts between the effective date of the sale and December 31, 2019, in an aggregate amount not to exceed $45.0 million. As of September 30, 2018, the remaining liability associated with estimated future payments for this commitment was $23.0 million.

In addition to the Pinedale Divestiture, during the nine months ended September 30, 2017, QEP received net cash proceeds of $69.7 million, resulting in a net pre-tax gain on sale of $26.4 million, primarily related to the divestiture of certain properties in the Other Northern area.

Financial and Operating Highlights

During the three months ended September 30, 2018, QEP:

Closed the Uinta Basin Divestiture, for net cash proceeds of $153.0 million;
Delivered record oil and condensate production of 6.6 MMbbls, a 38% increase over 2017 volumes;
Increased oil and condensate production in the Permian Basin by 108% to a record 3.5 MMbbls;
Increased gas production in Haynesville/Cotton Valley to 27.4 Bcf, a 38% increase over 2017 volumes, primarily due to successful refracturing and drilling programs;
Reported net realized oil price of $56.38 per bbl, an 18% increase over 2017;
Generated net income of $7.3 million or $0.03 per diluted share; and
Reported Adjusted EBITDA (a non-GAAP financial measure defined and reconciled below) of $326.2 million, a 69% increase over 2017.

During the nine months ended September 30, 2018, QEP:

Closed the Uinta Basin Divestiture, for net cash proceeds of $153.0 million;
Delivered oil and condensate production of 18.2 MMbbls, a 26% increase over 2017 volumes;
Increased oil and condensate production in the Permian Basin by 115% to a record 8.9 MMbbls;
Increased gas production in Haynesville/Cotton Valley to 81.6 Bcf, a 67% increase over 2017 volumes, primarily due to successful refracturing and drilling programs;
Reported net realized oil price of $54.30 per bbl, a 15% increase over 2017;
Repurchased and retired 6.2 million shares of the Company's common stock outstanding for $58.4 million;
Generated a net loss of $382.3 million, or $1.60 per diluted share; and
Reported Adjusted EBITDA (a non-GAAP financial measure defined and reconciled below) of $780.7 million, a 44% increase over 2017.

Factors Affecting Results of Operations

Supply, Demand, Market Risk and their Impact on Oil and Gas Prices
Oil and gas prices are affected by many factors outside of our control, including changes in market supply and demand, which are impacted by weather conditions, pipeline capacity constraints, inventory storage levels, basis differentials, export capacity, strength of the U.S. dollar and other factors. In recent years, oil and gas prices have been affected by supply growth, particularly in U.S. oil and gas production, driven by advances in drilling and completion technologies, and fluctuations in demand driven by a variety of factors.


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