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QEP Resources (QEP) Q2 Loss Wider Than Expected, Sales Miss
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QEP Resources, Inc. posted unimpressive second-quarter 2020 results due to weak oil price realizations. The upstream player’s net oil price realization of $21.72 per barrel (excluding hedges) fell shy of the Zacks Consensus Estimate of $54 per barrel. The same even fell from the year-ago figure of $55.46.
The company’s adjusted net loss per share of 6 cents was wider than the Zacks Consensus Estimate of a loss of 2 cents and also the year-ago loss of 4 cents.
Moreover, quarterly revenues of $120.6 million lagged the Zacks Consensus Estimate by 43.57%. Also, the top line deteriorated 59.3% from the year-ago sales of $296.2 million.
Volume Analysis
Production of crude and natural gas totalled 7,972.9 thousand barrels of oil equivalent (MBoe) (68.5% oil and condensate), up 5.8% from the year-ago figure of 7,534.7Mboe, primarily reflecting the expanded production volumes in the Permian Basin. The figure even surpassed the Zacks Consensus Estimate of 6,626 MBoe.
Natural gas volumes substantially increased 13% year over year to 8.1 billion cubic feet (Bcf) while natural gas liquids output dipped 2% to 1,164.6 thousand barrels (Mbbl). Oil volumes improved from 5,150.3Mbbl in second-quarter 2019 to 5,458.5Mbbl in the quarter under review.
Moreover, the company’s Permian Basin production rose 20% year over year to a record 5,453.2Mboe, accounting for 68.4% of its total output. Investors should know that QEP Resources allocated bulk of its 2019 capital budget to this lucrative basin as it aims at transforming itself into a Permian pure play.
Realized Prices (Excluding Derivative Impact)
QEP Resources’ net realized natural gas price in the quarter was $1.08 per thousand cubic feet, up 7% from the year-ago level of $1.01. However, the realized price fell shy of the Zacks Consensus Estimate of $1.36 per Mcf of gas. Net oil price realization also declined 60.5% year over year to $21.72 per barrel and fell below the Zacks Consensus Estimate of $54 per barrel as well. Further, net NGL’s price realization plummeted 54.9% from the second quarter of 2019 to $5.44 per barrel.
QEP Resources, Inc. Price, Consensus and EPS Surprise
Total operating expenses in the quarter decreased significantly to $233.1 million from $241.7 million a year ago. Moreover, QEP Resources’ second-quarter lease operating expenses came in at $28.8 million, down 37% from the same period last year while general and administrative costs fell 16.5% year over year. Capital investment excluding acquisitions decreased 78.5% year over year to $36.6 million in the second quarter, mainly due to considerably lowering development in both the Permian and Williston basins as a result of the oil price plunge.
As of Jun 30, 2020, QEP Resources had $3.4 million in cash and cash equivalents. The company’s long-term debt was $1,589.4 million, representing a debt-to-capitalization of 35.8%.
2020 Guidance
In response to the coronavirus-induced sudden oil price slump, QEP Resources is taking steps to rationalize its planned activities and capital spending for the current year.
Amid the growing crisis, this Denver, CO-based company reduced its 2020 capital expense estimate to the $340-$380 million range from the prior guided band of $545-$595 million. Moreover, the independent energy player anticipates generating free cash flow of minimum $150 million in the ongoing year.
The company also lowered its 2020 production outlook to the band of 28.1-29.6 million barrels of oil equivalent (MMboe) from the earlier forecast of 31.5-33.7 MMboe.
QEP Resources also revised its operating expense view. It projects it lease operating expenses in the range of $5-$5.30 per barrels of oil equivalent (Boe) while its general and administrative expenses are predicted in the $85-$90 million band. The earlier ranges were $5.20-$5.80 per Boe and $85-$95 million, respectively.
Zacks Rank & Key Picks
QEP Resources has a Zacks Rank #4 (Sell), currently.
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QEP Resources (QEP) Q2 Loss Wider Than Expected, Sales Miss
QEP Resources, Inc. posted unimpressive second-quarter 2020 results due to weak oil price realizations. The upstream player’s net oil price realization of $21.72 per barrel (excluding hedges) fell shy of the Zacks Consensus Estimate of $54 per barrel. The same even fell from the year-ago figure of $55.46.
The company’s adjusted net loss per share of 6 cents was wider than the Zacks Consensus Estimate of a loss of 2 cents and also the year-ago loss of 4 cents.
Moreover, quarterly revenues of $120.6 million lagged the Zacks Consensus Estimate by 43.57%. Also, the top line deteriorated 59.3% from the year-ago sales of $296.2 million.
Volume Analysis
Production of crude and natural gas totalled 7,972.9 thousand barrels of oil equivalent (MBoe) (68.5% oil and condensate), up 5.8% from the year-ago figure of 7,534.7Mboe, primarily reflecting the expanded production volumes in the Permian Basin. The figure even surpassed the Zacks Consensus Estimate of 6,626 MBoe.
Natural gas volumes substantially increased 13% year over year to 8.1 billion cubic feet (Bcf) while natural gas liquids output dipped 2% to 1,164.6 thousand barrels (Mbbl). Oil volumes improved from 5,150.3Mbbl in second-quarter 2019 to 5,458.5Mbbl in the quarter under review.
Moreover, the company’s Permian Basin production rose 20% year over year to a record 5,453.2Mboe, accounting for 68.4% of its total output. Investors should know that QEP Resources allocated bulk of its 2019 capital budget to this lucrative basin as it aims at transforming itself into a Permian pure play.
Realized Prices (Excluding Derivative Impact)
QEP Resources’ net realized natural gas price in the quarter was $1.08 per thousand cubic feet, up 7% from the year-ago level of $1.01. However, the realized price fell shy of the Zacks Consensus Estimate of $1.36 per Mcf of gas. Net oil price realization also declined 60.5% year over year to $21.72 per barrel and fell below the Zacks Consensus Estimate of $54 per barrel as well. Further, net NGL’s price realization plummeted 54.9% from the second quarter of 2019 to $5.44 per barrel.
QEP Resources, Inc. Price, Consensus and EPS Surprise
QEP Resources, Inc. price-consensus-eps-surprise-chart | QEP Resources, Inc. Quote
Costs, Capex and Balance Sheet
Total operating expenses in the quarter decreased significantly to $233.1 million from $241.7 million a year ago. Moreover, QEP Resources’ second-quarter lease operating expenses came in at $28.8 million, down 37% from the same period last year while general and administrative costs fell 16.5% year over year. Capital investment excluding acquisitions decreased 78.5% year over year to $36.6 million in the second quarter, mainly due to considerably lowering development in both the Permian and Williston basins as a result of the oil price plunge.
As of Jun 30, 2020, QEP Resources had $3.4 million in cash and cash equivalents. The company’s long-term debt was $1,589.4 million, representing a debt-to-capitalization of 35.8%.
2020 Guidance
In response to the coronavirus-induced sudden oil price slump, QEP Resources is taking steps to rationalize its planned activities and capital spending for the current year.
Amid the growing crisis, this Denver, CO-based company reduced its 2020 capital expense estimate to the $340-$380 million range from the prior guided band of $545-$595 million. Moreover, the independent energy player anticipates generating free cash flow of minimum $150 million in the ongoing year.
The company also lowered its 2020 production outlook to the band of 28.1-29.6 million barrels of oil equivalent (MMboe) from the earlier forecast of 31.5-33.7 MMboe.
QEP Resources also revised its operating expense view. It projects it lease operating expenses in the range of $5-$5.30 per barrels of oil equivalent (Boe) while its general and administrative expenses are predicted in the $85-$90 million band. The earlier ranges were $5.20-$5.80 per Boe and $85-$95 million, respectively.
Zacks Rank & Key Picks
QEP Resources has a Zacks Rank #4 (Sell), currently.
Some better-ranked players in the energy space are Halliburton Company (HAL - Free Report) , Core Laboratories NV (CLB - Free Report) and Pembina Pipeline Corp (PBA - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
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