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QEP Resources (QEP) Stock Surges 132% in 2 Days: Here's Why

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Shares of QEP Resources, Inc. have skyrocketed 131.5% in the past couple of days following the amendment of its revolving credit facility on Jun 4.

The amendment involves expansion of liquidity by not less than $500 million along with the provision of essential financial flexibility to put into practise its ongoing business strategy. This alteration will be supported by Wells Fargo Bank, National Association and other lenders.

Let’s delve deeper.

A new leverage ratio covenant, allowing a net priority guaranteed debt to consolidated EBITDAX ratio of not more than 2.5-to-1, while the revised debt ratio covenant requiring minimum present value to net priority guaranteed debt ratio should not fall below 1.5-1.     

The adjusted pact also lowers aggregate commitments to $850 million from $1.25 billion announced earlier.

These efforts boost the company’s maturity profile and help it enjoy greater liquidity for day-to-day operations. Also, the move will drive the company’s existing cash flow in the prevalent tough market environment.

Notably, this Denver, CO-based company boasts a solid financial position. As of Mar 31, 2020, the company’s total debt to total capital was 39.4%, which improved from the sequential quarter’s 43.9%. In 2019, its return on equity increased to 0.4% from -0.7% in 2018.

The company’s first-quarter 2020 earnings grew on a year-over-year basis and it remains upbeat about an upsurge in second-quarter results as well.

Brief on the Company

QEP Resources is a leading independent energy company engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Its operations are currently focused on the Northern (primarily in North Dakota) and the Southern regions (mainly in Texas) of the United States.

Zacks Rank & Other Key Picks

QEP Resources currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the energy space include Gulfport Energy Corporation (GPOR - Free Report) , Halliburton Company (HAL - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) , each presently carrying the same Zacks Rank as QEP Resources. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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