A month has gone by since the last earnings report for QEP Resources . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is QEP Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
QEP Resources Q1 Earnings Beat Estimates, Revenues Miss Mark
QEP Resources, Inc. delivered strong first-quarter 2020 earnings on the back of higher output at the Permian play. The upstream player’s output of 7,930.9 thousand barrels of oil equivalent (MBoe) surpassed the Zacks Consensus Estimate of 7,759 MBoe.
The company’s adjusted net income per share of 21 cents outpaced the Zacks Consensus Estimate of 2 cents and also increased 40% from the year-ago figure of 15 cents.
However, quarterly revenues of $225.8 million lagged the Zacks Consensus Estimate by 16.82%. Moreover, the top line deteriorated 19.5% from the year-ago figure of $280.6 million, primarily due to weak commodity price realizations.
Volume Analysis
Production of crude and natural gas totalled 7,930.9 Mboe (66% oil and condensate), up 1.6% from the year-ago figure of 7,806.3 Mboe, primarily reflecting the expanded production volumes in the Permian Basin.
Natural gas volumes substantially dropped 12% year over year to 8.1 billion cubic feet (Bcf) while natural gas liquids output improved 16% to 1,369.1 thousand barrels (Mbbl). Oil volumes improved from 5,083.6 Mbbl in first-quarter 2019 to 5,219.1 Mbbl in the quarter under review.
Moreover, the company’s Permian Basin production from the area rose 21% year over year to a record 4,946.7 Mboe– accounting for 62% of the 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
QEP Resources’ net realized natural gas price in the quarter was 81 cents per thousand cubic feet, down 67.5% from the year-ago level of $2.49. The realized price also fell shy of the Zacks Consensus Estimate of $1.03 per Mcf of gas. Net oil price realization declined 14.1% year over year to $42.15 per barrel and was also below the Zacks Consensus Estimate of $43.36 per barrel. Finally, net NGLs price realization plummeted 51% from the first quarter of 2019 to $7.02 per barrel.
Costs, Capex and Balance Sheet
Total operating expenses in the quarter decreased significantly to $236.7 million from $283.2 million a year ago. Moreover, QEP Resources’ first-quarter lease operating expenses came in at $40.2 million, down 22% from the same quarter last year, while general and administrative costs fell 7% year over year. Capital investment excluding acquisitions increased 6.7% year over year to $178.5 million in the first quarter, mainly due to rise in completion activities in the Permian Basin and recompletion activity in the Williston Basin.
As of Mar 31, 2020, QEP Resources had $70.3 million in cash and cash equivalents. The company’s long-term debt was $1,587.4 million, representing a debt-to-capitalization of 34.4%.
2020 Guidance
In response to the coronavirus-induced sudden oil price slump, QEP Resourcesis 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 by around 32% to $385 million. Moreover, the independent energy player anticipates generating free cash flow of a minimum of $100 million in the ongoing year.
Notably, the company suspended completion activities in the Permian Basin until November at the minimum. It also halted its Williston Basin’s refracturing program for the remainder of the year. The company further ramped down its drilling rig functioning in the Permian Basin to a single rig for the rest of the year. Moreover, QEP Resources set up well shut-in strategy to deal with low- margin wells independent of hedge position.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 120.11% due to these changes.
VGM Scores
At this time, QEP Resources has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise QEP Resources has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is QEP Resources (QEP) Down 6.1% Since Last Earnings Report?
A month has gone by since the last earnings report for QEP Resources . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is QEP Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
QEP Resources Q1 Earnings Beat Estimates, Revenues Miss Mark
QEP Resources, Inc. delivered strong first-quarter 2020 earnings on the back of higher output at the Permian play. The upstream player’s output of 7,930.9 thousand barrels of oil equivalent (MBoe) surpassed the Zacks Consensus Estimate of 7,759 MBoe.
The company’s adjusted net income per share of 21 cents outpaced the Zacks Consensus Estimate of 2 cents and also increased 40% from the year-ago figure of 15 cents.
However, quarterly revenues of $225.8 million lagged the Zacks Consensus Estimate by 16.82%. Moreover, the top line deteriorated 19.5% from the year-ago figure of $280.6 million, primarily due to weak commodity price realizations.
Volume Analysis
Production of crude and natural gas totalled 7,930.9 Mboe (66% oil and condensate), up 1.6% from the year-ago figure of 7,806.3 Mboe, primarily reflecting the expanded production volumes in the Permian Basin.
Natural gas volumes substantially dropped 12% year over year to 8.1 billion cubic feet (Bcf) while natural gas liquids output improved 16% to 1,369.1 thousand barrels (Mbbl). Oil volumes improved from 5,083.6 Mbbl in first-quarter 2019 to 5,219.1 Mbbl in the quarter under review.
Moreover, the company’s Permian Basin production from the area rose 21% year over year to a record 4,946.7 Mboe– accounting for 62% of the 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
QEP Resources’ net realized natural gas price in the quarter was 81 cents per thousand cubic feet, down 67.5% from the year-ago level of $2.49. The realized price also fell shy of the Zacks Consensus Estimate of $1.03 per Mcf of gas. Net oil price realization declined 14.1% year over year to $42.15 per barrel and was also below the Zacks Consensus Estimate of $43.36 per barrel. Finally, net NGLs price realization plummeted 51% from the first quarter of 2019 to $7.02 per barrel.
Costs, Capex and Balance Sheet
Total operating expenses in the quarter decreased significantly to $236.7 million from $283.2 million a year ago. Moreover, QEP Resources’ first-quarter lease operating expenses came in at $40.2 million, down 22% from the same quarter last year, while general and administrative costs fell 7% year over year. Capital investment excluding acquisitions increased 6.7% year over year to $178.5 million in the first quarter, mainly due to rise in completion activities in the Permian Basin and recompletion activity in the Williston Basin.
As of Mar 31, 2020, QEP Resources had $70.3 million in cash and cash equivalents. The company’s long-term debt was $1,587.4 million, representing a debt-to-capitalization of 34.4%.
2020 Guidance
In response to the coronavirus-induced sudden oil price slump, QEP Resourcesis 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 by around 32% to $385 million. Moreover, the independent energy player anticipates generating free cash flow of a minimum of $100 million in the ongoing year.
Notably, the company suspended completion activities in the Permian Basin until November at the minimum. It also halted its Williston Basin’s refracturing program for the remainder of the year. The company further ramped down its drilling rig functioning in the Permian Basin to a single rig for the rest of the year. Moreover, QEP Resources set up well shut-in strategy to deal with low- margin wells independent of hedge position.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 120.11% due to these changes.
VGM Scores
At this time, QEP Resources has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise QEP Resources has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.