x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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STATE OF DELAWARE | 001-34778 | 87-0287750 |
(State or other jurisdiction of
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(Commission
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(I.R.S. Employer
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incorporation or organization
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File Number)
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Identification No.)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o (Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Page
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2
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ITEM 1.
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2
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2
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3
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4
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5
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6
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ITEM 2.
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25
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ITEM 3.
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48
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ITEM 4.
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51
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51
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ITEM 1.
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51
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ITEM 1A.
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52
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ITEM 2.
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52
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ITEM 3.
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52
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ITEM 4.
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52
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ITEM 5.
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52
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ITEM 6.
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52
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53
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ITEM 1.
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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|||||||||||||||
2012
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2011
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2012
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2011
|
|||||||||||||
(in millions, except per share amounts)
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||||||||||||||||
REVENUES
|
||||||||||||||||
Natural gas sales
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$ | 138.9 | $ | 298.7 | $ | 300.1 | $ | 611.3 | ||||||||
Oil sales
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107.2 | 80.7 | 218.0 | 143.7 | ||||||||||||
NGL sales
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82.1 | 63.8 | 179.5 | 111.7 | ||||||||||||
Gathering, processing and other
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45.8 | 58.9 | 95.6 | 105.5 | ||||||||||||
Purchased gas, oil and NGL sales
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125.3 | 306.0 | 309.3 | 453.8 | ||||||||||||
Total Revenues
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499.3 | 808.1 | 1,102.5 | 1,426.0 | ||||||||||||
OPERATING EXPENSES
|
||||||||||||||||
Purchased gas, oil and NGL expense
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124.9 | 303.9 | 313.3 | 450.6 | ||||||||||||
Lease operating expense
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40.5 | 34.3 | 80.6 | 67.1 | ||||||||||||
Natural gas, oil and NGL transportation and other handling costs
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40.7 | 24.0 | 75.2 | 45.7 | ||||||||||||
Gathering, processing and other
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20.6 | 27.2 | 44.3 | 52.4 | ||||||||||||
General and administrative
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36.8 | 28.7 | 72.8 | 60.4 | ||||||||||||
Production and property taxes
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19.4 | 27.1 | 44.1 | 50.8 | ||||||||||||
Depreciation, depletion and amortization
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214.1 | 186.6 | 413.3 | 377.4 | ||||||||||||
Exploration expenses
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2.1 | 2.3 | 4.1 | 5.1 | ||||||||||||
Abandonment and impairment
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55.7 | 5.3 | 62.3 | 10.7 | ||||||||||||
Total Operating Expenses
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554.8 | 639.4 | 1,110.0 | 1,120.2 | ||||||||||||
Net gain from asset sales
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- | 0.2 | 1.5 | 0.2 | ||||||||||||
OPERATING (LOSS) INCOME
|
(55.5 | ) | 168.9 | (6.0 | ) | 306.0 | ||||||||||
Realized and unrealized gains on derivative contracts (See Note 6)
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82.3 | - | 298.6 | - | ||||||||||||
Interest and other income (loss)
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0.9 | (0.4 | ) | 2.6 | 0.2 | |||||||||||
Income from unconsolidated affiliates
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1.4 | 1.3 | 3.3 | 2.2 | ||||||||||||
Loss from early extinguishment of debt
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(0.6 | ) | - | (0.6 | ) | - | ||||||||||
Interest expense
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(28.2 | ) | (22.1 | ) | (52.9 | ) | (44.2 | ) | ||||||||
INCOME BEFORE INCOME TAXES
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0.3 | 147.7 | 245.0 | 264.2 | ||||||||||||
Income taxes
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(0.1 | ) | (54.2 | ) | (88.8 | ) | (96.9 | ) | ||||||||
NET INCOME
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0.2 | 93.5 | 156.2 | 167.3 | ||||||||||||
Net income attributable to noncontrolling interest
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(0.9 | ) | (0.7 | ) | (1.7 | ) | (1.3 | ) | ||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO QEP
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$ | (0.7 | ) | $ | 92.8 | $ | 154.5 | $ | 166.0 | |||||||
Earnings Per Common Share Attributable to QEP
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||||||||||||||||
Basic total
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$ | - | $ | 0.52 | $ | 0.87 | $ | 0.94 | ||||||||
Diluted total
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$ | - | $ | 0.52 | $ | 0.87 | $ | 0.93 | ||||||||
Weighted-average common shares outstanding
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||||||||||||||||
Used in basic calculation
|
177.7 | 176.6 | 177.6 | 176.4 | ||||||||||||
Used in diluted calculation
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177.7 | 178.6 | 178.5 | 178.5 | ||||||||||||
Dividends per common share
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$ | 0.02 | $ | 0.02 | $ | 0.04 | $ | 0.04 | ||||||||
Three Months Ended
June 30,
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Six Months Ended
June 30,
|
|||||||||||||||
2012
|
2011
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2012
|
2011
|
|||||||||||||
(in millions)
|
||||||||||||||||
Net income
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$ | 0.2 | $ | 93.5 | $ | 156.2 | $ | 167.3 | ||||||||
Other comprehensive (loss) income, net of tax:
|
||||||||||||||||
Reclassification of previously deferred derivative gains(1)
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(44.7 | ) | (2.5 | ) | (91.7 | ) | (50.3 | ) | ||||||||
Pension and other postretirement plans adjustments:
|
||||||||||||||||
Amortization of net actuarial loss (2)
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0.1 | - | 0.2 | - | ||||||||||||
Amortization of prior service cost (3)
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0.8 | 1.7 | 1.7 | 1.7 | ||||||||||||
Total pension and other postretirement plans adjustments
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0.9 | 1.7 | 1.9 | 1.7 | ||||||||||||
Other comprehensive loss
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(43.8 | ) | (0.8 | ) | (89.8 | ) | (48.6 | ) | ||||||||
Comprehensive (loss) income
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(43.6 | ) | 92.7 | 66.4 | 118.7 | |||||||||||
Comprehensive income attributable to noncontrolling interests
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(0.9 | ) | (0.7 | ) | (1.7 | ) | (1.3 | ) | ||||||||
Comprehensive (loss) income attributable to QEP
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$ | (44.5 | ) | $ | 92.0 | $ | 64.7 | $ | 117.4 |
(1)
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Presented net of income tax benefit of $26.5 million and $54.3 million during the three and six months ended June 30, 2012, respectively, and net of income tax benefit of $1.5 million and $29.8 million during the three and six months ended June 30, 2011, respectively.
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(2)
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Presented net of income tax expense of $0.1 million and $0.2 million during the three and six months ended June 30, 2012, respectively,.
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(3)
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Presented net of income tax expense of $0.5 million and $1.1 million during the three and six months ended June 30, 2012, respectively, and net of income tax expense of $1.1 million during the three and six months ended June 30, 2011, respectively.
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June 30,
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December 31,
|
|||||||
2012
|
2011
|
|||||||
(in millions)
|
||||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 146.4 | $ | - | ||||
Accounts receivable, net
|
236.9 | 397.4 | ||||||
Fair value of derivative contracts
|
268.2 | 273.7 | ||||||
Inventories, at lower of average cost or market
|
||||||||
Gas, oil and NGL
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11.6 | 16.2 | ||||||
Materials and supplies
|
90.0 | 87.6 | ||||||
Prepaid expenses and other
|
42.5 | 43.7 | ||||||
Total Current Assets
|
795.6 | 818.6 | ||||||
Property, Plant and Equipment (successful efforts method for gas and oil properties)
|
||||||||
Proved properties
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8,822.3 | 8,172.4 | ||||||
Unproved properties
|
305.4 | 326.8 | ||||||
Midstream field services
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1,550.1 | 1,463.6 | ||||||
Marketing and other
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53.6 | 49.8 | ||||||
Total Property, Plant and Equipment
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10,731.4 | 10,012.6 | ||||||
Less Accumulated Depreciation, Depletion and Amortization
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||||||||
Exploration and production
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3,763.7 | 3,339.2 | ||||||
Midstream field services
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327.8 | 297.5 | ||||||
Marketing and other
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16.3 | 14.6 | ||||||
Total Accumulated Depreciation, Depletion and Amortization
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4,107.8 | 3,651.3 | ||||||
Net Property, Plant and Equipment
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6,623.6 | 6,361.3 | ||||||
Investment in unconsolidated affiliates
|
41.9 | 42.2 | ||||||
Goodwill
|
59.5 | 59.5 | ||||||
Fair value of derivative contracts
|
76.2 | 123.5 | ||||||
Other noncurrent assets
|
40.8 | 37.6 | ||||||
TOTAL ASSETS
|
$ | 7,637.6 | $ | 7,442.7 | ||||
LIABILITIES AND EQUITY
|
||||||||
Current Liabilities
|
||||||||
Checks outstanding in excess of cash balances
|
$ | - | $ | 29.4 | ||||
Accounts payable and accrued expenses
|
373.8 | 457.3 | ||||||
Production and property taxes
|
47.2 | 40.0 | ||||||
Interest payable
|
33.0 | 24.4 | ||||||
Fair value of derivative contracts
|
2.3 | 1.3 | ||||||
Deferred income taxes
|
31.0 | 85.4 | ||||||
Total Current Liabilities
|
487.3 | 637.8 | ||||||
Long-term debt
|
1,866.6 | 1,679.4 | ||||||
Deferred income taxes
|
1,563.1 | 1,484.7 | ||||||
Asset retirement obligations
|
172.2 | 163.9 | ||||||
Fair value of derivative contracts
|
2.4 | - | ||||||
Other long-term liabilities
|
129.8 | 124.8 | ||||||
Commitments and contingencies
|
||||||||
EQUITY
|
||||||||
Common stock - par value $0.01 per share; 500.0 million shares authorized; 178.5 million and 177.2 million shares issued, respectively
|
1.8 | 1.8 | ||||||
Treasury stock - 0.7 million and 0.4 million shares, respectively
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(24.0 | ) | (13.1 | ) | ||||
Additional paid-in capital
|
450.4 | 431.4 | ||||||
Retained earnings
|
2,820.7 | 2,673.5 | ||||||
Accumulated other comprehensive income
|
118.1 | 207.9 | ||||||
Total Common Shareholders' Equity
|
3,367.0 | 3,301.5 | ||||||
Noncontrolling interest
|
49.2 | 50.6 | ||||||
Total Equity
|
3,416.2 | 3,352.1 | ||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 7,637.6 | $ | 7,442.7 |
Six Months Ended
|
||||||||
June 30,
|
||||||||
2012
|
2011
|
|||||||
(in millions)
|
||||||||
OPERATING ACTIVITIES
|
||||||||
Net income
|
$ | 156.2 | $ | 167.3 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation, depletion and amortization
|
413.3 | 377.4 | ||||||
Deferred income taxes
|
77.1 | 95.7 | ||||||
Abandonment and impairment
|
62.3 | 10.7 | ||||||
Share-based compensation
|
12.3 | 10.8 | ||||||
Amortization of debt issuance costs and discounts
|
2.4 | 1.5 | ||||||
Dry exploratory well expense
|
0.1 | 0.5 | ||||||
Net gain from asset sales
|
(1.5 | ) | (0.2 | ) | ||||
Income from unconsolidated affiliates
|
(3.3 | ) | (2.2 | ) | ||||
Distributions from unconsolidated affiliates and other
|
3.5 | 2.6 | ||||||
Non-cash loss on early extinguishment of debt
|
0.1 | - | ||||||
Unrealized gain on derivative contracts
|
(89.9 | ) | (58.8 | ) | ||||
Changes in operating assets and liabilities
|
61.7 | 23.3 | ||||||
Net Cash Provided by Operating Activities
|
694.3 | 628.6 | ||||||
INVESTING ACTIVITIES
|
||||||||
Property acquisitions
|
(4.0 | ) | (29.8 | ) | ||||
Property, plant and equipment, including dry exploratory well expense
|
(681.5 | ) | (632.0 | ) | ||||
Proceeds from disposition of assets
|
3.6 | 1.6 | ||||||
Net Cash Used in Investing Activities
|
(681.9 | ) | (660.2 | ) | ||||
FINANCING ACTIVITIES
|
||||||||
Checks outstanding in excess of cash balances
|
(29.4 | ) | (1.5 | ) | ||||
Long-term debt issued
|
800.0 | - | ||||||
Long-term debt issuance costs paid
|
(8.8 | ) | - | |||||
Long-term debt repaid
|
(6.7 | ) | (58.5 | ) | ||||
Proceeds from credit facility
|
194.5 | 200.0 | ||||||
Repayments of credit facility
|
(801.0 | ) | (100.0 | ) | ||||
Other capital contributions
|
(6.4 | ) | (0.4 | ) | ||||
Dividends paid
|
(7.1 | ) | (7.1 | ) | ||||
Excess tax benefit on share-based compensation
|
2.0 | 1.4 | ||||||
Distribution from Questar
|
- | 0.2 | ||||||
Distribution to noncontrolling interest
|
(3.1 | ) | (2.5 | ) | ||||
Net Cash Provided by Financing Activities
|
134.0 | 31.6 | ||||||
Change in cash and cash equivalents
|
146.4 | - | ||||||
Beginning cash and cash equivalents
|
- | - | ||||||
Ending cash and cash equivalents
|
$ | 146.4 | $ | - | ||||
Supplemental Disclosures:
|
||||||||
Cash paid for interest
|
$ | 42.7 | $ | 64.6 | ||||
Cash paid (received) for income taxes
|
8.0 | (7.2 | ) | |||||
Non-cash investing activities
|
||||||||
Change in capital expenditure accrual balance
|
$ | 45.3 | $ | 12.3 |
§
|
QEP Energy Company (QEP Energy) acquires, explores for, develops, and produces natural gas, oil, and natural gas liquids (NGL);
|
§
|
QEP Field Services Company (QEP Field Services) provides midstream field services; including natural gas gathering, processing, compression, and treating services, for affiliates and third parties; and
|
§
|
QEP Marketing Company (QEP Marketing) markets affiliate and third-party natural gas and oil, provides risk–management services, and owns and operates an underground gas-storage reservoir.
|
Three Months Ended June 30, 2011
|
Six Months Ended June 30, 2011
|
|||||||||||||||||||||||
As reported (1)
|
As revised
|
Change
|
As reported (1)
|
As revised
|
Change
|
|||||||||||||||||||
(in millions)
|
(in millions)
|
|||||||||||||||||||||||
REVENUES
|
||||||||||||||||||||||||
Natural gas sales
|
$ | 258.1 | $ | 298.7 | $ | 40.6 | $ | 529.1 | $ | 611.3 | $ | 82.2 | ||||||||||||
Oil sales
|
80.0 | 80.7 | 0.7 | 142.3 | 143.7 | 1.4 | ||||||||||||||||||
NGL sales
|
61.6 | 63.8 | 2.2 | 107.4 | 111.7 | 4.3 | ||||||||||||||||||
Gathering, processing and other
|
78.4 | 58.9 | (19.5 | ) | 147.7 | 105.5 | (42.2 | ) | ||||||||||||||||
OPERATING EXPENSES
|
||||||||||||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
- | 24.0 | 24.0 | - | 45.7 | 45.7 |
(1)
|
The “As reported” numbers reflect QEP Field Services NGL sales of $45.1 million and $73.7 million for the three and six months ended June 30, 2011, which were reclassified from “Gathering, processing and other” into “NGL sales” for consistency with current period presentation. In its second quarter 2011 Form 10-Q, QEP reported “NGL sales” of $16.5 million and $33.7 million, and “Gathering, processing and other” of $123.5 million and $221.4 million for the three and six months ended June 30, 2011, respectively. The QEP Field Services NGL reclassification is all within “Revenues” and has no effect on income from continuing operations, net income or earnings per share.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(in millions)
|
||||||||||||||||
Weighted-average basic common shares outstanding
|
177.7 | 176.6 | 177.6 | 176.4 | ||||||||||||
Potential number of shares issuable upon excerise of in-the-money stock options under the Long-term Stock Incentive Plan
|
- | 2.0 | 0.9 | 2.1 | ||||||||||||
Average diluted common shares outstanding
|
177.7 | 178.6 | 178.5 | 178.5 |
Asset Retirement Obligations
|
||||||||
2012
|
2011
|
|||||||
(in millions)
|
||||||||
ARO liability at January 1,
|
$ | 163.9 | $ | 148.3 | ||||
Accretion
|
5.1 | 4.8 | ||||||
Liabilities incurred
|
3.6 | 2.9 | ||||||
Liabilities settled
|
(0.4 | ) | (0.3 | ) | ||||
ARO liability at June 30,
|
$ | 172.2 | $ | 155.7 |
Fair Value Measurements
|
||||||||||||||||||||
June 30, 2012
|
||||||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Netting
Adjustments
|
Total
|
||||||||||||||||
(in millions)
|
||||||||||||||||||||
Financial Assets
|
||||||||||||||||||||
Commodity derivative instruments - short-term
|
$ | - | $ | 272.2 | $ | - | $ | (4.0 | ) | $ | 268.2 | |||||||||
Commodity derivative instruments - long-term
|
- | 77.5 | - | (1.3 | ) | 76.2 | ||||||||||||||
Total financial assets
|
$ | - | $ | 349.7 | $ | - | $ | (5.3 | ) | $ | 344.4 | |||||||||
Financial Liabilities
|
||||||||||||||||||||
Commodity derivative instruments - short-term
|
$ | - | $ | 4.0 | $ | (4.0 | ) | $ | - | |||||||||||
Interest rate swaps - short-term
|
- | 2.3 | - | 2.3 | ||||||||||||||||
Commodity derivative instruments - long-term
|
- | 1.7 | (1.3 | ) | 0.4 | |||||||||||||||
Interest rate swaps - long-term
|
- | 2.0 | - | 2.0 | ||||||||||||||||
Total financial liabilities
|
$ | - | $ | 10.0 | $ | - | $ | (5.3 | ) | $ | 4.7 |
Change in Level 3 Fair
Value Measurements
|
||||
2012
|
||||
(in millions)
|
||||
Balance at January 1,
|
$ | - | ||
Realized gains and losses
|
0.6 | |||
Unrealized gains and losses
|
3.8 | |||
Settlements
|
(0.6 | ) | ||
Transfers out of Level 3
|
(3.8 | ) | ||
Balance at June 30,
|
$ | - |
Fair Value Measurements
|
||||||||||||||||||||
December 31, 2011
|
||||||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Netting
Adjustments
|
Total
|
||||||||||||||||
(in millions)
|
||||||||||||||||||||
Financial Assets
|
||||||||||||||||||||
Commodity derivative instruments - short-term
|
$ | - | $ | 284.1 | $ | - | $ | (10.4 | ) | $ | 273.7 | |||||||||
Commodity derivative instruments - long-term
|
- | 123.5 | - | - | 123.5 | |||||||||||||||
Total financial assets
|
$ | - | $ | 407.6 | $ | - | $ | (10.4 | ) | $ | 397.2 | |||||||||
Financial Liabilities
|
||||||||||||||||||||
Commodity derivative instruments - short-term
|
$ | - | $ | 11.7 | $ | - | $ | (10.4 | ) | $ | 1.3 | |||||||||
Commodity derivative instruments - long-term
|
- | - | - | - | - | |||||||||||||||
Total financial liabilities
|
$ | - | $ | 11.7 | $ | - | $ | (10.4 | ) | $ | 1.3 |
Carrying
Amount
|
Level 1
Fair Value
|
Carrying
Amount
|
Level 1
Fair Value
|
|||||||||||||
June 30, 2012
|
December 31, 2011
|
|||||||||||||||
(in millions)
|
||||||||||||||||
Financial assets
|
||||||||||||||||
Cash and cash equivalents
|
$ | 146.4 | $ | 146.4 | $ | - | $ | - | ||||||||
Financial liabilities
|
||||||||||||||||
Checks outstanding in excess of cash balances
|
$ | - | $ | - | $ | 29.4 | $ | 29.4 | ||||||||
Long-term debt
|
$ | 1,866.6 | $ | 1,967.2 | $ | 1,679.4 | $ | 1,754.9 |
Level 3
Fair Value
|
Impairment
|
Level 3
Fair Value
|
Impairment
|
|||||||||||||
June 30, 2012
|
December 31, 2011
|
|||||||||||||||
(in millions)
|
||||||||||||||||
Proved Property
|
$ | 5,058.6 | $ | 49.3 | $ | 4,833.2 | $ | 195.5 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
QEP Energy
|
||||||||||||||||
Natural gas derivative volumes as a percent of QEP Energy natural gas production
|
||||||||||||||||
Fixed price swaps
|
67 | % | 46 | % | 63 | % | 44 | % | ||||||||
Costless collars
|
0 | % | 12 | % | 0 | % | 12 | % | ||||||||
Oil derivative volumes as a percent of QEP Energy oil production
|
||||||||||||||||
Fixed price swaps
|
35 | % | 3 | % | 36 | % | 2 | % | ||||||||
Costless collars
|
28 | % | 31 | % | 22 | % | 33 | % | ||||||||
NGL derivative volumes as a percent of QEP Energy NGL production
|
||||||||||||||||
Fixed price swaps
|
18 | % | 0 | % | 17 | % | 0 | % | ||||||||
QEP Field Services
|
||||||||||||||||
Ethane derivative volumes as a percent of ethane volumes - QEP Field Services
|
||||||||||||||||
Fixed price swaps
|
15 | % | 0 | % | 27 | % | 0 | % | ||||||||
Propane derivative volumes as a percent of propane volumes - QEP Field Services
|
||||||||||||||||
Fixed price swaps
|
59 | % | 0 | % | 76 | % | 0 | % |
Swaps
|
Collars
|
||||||||||||||||||||
Year
|
Type of Contract
|
Index
|
Total
Volumes
|
Average price per
unit
|
Floor price
|
Ceiling
price
|
|||||||||||||||
(in millions)
|
|||||||||||||||||||||
Natural gas sales
|
(MMBtu)
|
||||||||||||||||||||
2012
|
Swap
|
NYMEX
|
39.9 | $ | 4.66 | ||||||||||||||||
2012
|
Swap
|
IFPEPL (1)
|
4.9 | $ | 4.14 | ||||||||||||||||
2012
|
Swap
|
IFNPCR (2)
|
45.4 | $ | 4.61 | ||||||||||||||||
2012
|
Swap
|
IFCNPTE (3)
|
5.5 | $ | 2.66 | ||||||||||||||||
2013
|
Swap
|
NYMEX
|
29.2 | $ | 3.68 | ||||||||||||||||
2013
|
Swap
|
IFNPCR (2)
|
65.7 | $ | 5.66 | ||||||||||||||||
Oil sales
|
(Bbls)
|
||||||||||||||||||||
2012
|
Swap
|
NYMEX WTI
|
0.9 | $ | 97.03 | ||||||||||||||||
2012
|
Collar
|
NYMEX WTI
|
0.7 | $ | 87.50 | $ | 115.36 | ||||||||||||||
2013
|
Swap
|
NYMEX WTI
|
0.9 | $ | 104.12 | ||||||||||||||||
NGL sales
|
(Gals)
|
||||||||||||||||||||
2012
|
Swap
|
Mt. Belvieu Ethane
|
7.7 | $ | 0.64 | ||||||||||||||||
2012
|
Swap
|
Mt. Belvieu Propane
|
11.6 | $ | 1.28 |
(1)
|
Inside FERC monthly settlement index for the Panhandle Eastern Pipeline Company.
|
(2)
|
Inside FERC monthly settlement index for the Northwest Pipeline Corp. Rocky Mountains.
|
(3)
|
Inside FERC monthly settlement index for Centerpoint East.
|
Year
|
Type of Contract
|
Index
|
Total
Volumes
|
Average Swap price
per gallon
|
||||||||
(in millions)
|
||||||||||||
NGL sales
|
(Gals)
|
|||||||||||
2012
|
Swap
|
Mt. Belvieu Ethane
|
7.7 | $ | 0.64 | |||||||
2012
|
Swap
|
Mt. Belvieu Propane
|
3.9 | $ | 1.28 |
Year
|
Type of Contract
|
Index
|
Total
Volumes
|
Average Swaps price
per MMBtu
|
||||||||
(in millions)
|
||||||||||||
Natural gas sales
|
(MMBtu)
|
|||||||||||
2012
|
Swap
|
IFNPCR (1)
|
1.8 | $ | 4.06 | |||||||
2013
|
Swap
|
IFNPCR (1)
|
1.2 | $ | 4.57 | |||||||
Natural gas purchases
|
(MMBtu)
|
|||||||||||
2012
|
Swap
|
IFNPCR (1)
|
0.7 | $ | 2.97 | |||||||
2013
|
Swap
|
IFNPCR (1)
|
0.1 | $ | 2.59 |
(1)
|
Inside FERC monthly settlement index for the Northwest Pipeline Corp. Rocky Mountains.
|
Notional amount
|
Type of Contract
|
Maturity
|
Fixed Rate Paid
|
Variable Rate Received
|
|||||
(in millions)
|
|||||||||
$300.0
|
Swap
|
March 2017
|
1.07% |
One month LIBOR
|
Gross asset derivative
instruments fair value
|
Gross liability derivative
instruments fair value
|
|||||||||||||||||
Balance Sheet
line item
|
June 30,
2012
|
December 31,
2011
|
Balance Sheet
line item
|
June 30,
2012
|
December 31,
2011
|
|||||||||||||
|
(in millions)
|
(in millions)
|
||||||||||||||||
Current:
|
||||||||||||||||||
Commodity
|
Fair value of
derivative contracts
|
$ | 272.2 | $ | 284.1 |
Fair value of
derivative contracts
|
$ | 4.0 | $ | 11.7 | ||||||||
Interest rate swaps
|
Fair value of
derivative contracts
|
- | - |
Fair value of
derivative contracts
|
2.3 | - | ||||||||||||
Long-term:
|
||||||||||||||||||
Commodity
|
Fair value of
derivative contracts
|
77.5 | 123.5 |
Fair value of
derivative contracts
|
1.7 | - | ||||||||||||
Interest rate swaps
|
Fair value of
derivative contracts
|
- | - |
Fair value of
derivative contracts
|
2.0 | - | ||||||||||||
Total derivative
instruments
|
$ | 349.7 | $ | 407.6 | $ | 10.0 | $ | 11.7 |
Three Months Ended | Six Months Ended | |||||||||||||||||
Derivative instruments not designated
|
Location of gain (loss)
|
June 30, | June 30, | |||||||||||||||
as cash flow hedges |
recognized in earnings
|
2012 | 2011 | 2012 | 2011 | |||||||||||||
(in millions) | ||||||||||||||||||
Realized gain (loss) on commodity derivative contracts
|
||||||||||||||||||
QEP Energy
|
||||||||||||||||||
Natural gas derivative contracts
|
$ | 111.9 | $ | (27.6 | ) | $ | 197.6 | $ | (58.8 | ) | ||||||||
Oil derivative contracts
|
2.2 | - | (0.5 | ) | - | |||||||||||||
NGL derivative contracts
|
2.7 | - | 3.1 | - | ||||||||||||||
QEP Field Services
|
||||||||||||||||||
NGL derivative contracts
|
3.3 | - | 4.4 | - | ||||||||||||||
QEP Marketing
|
||||||||||||||||||
Natural gas derivative contracts
|
0.6 | - | 4.1 | - | ||||||||||||||
Total realized gain (loss) on commodity derivative contracts
|
120.7 | (27.6 | ) | 208.7 | (58.8 | ) | ||||||||||||
Unrealized gain (loss) on commodity derivative contracts
|
||||||||||||||||||
QEP Energy
|
||||||||||||||||||
Natural gas derivative contracts
|
(78.4 | ) | 27.6 | 53.9 | 58.8 | |||||||||||||
Oil derivative contracts
|
38.6 | - | 27.1 | - | ||||||||||||||
NGL derivative contracts
|
4.9 | - | 7.8 | - | ||||||||||||||
QEP Field Services
|
||||||||||||||||||
NGL derivative contracts
|
1.5 | - | 4.5 | - | ||||||||||||||
QEP Marketing
|
||||||||||||||||||
Natural gas derivative contracts
|
(0.7 | ) | - | 0.9 | - | |||||||||||||
Total unrealized (loss) gain on commodity derivative contracts
|
(34.1 | ) | 27.6 | 94.2 | 58.8 | |||||||||||||
Total realized and unrealized gain on commodity derivative contracts
|
Realized and unrealized gains on derivative contracts
|
$ | 86.6 | $ | - | $ | 302.9 | $ | - | |||||||||
Unrealized gain (loss) on interest rate swaps
|
||||||||||||||||||
Unrealized loss on interest rate swaps
|
Realized and unrealized gains on derivative contracts
|
$ | (4.3 | ) | $ | - | $ | (4.3 | ) | $ | - |
Three Months Ended |
Six Months Ended
|
|||||||||||||||||
Derivative instruments classified | Location of gain (loss) | June 30, |
June 30,
|
|||||||||||||||
as cash flow hedges | recognized in earnings | 2012 |
2011
|
2012
|
2011
|
|||||||||||||
Commodity derivatives |
(in millions)
|
|||||||||||||||||
Gain on derivative instruments for the effective portion of hedge recognized in AOCI
|
Accumulated other comprehensive income
|
$ | - | $ | 61.3 | $ | - | $ | 61.5 | |||||||||
Gain reclassified from AOCI into income for effective portion of hedge
|
Natural gas sales
|
- | 64.4 | - | 137.5 | |||||||||||||
Gain reclassified from AOCI into income for effective portion of hedge
|
Oil sales
|
- | 0.1 | - | 0.1 | |||||||||||||
Gain reclassified from AOCI into income for effective portion of hedge
|
Marketing purchases
|
- | 0.5 | - | 3.9 | |||||||||||||
Gain recognized in income for the ineffective portion of hedges
|
Interest and other income
|
- | 0.3 | - | 0.1 |
Restructuring Liability
|
||||
(in millions)
|
||||
Balance at December 31, 2011
|
$ | - | ||
Costs incurred and charged to expense
|
5.0 | |||
Costs paid or otherwise settled
|
(4.6 | ) | ||
Balance at June 30, 2012
|
$ | 0.4 |
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(in millions)
|
||||||||
Revolving Credit Facility due 2016
|
$ | - | $ | 606.5 | ||||
Term Loan due 2017
|
300.0 | - | ||||||
6.05% Senior Notes due 2016
|
176.8 | 176.8 | ||||||
6.80% Senior Notes due 2018
|
134.0 | 138.6 | ||||||
6.80% Senior Notes due 2020
|
136.0 | 138.0 | ||||||
6.875% Senior Notes due 2021
|
625.0 | 625.0 | ||||||
5.375% Senior Notes due 2022
|
500.0 | - | ||||||
Total principal amount of debt
|
1,871.8 | 1,684.9 | ||||||
Less unamortized discount
|
(5.2 | ) | (5.5 | ) | ||||
Total long-term debt outstanding
|
$ | 1,866.6 | $ | 1,679.4 |
Stock Option Variables
Six Months Ended
June 30, 2012
|
||||
Fair value of options at grant date
|
$ | 14.46 | ||
Risk-free interest rate
|
0.81 | % | ||
Expected price volatility
|
55.9 | % | ||
Expected dividend yield
|
0.26 | % | ||
Expected life in years
|
5.0 |
Options
Outstanding
|
Weighted-
Average Price
|
Weighted-Average
Remaining
Contractual Term
|
Aggregate
Intrinsic Value
|
|||||||||||||
(per share)
|
(in years)
|
(in millions)
|
||||||||||||||
Outstanding at December 31, 2011
|
2,003,694 | $ | 21.23 | |||||||||||||
Granted
|
291,143 | 30.83 | ||||||||||||||
Exercised
|
(313,342 | ) | 8.15 | |||||||||||||
Forfeited
|
- | - | - | |||||||||||||
Outstanding at June 30, 2012
|
1,981,495 | $ | 24.71 | 3.6 | $ | 12.5 | ||||||||||
Options Exercisable at June 30, 2012
|
1,500,192 | $ | 22.19 | 2.8 | $ | 12.3 | ||||||||||
Unvested Options at June 30, 2012
|
481,303 | $ | 32.56 | 6.1 | $ | 0.2 |
Restricted Shares
Outstanding
|
Weighted-
Average Price
|
|||||||
(per share)
|
||||||||
Unvested balance at December 31, 2011
|
1,099,752 | $ | 32.80 | |||||
Granted
|
706,221 | 30.74 | ||||||
Vested
|
(397,204 | ) | 32.31 | |||||
Forfeited
|
(49,209 | ) | 32.71 | |||||
Unvested balance at June 30, 2012
|
1,359,560 | $ | 31.88 |
Performance Share
Units Outstanding
|
Weighted-
Average Price
|
|||||||
Unvested balance at December 31, 2011
|
115,274 | $ | 39.07 | |||||
Granted
|
171,954 | 30.90 | ||||||
Vested
|
- | - | ||||||
Forfeited
|
(4,148 | ) | 39.07 | |||||
Unvested balance at June 30, 2012
|
283,080 | $ | 34.11 |
Pension
|
||||||||||||||||
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(in millions)
|
||||||||||||||||
Service cost
|
$ | 0.9 | $ | 0.7 | $ | 1.9 | $ | 1.4 | ||||||||
Interest cost
|
1.2 | 1.1 | 2.4 | 2.2 | ||||||||||||
Expected return on plan assets
|
(0.9 | ) | (0.6 | ) | (1.8 | ) | (1.2 | ) | ||||||||
Amortization of prior service costs
|
1.3 | 1.3 | 2.6 | 2.6 | ||||||||||||
Amortization of actuarial loss
|
0.2 | - | 0.4 | - | ||||||||||||
Periodic expense
|
$ | 2.7 | $ | 2.5 | $ | 5.5 | $ | 5.0 |
Postretirement benefits
|
||||||||||||||||
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(in millions)
|
||||||||||||||||
Service cost
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Interest cost
|
0.1 | 0.1 | 0.2 | 0.2 | ||||||||||||
Expected return on plan assets
|
- | - | - | - | ||||||||||||
Amortization of prior service costs
|
0.1 | 0.1 | 0.2 | 0.2 | ||||||||||||
Recognized net actuarial loss
|
- | - | - | - | ||||||||||||
Periodic expense
|
$ | 0.2 | $ | 0.2 | $ | 0.4 | $ | 0.4 |
QEP Energy
|
QEP Field
Services
|
QEP Marketing
& Other
|
Eliminations
|
QEP
Consolidated
|
||||||||||||||||
For the three months ended June 30, 2012
|
(in millions)
|
|||||||||||||||||||
Revenues (1)
|
||||||||||||||||||||
From unaffiliated customers
|
$ | 335.5 | $ | 83.4 | $ | 80.4 | $ | - | $ | 499.3 | ||||||||||
From affiliated customers
|
- | 30.2 | 118.2 | (148.4 | ) | - | ||||||||||||||
Total Revenues
|
335.5 | 113.6 | 198.6 | (148.4 | ) | 499.3 | ||||||||||||||
Operating expenses
|
||||||||||||||||||||
Purchased gas, oil and NGL expense
|
40.6 | 4.1 | 197.4 | (117.2 | ) | 124.9 | ||||||||||||||
Lease operating expense
|
41.4 | - | - | (0.9 | ) | 40.5 | ||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
57.2 | 12.0 | - | (28.5 | ) | 40.7 | ||||||||||||||
Gathering, processing and other
|
- | 20.4 | 0.5 | (0.3 | ) | 20.6 | ||||||||||||||
General and administrative
|
29.2 | 9.0 | 0.1 | (1.5 | ) | 36.8 | ||||||||||||||
Production and property taxes
|
18.2 | 1.2 | - | - | 19.4 | |||||||||||||||
Depreciation, depletion and amortization
|
197.2 | 16.1 | 0.8 | - | 214.1 | |||||||||||||||
Other operating expenses
|
57.8 | - | - | - | 57.8 | |||||||||||||||
Total operating expenses
|
441.6 | 62.8 | 198.8 | (148.4 | ) | 554.8 | ||||||||||||||
Operating (loss) income (2)
|
(106.1 | ) | 50.8 | (0.2 | ) | - | (55.5 | ) | ||||||||||||
Realized and unrealized gains (losses) on derivative contracts
|
81.8 | 4.8 | (4.3 | ) | - | 82.3 | ||||||||||||||
Interest and other income
|
0.7 | 0.1 | 26.8 | (26.7 | ) | 0.9 | ||||||||||||||
Income from unconsolidated affiliates
|
0.1 | 1.3 | - | - | 1.4 | |||||||||||||||
Loss on early extinguishment of debt
|
- | - | (0.6 | ) | - | (0.6 | ) | |||||||||||||
Interest expense
|
(23.4 | ) | (3.6 | ) | (27.9 | ) | 26.7 | (28.2 | ) | |||||||||||
(Loss) income before income taxes
|
(46.9 | ) | 53.4 | (6.2 | ) | - | 0.3 | |||||||||||||
Income taxes
|
16.6 | (19.2 | ) | 2.5 | - | (0.1 | ) | |||||||||||||
Net (loss) income
|
(30.3 | ) | 34.2 | (3.7 | ) | - | 0.2 | |||||||||||||
Net income attributable to noncontrolling interest
|
- | (0.9 | ) | - | - | (0.9 | ) | |||||||||||||
Net (loss) income attributable to QEP (3)
|
$ | (30.3 | ) | $ | 33.3 | $ | (3.7 | ) | $ | - | $ | (0.7 | ) |
(1)
|
The impact of QEP’s settled derivative contracts, for the three months ended June 30, 2012, are reflected below operating (loss) income.
|
(2)
|
Operating (loss) income for the three months ended June 30, 2012, excludes the impact of realized commodity derivative contract settlements. During the three months ended June 30, 2012, gains and losses from realized commodity derivative contract settlements were included below operating (loss) income.
|
(3)
|
Net income (loss) attributable to QEP for the three months ended June 30, 2012, includes the impact of unrealized gains and losses from changes in the fair value of the commodity derivative contracts.
|
QEP Energy
|
QEP Field
Services
|
QEP Marketing
& Other
|
Eliminations
|
QEP
Consolidated
|
||||||||||||||||
For the three months ended June 30, 2011
|
(in millions)
|
|||||||||||||||||||
Revenues (1)
|
||||||||||||||||||||
From unaffiliated customers
|
$ | 555.5 | $ | 102.0 | $ | 150.6 | $ | - | $ | 808.1 | ||||||||||
From affiliated customers
|
- | 20.2 | 145.2 | (165.4 | ) | - | ||||||||||||||
Total Revenues
|
555.5 | 122.2 | 295.8 | (165.4 | ) | 808.1 | ||||||||||||||
Operating expenses
|
||||||||||||||||||||
Purchased gas, oil and NGL expenses
|
154.7 | - | 292.5 | (143.3 | ) | 303.9 | ||||||||||||||
Lease operating expense
|
35.0 | - | - | (0.7 | ) | 34.3 | ||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
42.3 | 1.2 | - | (19.5 | ) | 24.0 | ||||||||||||||
Gathering, processing and other
|
- | 26.9 | 0.4 | (0.1 | ) | 27.2 | ||||||||||||||
General and administrative
|
22.9 | 6.8 | 0.8 | (1.8 | ) | 28.7 | ||||||||||||||
Production and property taxes
|
25.4 | 1.6 | 0.1 | - | 27.1 | |||||||||||||||
Depreciation, depletion and amortization
|
172.5 | 13.5 | 0.6 | - | 186.6 | |||||||||||||||
Other operating expenses
|
7.6 | - | - | - | 7.6 | |||||||||||||||
Total operating expenses
|
460.4 | 50.0 | 294.4 | (165.4 | ) | 639.4 | ||||||||||||||
Net gain (loss) from asset sales
|
0.2 | 0.1 | (0.1 | ) | - | 0.2 | ||||||||||||||
Operating income (2)
|
95.3 | 72.3 | 1.3 | - | 168.9 | |||||||||||||||
Interest and other (loss) income
|
(0.5 | ) | - | 24.8 | (24.7 | ) | (0.4 | ) | ||||||||||||
Income from unconsolidated affiliates
|
0.1 | 1.2 | - | - | 1.3 | |||||||||||||||
Interest expense
|
(20.4 | ) | (3.1 | ) | (23.3 | ) | 24.7 | (22.1 | ) | |||||||||||
Income before income taxes
|
74.5 | 70.4 | 2.8 | - | 147.7 | |||||||||||||||
Income taxes
|
(27.7 | ) | (25.5 | ) | (1.0 | ) | - | (54.2 | ) | |||||||||||
Net income
|
46.8 | 44.9 | 1.8 | - | 93.5 | |||||||||||||||
Net income attributable to noncontrolling interest
|
- | (0.7 | ) | - | - | (0.7 | ) | |||||||||||||
Net income attributable to QEP (3)
|
$ | 46.8 | $ | 44.2 | $ | 1.8 | $ | - | $ | 92.8 |
(1)
|
Revenues for the three months ended June 30, 2011, have been recast to reflect QEP’s revised reporting of its transportation and handling costs. See Note 2 - Basis of Presentation of Interim Consolidated Financial Statements for additional information. In addition, revenues for the three months ended June 30, 2011, reflect the impact of QEP’s settled derivative contracts. See Note 6 - Derivative Contracts for detailed information on derivative contract settlements in the three months ended June 30, 2011.
|
(2)
|
Under hedge accounting, gains and losses from realized commodity derivative contract settlements were included in revenues and operating income during the three months ended June 30, 2011.
|
(3)
|
Under hedge accounting, unrealized gains and losses from changes in the fair value were deferred in accumulated other comprehensive income during the three months ended June 30, 2011.
|
QEP Energy
|
QEP Field
Services
|
QEP Marketing
& Other
|
Eliminations
|
QEP
Consolidated
|
||||||||||||||||
For the six months ended June 30, 2012
|
(in millions)
|
|||||||||||||||||||
Revenues (1)
|
||||||||||||||||||||
From unaffiliated customers
|
$ | 732.3 | $ | 177.0 | $ | 193.2 | $ | - | $ | 1,102.5 | ||||||||||
From affiliated customers
|
- | 56.3 | 250.5 | (306.8 | ) | - | ||||||||||||||
Total Revenues
|
732.3 | 233.3 | 443.7 | (306.8 | ) | 1,102.5 | ||||||||||||||
Operating expenses
|
||||||||||||||||||||
Purchased gas, oil and NGL expense
|
113.1 | 4.1 | 445.0 | (248.9 | ) | 313.3 | ||||||||||||||
Lease operating expense
|
82.2 | - | - | (1.6 | ) | 80.6 | ||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
107.6 | 20.8 | - | (53.2 | ) | 75.2 | ||||||||||||||
Gathering, processing and other
|
- | 43.8 | 0.7 | (0.2 | ) | 44.3 | ||||||||||||||
General and administrative
|
62.1 | 13.5 | 0.1 | (2.9 | ) | 72.8 | ||||||||||||||
Production and property taxes
|
41.1 | 2.9 | 0.1 | - | 44.1 | |||||||||||||||
Depreciation, depletion and amortization
|
380.3 | 31.4 | 1.6 | - | 413.3 | |||||||||||||||
Other operating expenses
|
66.4 | - | - | - | 66.4 | |||||||||||||||
Total operating expenses
|
852.8 | 116.5 | 447.5 | (306.8 | ) | 1,110.0 | ||||||||||||||
Net gain from asset sales
|
1.5 | - | - | - | 1.5 | |||||||||||||||
Operating (loss) income (2)
|
(119.0 | ) | 116.8 | (3.8 | ) | - | (6.0 | ) | ||||||||||||
Realized and unrealized gains on derivative contracts
|
289.0 | 8.9 | 0.7 | - | 298.6 | |||||||||||||||
Interest and other income
|
2.4 | 0.1 | 52.7 | (52.6 | ) | 2.6 | ||||||||||||||
Income from unconsolidated affiliates
|
0.1 | 3.2 | - | - | 3.3 | |||||||||||||||
Loss on early extinguishment of debt
|
- | - | (0.6 | ) | - | (0.6 | ) | |||||||||||||
Interest expense
|
(47.0 | ) | (5.9 | ) | (52.6 | ) | 52.6 | (52.9 | ) | |||||||||||
Income (loss) before income taxes
|
125.5 | 123.1 | (3.6 | ) | - | 245.0 | ||||||||||||||
Income taxes
|
(47.7 | ) | (42.7 | ) | 1.6 | - | (88.8 | ) | ||||||||||||
Net income (loss)
|
77.8 | 80.4 | (2.0 | ) | - | 156.2 | ||||||||||||||
Net income attributable to noncontrolling interest
|
- | (1.7 | ) | - | - | (1.7 | ) | |||||||||||||
Net income (loss) attributable to QEP (3)
|
$ | 77.8 | $ | 78.7 | $ | (2.0 | ) | $ | - | $ | 154.5 |
(1)
|
The impact of QEP’s settled derivative contracts, for the six months ended June 30, 2012, are reflected below operating (loss) income.
|
(2)
|
Operating (loss) income for the six months ended June 30, 2012, excludes the impact of realized commodity derivative contract settlements. During the six months ended June 30, 2012, gains and losses from realized commodity derivative contract settlements were included below operating (loss) income.
|
(3)
|
Net (loss) income attributable to QEP for the six months ended June 30, 2012, includes the impact of unrealized gains and losses from changes in the fair value of the commodity derivative contracts.
|
QEP Energy
|
QEP Field
Services
|
QEP Marketing
& Other
|
Eliminations
|
QEP
Consolidated
|
||||||||||||||||
For the six months ended June 30, 2011
|
(in millions)
|
|||||||||||||||||||
Revenues (1)
|
||||||||||||||||||||
From unaffiliated customers
|
$ | 951.7 | $ | 175.3 | $ | 299.0 | $ | - | $ | 1,426.0 | ||||||||||
From affiliated customers
|
- | 43.5 | 278.3 | (321.8 | ) | - | ||||||||||||||
Total Revenues
|
951.7 | 218.8 | 577.3 | (321.8 | ) | 1,426.0 | ||||||||||||||
Operating expenses
|
||||||||||||||||||||
Purchased gas, oil and NGL expense
|
154.7 | - | 570.4 | (274.5 | ) | 450.6 | ||||||||||||||
Lease operating expense
|
68.4 | - | - | (1.3 | ) | 67.1 | ||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
85.8 | 2.1 | - | (42.2 | ) | 45.7 | ||||||||||||||
Gathering, processing and other
|
- | 51.7 | 0.7 | - | 52.4 | |||||||||||||||
General and administrative
|
46.8 | 15.8 | 1.6 | (3.8 | ) | 60.4 | ||||||||||||||
Production and property taxes
|
47.6 | 3.0 | 0.2 | - | 50.8 | |||||||||||||||
Depreciation, depletion and amortization
|
349.6 | 26.7 | 1.1 | - | 377.4 | |||||||||||||||
Other operating expenses
|
15.8 | - | - | - | 15.8 | |||||||||||||||
Total operating expenses
|
768.7 | 99.3 | 574.0 | (321.8 | ) | 1,120.2 | ||||||||||||||
Net gain (loss) from asset sales
|
0.2 | 0.1 | (0.1 | ) | - | 0.2 | ||||||||||||||
Operating income (2)
|
183.2 | 119.6 | 3.2 | - | 306.0 | |||||||||||||||
Interest and other income
|
0.2 | - | 49.2 | (49.2 | ) | 0.2 | ||||||||||||||
Income from unconsolidated affiliates
|
0.1 | 2.1 | - | - | 2.2 | |||||||||||||||
Interest expense
|
(40.3 | ) | (6.6 | ) | (46.5 | ) | 49.2 | (44.2 | ) | |||||||||||
Income before income taxes
|
143.2 | 115.1 | 5.9 | - | 264.2 | |||||||||||||||
Income taxes
|
(53.3 | ) | (41.6 | ) | (2.0 | ) | - | (96.9 | ) | |||||||||||
Net income
|
89.9 | 73.5 | 3.9 | - | 167.3 | |||||||||||||||
Net income attributable to noncontrolling interest
|
- | (1.3 | ) | - | - | (1.3 | ) | |||||||||||||
Net income attributable to QEP (3)
|
$ | 89.9 | $ | 72.2 | $ | 3.9 | $ | - | $ | 166.0 |
(1)
|
Revenues for the six months ended June 30, 2011, have been recast to reflect QEP’s revised reporting of its transportation and handling costs. See Note 2 - Basis of Presentation of Interim Consolidated Financial Statements for additional information. In addition, revenues for the six months ended June 30, 2011, reflect the impact of QEP’s settled derivative contracts. See Note 6 - Derivative Contracts for detailed information on derivative contract settlements in the six months ended June 30, 2011.
|
(2)
|
Under hedge accounting, realized gains and losses from realized commodity derivative contract settlements were included in revenues and operating income during the three and six months ended June 30, 2011.
|
(3)
|
Under hedge accounting, unrealized gains and losses from changes in the fair value were deferred in accumulated other comprehensive income during the three and six months ended June 30, 2011.
|
§
|
QEP Energy Company (QEP Energy) acquires, explores for, develops and produces natural gas, crude oil, and natural gas liquids (NGL) in two principal operating regions in the United States: the Northern Region, which includes the Pinedale Division with properties on the Pinedale Anticline in western Wyoming, the Uinta Basin Division with properties in eastern Utah, and the Legacy Division, with properties in the Bakken/Three Forks area in western North Dakota, the Greater Green River and Powder River Basins of Wyoming and other properties primarily in Colorado and New Mexico, and the Southern Region, which includes the Haynesville/Cotton Valley Division with properties in northwest Louisiana and the Midcontinent Division with properties primarily located in Oklahoma and the Texas Panhandle;
|
§
|
QEP Field Services Company (QEP Field Services) provides midstream field services in the Northern Region and northwest Louisiana, including natural gas gathering and processing, compression and treating services, for affiliates and third parties; and
|
§
|
QEP Marketing Company (QEP Marketing) markets affiliate and third-party natural gas and oil, provides risk-management services, and owns and operates an underground gas storage reservoir.
|
§
|
Operate in a safe and environmentally responsible manner;
|
§
|
Allocate capital to those projects that generate optimal returns;
|
§
|
Maintain a sustainable, diverse inventory of low-cost, high-margin resource plays;
|
§
|
Be in the highest-potential areas of the resource plays in which we operate;
|
§
|
Build contiguous acreage positions to drive operating efficiencies;
|
§
|
Be the operator of our assets, whenever possible;
|
§
|
Be the low-cost driller and producer in each area where we operate;
|
§
|
Own and operate midstream infrastructure in our core producing areas to capture value downstream of the wellhead;
|
§
|
Build gas processing plants to extract liquids from our natural gas streams;
|
§
|
Gather, compress and treat our production to drive down costs;
|
§
|
Actively market our QEP Energy production to maximize value;
|
§
|
Utilize derivative contracts to mitigate the impact of natural gas, crude oil or NGL price volatility, while locking acceptable cash flows required to support future capital expenditures;
|
§
|
Attract and retain the best people; and
|
§
|
Maintain a capital structure that allows us the necessary financial flexibility with which to invest in organic growth and potential acquisition opportunities, as they may arise.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
QEP Energy
|
$ | (30.3 | ) | $ | 46.8 | $ | (77.1 | ) | $ | 77.8 | $ | 89.9 | $ | (12.1 | ) | |||||||||
QEP Field Services
|
33.3 | 44.2 | (10.9 | ) | 78.7 | 72.2 | 6.5 | |||||||||||||||||
QEP Marketing and other
|
(3.7 | ) | 1.8 | (5.5 | ) | (2.0 | ) | 3.9 | (5.9 | ) | ||||||||||||||
Net (loss) income attributable to QEP
|
$ | (0.7 | ) | $ | 92.8 | $ | (93.5 | ) | $ | 154.5 | $ | 166.0 | $ | (11.5 | ) | |||||||||
Earnings per diluted share
|
$ | - | $ | 0.52 | $ | (0.52 | ) | $ | 0.87 | $ | 0.93 | $ | (0.06 | ) | ||||||||||
Average diluted shares
|
177.7 | 178.6 | (0.9 | ) | 178.5 | 178.5 | - |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
QEP Energy
|
$ | 265.7 | $ | 247.7 | $ | 18.0 | $ | 526.5 | $ | 489.7 | $ | 36.8 | ||||||||||||
QEP Field Services
|
71.5 | 86.9 | (15.4 | ) | 155.8 | 148.3 | 7.5 | |||||||||||||||||
QEP Marketing and other
|
1.3 | 2.0 | (0.7 | ) | 1.9 | 4.4 | (2.5 | ) | ||||||||||||||||
Adjusted EBITDA
|
$ | 338.5 | $ | 336.6 | $ | 1.9 | $ | 684.2 | $ | 642.4 | $ | 41.8 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
Net (loss) income attributable to QEP Resources
|
$ | (0.7 | ) | $ | 92.8 | $ | (93.5 | ) | $ | 154.5 | $ | 166.0 | $ | (11.5 | ) | |||||||||
Net income attributable to non-controlling interest
|
0.9 | 0.7 | 0.2 | 1.7 | 1.3 | 0.4 | ||||||||||||||||||
Net income
|
0.2 | 93.5 | (93.3 | ) | 156.2 | 167.3 | (11.1 | ) | ||||||||||||||||
Unrealized loss (gain) on derivative contracts
|
38.4 | (27.6 | ) | 66.0 | (89.9 | ) | (58.8 | ) | (31.1 | ) | ||||||||||||||
Net gain from asset sales
|
- | (0.2 | ) | 0.2 | (1.5 | ) | (0.2 | ) | (1.3 | ) | ||||||||||||||
Interest and other (income) loss
|
(0.9 | ) | 0.4 | (1.3 | ) | (2.6 | ) | (0.2 | ) | (2.4 | ) | |||||||||||||
Income taxes
|
0.1 | 54.2 | (54.1 | ) | 88.8 | 96.9 | (8.1 | ) | ||||||||||||||||
Interest expense
|
28.2 | 22.1 | 6.1 | 52.9 | 44.2 | 8.7 | ||||||||||||||||||
Loss on early extinguishment of debt
|
0.6 | - | 0.6 | 0.6 | - | 0.6 | ||||||||||||||||||
Depreciation, depletion and amortization
|
214.1 | 186.6 | 27.5 | 413.3 | 377.4 | 35.9 | ||||||||||||||||||
Abandonment and impairment
|
55.7 | 5.3 | 50.4 | 62.3 | 10.7 | 51.6 | ||||||||||||||||||
Exploration expenses
|
2.1 | 2.3 | (0.2 | ) | 4.1 | 5.1 | (1.0 | ) | ||||||||||||||||
Adjusted EBITDA
|
$ | 338.5 | $ | 336.6 | $ | 1.9 | $ | 684.2 | $ | 642.4 | $ | 41.8 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
Net income (loss) attributable to QEP Energy
|
$ | (30.3 | ) | $ | 46.8 | $ | (77.1 | ) | $ | 77.8 | $ | 89.9 | $ | (12.1 | ) | |||||||||
Unrealized loss (gain) on derivative contracts
|
34.9 | (27.6 | ) | 62.5 | (88.8 | ) | (58.8 | ) | (30.0 | ) | ||||||||||||||
Net gain from asset sales
|
- | (0.2 | ) | 0.2 | (1.5 | ) | (0.2 | ) | (1.3 | ) | ||||||||||||||
Interest and other (income) loss
|
(0.7 | ) | 0.5 | (1.2 | ) | (2.4 | ) | (0.2 | ) | (2.2 | ) | |||||||||||||
Income taxes
|
(16.6 | ) | 27.7 | (44.3 | ) | 47.7 | 53.3 | (5.6 | ) | |||||||||||||||
Interest expense
|
23.4 | 20.4 | 3.0 | 47.0 | 40.3 | 6.7 | ||||||||||||||||||
Depreciation, depletion and amortization
|
197.2 | 172.5 | 24.7 | 380.3 | 349.6 | 30.7 | ||||||||||||||||||
Abandonment and impairment
|
55.7 | 5.3 | 50.4 | 62.3 | 10.7 | 51.6 | ||||||||||||||||||
Exploration expenses
|
2.1 | 2.3 | (0.2 | ) | 4.1 | 5.1 | (1.0 | ) | ||||||||||||||||
Adjusted EBITDA
|
$ | 265.7 | $ | 247.7 | $ | 18.0 | $ | 526.5 | $ | 489.7 | $ | 36.8 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
Net income attributable to QEP Field Services
|
$ | 33.3 | $ | 44.2 | $ | (10.9 | ) | $ | 78.7 | $ | 72.2 | $ | 6.5 | |||||||||||
Net income attributable to non-controlling interest
|
0.9 | 0.7 | 0.2 | 1.7 | 1.3 | 0.4 | ||||||||||||||||||
Net income
|
34.2 | 44.9 | (10.7 | ) | 80.4 | 73.5 | 6.9 | |||||||||||||||||
Unrealized (gain) on derivative contracts
|
(1.5 | ) | - | (1.5 | ) | (4.5 | ) | - | (4.5 | ) | ||||||||||||||
Net gain from asset sales
|
- | (0.1 | ) | 0.1 | - | (0.1 | ) | 0.1 | ||||||||||||||||
Interest and other income
|
(0.1 | ) | - | (0.1 | ) | (0.1 | ) | - | (0.1 | ) | ||||||||||||||
Income taxes
|
19.2 | 25.5 | (6.3 | ) | 42.7 | 41.6 | 1.1 | |||||||||||||||||
Interest expense
|
3.6 | 3.1 | 0.5 | 5.9 | 6.6 | (0.7 | ) | |||||||||||||||||
Depreciation, depletion and amortization
|
16.1 | 13.5 | 2.6 | 31.4 | 26.7 | 4.7 | ||||||||||||||||||
Adjusted EBITDA
|
$ | 71.5 | $ | 86.9 | $ | (15.4 | ) | $ | 155.8 | $ | 148.3 | $ | 7.5 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
Net income (loss) attributable to QEP Marketing and other
|
$ | (3.7 | ) | $ | 1.8 | $ | (5.5 | ) | $ | (2.0 | ) | $ | 3.9 | $ | (5.9 | ) | ||||||||
Unrealized loss on derivative contracts
|
5.0 | - | 5.0 | 3.4 | - | 3.4 | ||||||||||||||||||
Net gain from asset sales
|
- | 0.1 | (0.1 | ) | - | 0.1 | (0.1 | ) | ||||||||||||||||
Interest and other income
|
(0.1 | ) | (0.1 | ) | - | (0.1 | ) | - | (0.1 | ) | ||||||||||||||
Income taxes
|
(2.5 | ) | 1.0 | (3.5 | ) | (1.6 | ) | 2.0 | (3.6 | ) | ||||||||||||||
Interest expense
|
1.2 | (1.4 | ) | 2.6 | - | (2.7 | ) | 2.7 | ||||||||||||||||
Loss on early extinguishment of debt
|
0.6 | - | 0.6 | 0.6 | - | 0.6 | ||||||||||||||||||
Depreciation, depletion and amortization
|
0.8 | 0.6 | 0.2 | 1.6 | 1.1 | 0.5 | ||||||||||||||||||
Adjusted EBITDA
|
$ | 1.3 | $ | 2.0 | $ | (0.7 | ) | $ | 1.9 | $ | 4.4 | $ | (2.5 | ) |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
QEP Energy Production Volumes
|
||||||||||||||||||||||||
Natural gas (Bcf)
|
64.0 | 57.0 | 7.0 | 123.5 | 116.1 | 7.4 | ||||||||||||||||||
Oil (Mbbl)
|
1,308.0 | 873.6 | 434.4 | 2,530.5 | 1,636.6 | 893.9 | ||||||||||||||||||
NGL (Mbbl)
|
1,297.8 | 394.3 | 903.5 | 2,519.5 | 780.6 | 1,738.9 | ||||||||||||||||||
Total production (Bcfe)
|
79.6 | 64.7 | 14.9 | 153.8 | 130.6 | 23.2 | ||||||||||||||||||
Average daily production (MMcfe)
|
875.1 | 710.8 | 164.3 | 845.1 | 721.7 | 123.4 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
QEP Energy - Natural gas Production (Bcf)
|
||||||||||||||||||||||||
Northern Region
|
||||||||||||||||||||||||
Pinedale
|
18.2 | 17.0 | 1.2 | 35.2 | 32.4 | 2.8 | ||||||||||||||||||
Uinta Basin
|
4.0 | 3.4 | 0.6 | 7.3 | 8.2 | (0.9 | ) | |||||||||||||||||
Legacy
|
2.9 | 3.1 | (0.2 | ) | 6.0 | 6.1 | (0.1 | ) | ||||||||||||||||
Southern Region
|
||||||||||||||||||||||||
Haynesville/Cotton Valley
|
30.9 | 25.7 | 5.2 | 58.8 | 53.9 | 4.9 | ||||||||||||||||||
Midcontinent
|
8.0 | 7.8 | 0.2 | 16.2 | 15.5 | 0.7 | ||||||||||||||||||
Total production
|
64.0 | 57.0 | 7.0 | 123.5 | 116.1 | 7.4 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
QEP Energy - Oil Production (Mbbl)
|
||||||||||||||||||||||||
Northern Region
|
||||||||||||||||||||||||
Pinedale
|
153.8 | 139.2 | 14.6 | 306.1 | 269.8 | 36.3 | ||||||||||||||||||
Uinta Basin
|
216.2 | 233.4 | (17.2 | ) | 420.3 | 458.7 | (38.4 | ) | ||||||||||||||||
Legacy
|
575.2 | 298.7 | 276.5 | 1,146.0 | 527.6 | 618.4 | ||||||||||||||||||
Southern Region
|
||||||||||||||||||||||||
Haynesville/Cotton Valley
|
13.0 | 11.7 | 1.3 | 22.4 | 26.3 | (3.9 | ) | |||||||||||||||||
Midcontinent
|
349.8 | 190.6 | 159.2 | 635.7 | 354.2 | 281.5 | ||||||||||||||||||
Total production
|
1,308.0 | 873.6 | 434.4 | 2,530.5 | 1,636.6 | 893.9 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
QEP Energy - NGL Production (Mbbl)
|
||||||||||||||||||||||||
Northern Region
|
||||||||||||||||||||||||
Pinedale
|
748.8 | - | 748.8 | 1,465.9 | - | 1,465.9 | ||||||||||||||||||
Uinta Basin
|
86.6 | 25.2 | 61.4 | 107.9 | 59.5 | 48.4 | ||||||||||||||||||
Legacy
|
48.2 | 29.8 | 18.4 | 89.6 | 56.3 | 33.3 | ||||||||||||||||||
Southern Region
|
||||||||||||||||||||||||
Haynesville/Cotton Valley
|
2.0 | 2.0 | - | 4.4 | 4.0 | 0.4 | ||||||||||||||||||
Midcontinent
|
412.2 | 337.3 | 74.9 | 851.7 | 660.8 | 190.9 | ||||||||||||||||||
Total production
|
1,297.8 | 394.3 | 903.5 | 2,519.5 | 780.6 | 1,738.9 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
QEP Energy - Total Production (Bcfe)
|
||||||||||||||||||||||||
Northern Region
|
||||||||||||||||||||||||
Pinedale
|
23.7 | 17.8 | 5.9 | 45.9 | 34.0 | 11.9 | ||||||||||||||||||
Uinta Basin (1)
|
5.9 | 5.0 | 0.9 | 10.5 | 11.4 | (0.9 | ) | |||||||||||||||||
Legacy
|
6.5 | 5.0 | 1.5 | 13.3 | 9.5 | 3.8 | ||||||||||||||||||
Southern Region
|
||||||||||||||||||||||||
Haynesville/Cotton Valley
|
30.9 | 25.8 | 5.1 | 58.9 | 54.1 | 4.8 | ||||||||||||||||||
Midcontinent
|
12.6 | 11.1 | 1.5 | 25.2 | 21.6 | 3.6 | ||||||||||||||||||
Total production
|
79.6 | 64.7 | 14.9 | 153.8 | 130.6 | 23.2 |
(1)
|
During the six months ended June 30, 2011, the Uinta Basin production included a 1.6 Bcfe positive adjustment due to an increase of QEP’s ownership interest within a federal unit.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
QEP Energy - Average field-level natural gas price (per Mcf)
|
||||||||||||||||||||||||
Northern Region
|
$ | 2.07 | $ | 3.95 | $ | (1.88 | ) | $ | 2.35 | $ | 4.05 | $ | (1.70 | ) | ||||||||||
Southern Region
|
2.23 | 4.21 | (1.98 | ) | 2.48 | 4.10 | (1.62 | ) | ||||||||||||||||
Average field-level natural gas price
|
2.17 | 4.11 | (1.94 | ) | 2.43 | 4.08 | (1.65 | ) | ||||||||||||||||
QEP Energy - Average field-level oil price (per bbl)
|
||||||||||||||||||||||||
Northern Region
|
$ | 78.12 | $ | 91.67 | $ | (13.55 | ) | $ | 83.19 | $ | 86.40 | $ | (3.21 | ) | ||||||||||
Southern Region
|
91.76 | 94.11 | (2.35 | ) | 94.51 | 92.12 | 2.39 | |||||||||||||||||
Average field-level oil price
|
81.90 | 92.24 | (10.34 | ) | 86.14 | 87.73 | (1.59 | ) | ||||||||||||||||
QEP Energy - Average field-level NGL price (per bbl)
|
||||||||||||||||||||||||
Northern Region
|
$ | 36.76 | $ | 63.22 | $ | (26.46 | ) | $ | 40.52 | $ | 63.41 | $ | (22.89 | ) | ||||||||||
Southern Region
|
32.11 | 41.14 | (9.03 | ) | 33.06 | 42.81 | (9.75 | ) | ||||||||||||||||
Average field-level NGL price
|
35.27 | 44.22 | (8.95 | ) | 37.98 | 45.86 | (7.88 | ) |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012 (1)
|
2011 (2)
|
Change
|
2012 (1)
|
2011 (2)
|
Change
|
|||||||||||||||||||
Natural gas (per Mcf)
|
||||||||||||||||||||||||
Average field-level price
|
$ | 2.17 | $ | 4.11 | $ | (1.94 | ) | $ | 2.43 | $ | 4.08 | $ | (1.65 | ) | ||||||||||
Commodity derivative impact
|
1.75 | 0.64 | 1.11 | 1.60 | 0.68 | 0.92 | ||||||||||||||||||
Net realized price
|
$ | 3.92 | $ | 4.75 | $ | (0.83 | ) | $ | 4.03 | $ | 4.76 | $ | (0.73 | ) | ||||||||||
Oil (per bbl)
|
||||||||||||||||||||||||
Average field-level price
|
$ | 81.90 | $ | 92.24 | $ | (10.34 | ) | $ | 86.14 | $ | 87.73 | $ | (1.59 | ) | ||||||||||
Commodity derivative impact
|
1.70 | 0.14 | 1.56 | (0.19 | ) | 0.08 | (0.27 | ) | ||||||||||||||||
Net realized price
|
$ | 83.60 | $ | 92.38 | $ | (8.78 | ) | $ | 85.95 | $ | 87.81 | $ | (1.86 | ) | ||||||||||
NGL (per bbl)
|
||||||||||||||||||||||||
Average field-level price
|
$ | 35.27 | $ | 44.22 | $ | (8.95 | ) | $ | 37.98 | $ | 45.86 | $ | (7.88 | ) | ||||||||||
Commodity derivative impact
|
2.04 | - | 2.04 | 1.23 | - | 1.23 | ||||||||||||||||||
Net realized price
|
$ | 37.31 | $ | 44.22 | $ | (6.91 | ) | $ | 39.21 | $ | 45.86 | $ | (6.65 | ) |
(1)
|
The impact was reported below operating (loss) income in “Realized and unrealized gains on derivative contracts” beginning January 1, 2012, in the Condensed Consolidated Statement of Income.
|
(2)
|
The impact of settled commodity derivatives that qualified for hedge accounting was reported in “Revenues” in the Condensed Consolidated Statement of Income.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
Gathering Margin
|
(in millions) |
(in millions)
|
||||||||||||||||||||||
Gathering revenues
|
$ | 45.8 | $ | 38.7 | $ | 7.1 | $ | 87.7 | $ | 78.1 | $ | 9.6 | ||||||||||||
Other gathering revenues
|
9.3 | 25.0 | (15.7 | ) | 20.6 | 42.7 | (22.1 | ) | ||||||||||||||||
Gathering expense
|
(8.3 | ) | (12.4 | ) | 4.1 | (17.9 | ) | (24.3 | ) | 6.4 | ||||||||||||||
Gathering margin
|
$ | 46.8 | $ | 51.3 | $ | (4.5 | ) | $ | 90.4 | $ | 96.5 | $ | (6.1 | ) |
Operating Statistics
|
||||||||||||||||||||||||
Natural gas gathering volumes (in millions of MMBtu)
|
||||||||||||||||||||||||
For unaffiliated customers
|
63.2 | 66.0 | (2.8 | ) | 124.2 | 127.1 | (2.9 | ) | ||||||||||||||||
For affiliated customers
|
70.7 | 55.1 | 15.6 | 133.4 | 113.0 | 20.4 | ||||||||||||||||||
Total Gas Gathering Volumes
|
133.9 | 121.1 | 12.8 | 257.6 | 240.1 | 17.5 | ||||||||||||||||||
Average gas gathering revenue (per MMBtu)
|
$ | 0.34 | $ | 0.32 | $ | 0.02 | $ | 0.34 | $ | 0.33 | $ | 0.01 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
Processing Margin
|
(in millions)
|
|||||||||||||||||||||||
NGL sales (1)
|
$ | 36.3 | $ | 46.3 | $ | (10.0 | ) | $ | 83.8 | $ | 75.8 | $ | 8.0 | |||||||||||
Realized gains from commodity derivative contract settlements
|
3.3 | - | 3.3 | 4.4 | - | 4.4 | ||||||||||||||||||
Processing (fee-based) revenues
|
17.6 | 12.2 | 5.4 | 33.6 | 22.2 | 11.4 | ||||||||||||||||||
Other processing fees
|
- | - | - | 3.0 | - | 3.0 | ||||||||||||||||||
Processing (expense)
|
(3.7 | ) | (3.1 | ) | (0.6 | ) | (7.4 | ) | (5.8 | ) | (1.6 | ) | ||||||||||||
Processing plant fuel and shrink (expense)
|
(8.4 | ) | (11.4 | ) | 3.0 | (18.5 | ) | (21.6 | ) | 3.1 | ||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
(12.0 | ) | (1.2 | ) | (10.8 | ) | (20.8 | ) | (2.1 | ) | (18.7 | ) | ||||||||||||
Processing margin
|
$ | 33.1 | $ | 42.8 | $ | (9.7 | ) | $ | 78.1 | $ | 68.5 | $ | 9.6 | |||||||||||
Keep-whole processing margin
|
$ | 19.2 | $ | 33.7 | $ | (14.5 | ) | $ | 48.9 | $ | 52.1 | $ | (3.2 | ) |
Operating Statistics
|
||||||||||||||||||||||||
Natural gas processing volumes
|
||||||||||||||||||||||||
NGL sales (MMgal)
|
41.4 | 36.4 | 5.0 | 86.6 | 64.2 | 22.4 | ||||||||||||||||||
Average net realized NGL sales price (per gal)
|
$ | 0.96 | $ | 1.27 | $ | (0.31 | ) | $ | 1.02 | $ | 1.18 | $ | (0.16 | ) | ||||||||||
Fee-based processing volumes (in millions of MMBtu)
|
||||||||||||||||||||||||
For unaffiliated customers
|
29.7 | 33.1 | (3.4 | ) | 57.7 | 64.5 | (6.8 | ) | ||||||||||||||||
For affiliated customers
|
34.8 | 27.2 | 7.6 | 66.5 | 52.8 | 13.7 | ||||||||||||||||||
Total fee-based processing volumes
|
64.5 | 60.3 | 4.2 | 124.2 | 117.3 | 6.9 | ||||||||||||||||||
Average fee-based processing revenue (per MMBtu)
|
$ | 0.27 | $ | 0.21 | $ | 0.06 | $ | 0.27 | $ | 0.19 | $ | 0.08 |
(1)
|
NGL sales for the three and six months ended June 30, 2011, have been recast to reflect QEP’s revised reporting of its transportation and handling costs. See Note 2 - Basis of Presentation of Interim Consolidated Financial Statements for additional information. In addition, revenues for the three and six months ended June 30, 2011, reflect the impact of QEP’s settled derivative contracts which during the three and six months ended June 30, 2012, are reflected below operating (loss) income. See Note 6 - Derivative Contracts for detailed information on derivative contract settlements in the three and six months ended June 30, 2011.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||||||
2011
|
2010
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
QEP Resources Revenues
|
||||||||||||||||||||||||
Natural gas sales
|
$ | 138.9 | $ | 298.7 | $ | (159.8 | ) | $ | 300.1 | $ | 611.3 | $ | (311.2 | ) | ||||||||||
Oil sales
|
107.2 | 80.7 | 26.5 | 218.0 | 143.7 | 74.3 | ||||||||||||||||||
NGL sales
|
82.1 | 63.8 | 18.3 | 179.5 | 111.7 | 67.8 | ||||||||||||||||||
Gathering, processing and other
|
45.8 | 58.9 | (13.1 | ) | 95.6 | 105.5 | (9.9 | ) | ||||||||||||||||
Purchased gas and oil sales
|
125.3 | 306.0 | (180.7 | ) | 309.3 | 453.8 | (144.5 | ) | ||||||||||||||||
Total Revenues
|
$ | 499.3 | $ | 808.1 | $ | (308.8 | ) | $ | 1,102.5 | $ | 1,426.0 | $ | (323.5 | ) |
Natural Gas
|
Oil
|
NGLs
|
Total
|
|||||||||||||
(in millions)
|
||||||||||||||||
QEP Energy Revenues
|
||||||||||||||||
Three months ended June 30, 2011 Revenues
|
$ | 298.7 | $ | 80.7 | $ | 17.5 | $ | 396.9 | ||||||||
Changes associated with volumes (1)
|
27.7 | 40.5 | 40.0 | 108.2 | ||||||||||||
Changes associated with prices (2)
|
(123.1 | ) | (13.9 | ) | (11.7 | ) | (148.7 | ) | ||||||||
Changes associated with discontinuance of hedge accounting (3)
|
(64.4 | ) | (0.1 | ) | - | (64.5 | ) | |||||||||
Three months ended June 30, 2012 Revenues
|
$ | 138.9 | $ | 107.2 | $ | 45.8 | $ | 291.9 | ||||||||
Natural Gas
|
Oil
|
NGLs
|
Total
|
|||||||||||||
(in millions)
|
||||||||||||||||
QEP Energy Revenues
|
||||||||||||||||
Six months ended June 30, 2011 Revenues
|
$ | 611.3 | $ | 143.7 | $ | 35.9 | $ | 790.9 | ||||||||
Changes associated with volumes (1)
|
30.1 | 78.4 | 79.7 | 188.2 | ||||||||||||
Changes associated with prices (2)
|
(203.8 | ) | (4.0 | ) | (19.9 | ) | (227.7 | ) | ||||||||
Changes associated with discontinuance of hedge accounting (3)
|
(137.5 | ) | (0.1 | ) | - | (137.6 | ) | |||||||||
Six months ended June 30, 2012 Revenues
|
$ | 300.1 | $ | 218.0 | $ | 95.7 | $ | 613.8 |
(1)
|
The revenue variance attributed to the change in volume is calculated by multiplying the change in volumes from the three and six months ended June 30, 2012, to the three and six months ended June 30, 2011, by the average field-level price for the three and six months ended June 30, 2011.
|
(2)
|
The revenue variance attributed to the change in price is calculated by multiplying the change in field-level prices or fee from the three and six months ended June 30, 2012, to the three and six months ended June 30, 2011, by volume for the three and six months ended June 30, 2012. Pricing changes are driven by changes in the commodity field-level prices excluding impact from commodity derivatives.
|
(3)
|
During the three and six months ended June 30, 2011, realized gains and losses on commodity derivative contract settlements were included in natural gas revenues on the Condensed Consolidated Statement of Income. Conversely, during the three and six months ended June 30, 2012, the realized gains and losses on commodity derivative contract settlements are recognized below operating (loss) income on the Condensed Consolidated Statement of Income.
|
Three Months Ended June 30,
|
||||||||||||||||
NGLs
|
Processing
|
Gathering
|
Total
|
|||||||||||||
(in millions)
|
||||||||||||||||
QEP Field Services
|
||||||||||||||||
Three months ended June 30, 2011 Revenues
|
$ | 46.3 | $ | 12.2 | $ | 63.7 | $ | 122.2 | ||||||||
Changes associated with volumes (1)
|
7.9 | 0.9 | 4.1 | 12.9 | ||||||||||||
Changes associated with prices/fees (2)
|
(17.9 | ) | 4.0 | 2.7 | (11.2 | ) | ||||||||||
Changes associated with other factors (3)
|
- | 0.5 | (15.4 | ) | (14.9 | ) | ||||||||||
Three months ended June 30, 2012 Revenues
|
$ | 36.3 | $ | 17.6 | $ | 55.1 | $ | 109.0 | ||||||||
Six Months Ended June 30,
|
||||||||||||||||
NGLs
|
Processing
|
Gathering
|
Total
|
|||||||||||||
(in millions)
|
||||||||||||||||
QEP Field Services
|
||||||||||||||||
Six months ended June 30, 2011 Revenues
|
$ | 75.8 | $ | 22.2 | $ | 120.8 | $ | 218.8 | ||||||||
Changes associated with volumes (1)
|
26.5 | 1.4 | 5.7 | 33.6 | ||||||||||||
Changes associated with prices/fees (2)
|
(18.5 | ) | 10.0 | 3.9 | (4.6 | ) | ||||||||||
Changes associated with other factors (3)
|
- | 3.0 | (22.1 | ) | (19.1 | ) | ||||||||||
Six months ended June 30, 2012 Revenues
|
$ | 83.8 | $ | 36.6 | $ | 108.3 | $ | 228.7 |
(1)
|
The revenue variance attributed to the change in volume is calculated by multiplying the change in volumes from the three and six months ended June 30, 2012, to the three and six months ended June 30, 2011, by the average price or fee for the three and six months ended June 30, 2011.
|
(2)
|
The revenue variance attributed to the change in fees is calculated by multiplying the change in prices or fees from the three and six months ended June 30, 2012, to the three and six months ended June 30, 2011, by volume for the three and six months ended June 30, 2012.
|
(3)
|
The revenue variance attributed to the change associated with other factors represents the changes in other gathering revenues and changes in other processing fees. These other revenues are not included in average gathering revenue per MMBtu or average fee-based processing revenue per MMBtu in QEP Field Services operating statistics and thus have not been included in the price and volume variance analysis presented above.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
Purchased gas and oil expense
|
$ | 124.9 | $ | 303.9 | $ | (179.0 | ) | $ | 313.3 | $ | 450.6 | $ | (137.3 | ) | ||||||||||
Lease operating expense
|
40.5 | 34.3 | 6.2 | 80.6 | 67.1 | 13.5 | ||||||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
40.7 | 24.0 | 16.7 | 75.2 | 45.7 | 29.5 | ||||||||||||||||||
Gathering, processing and other
|
20.6 | 27.2 | (6.6 | ) | 44.3 | 52.4 | (8.1 | ) | ||||||||||||||||
General and administrative
|
36.8 | 28.7 | 8.1 | 72.8 | 60.4 | 12.4 | ||||||||||||||||||
Production and property taxes
|
19.4 | 27.1 | (7.7 | ) | 44.1 | 50.8 | (6.7 | ) | ||||||||||||||||
Depreciation, depletion and amortization
|
214.1 | 186.6 | 27.5 | 413.3 | 377.4 | 35.9 | ||||||||||||||||||
Exploration expenses
|
2.1 | 2.3 | (0.2 | ) | 4.1 | 5.1 | (1.0 | ) | ||||||||||||||||
Abandonment and impairment
|
55.7 | 5.3 | 50.4 | 62.3 | 10.7 | 51.6 | ||||||||||||||||||
Total operating expenses
|
$ | 554.8 | $ | 639.4 | $ | (84.6 | ) | $ | 1,110.0 | $ | 1,120.2 | $ | (10.2 | ) |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
Natural gas sales
|
$ | 138.9 | $ | 298.7 | $ | (159.8 | ) | $ | 300.1 | $ | 611.3 | $ | (311.2 | ) | ||||||||||
Oil sales
|
107.2 | 80.7 | 26.5 | 218.0 | 143.7 | 74.3 | ||||||||||||||||||
NGL sales
|
45.8 | 17.5 | 28.3 | 95.7 | 35.9 | 59.8 | ||||||||||||||||||
Purchased gas, oil and NGL sales
|
41.3 | 156.0 | (114.7 | ) | 113.8 | 156.0 | (42.2 | ) | ||||||||||||||||
Other
|
2.3 | 2.6 | (0.3 | ) | 4.7 | 4.8 | (0.1 | ) | ||||||||||||||||
Total Revenues
|
335.5 | 555.5 | (220.0 | ) | 732.3 | 951.7 | (219.4 | ) | ||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Purchased gas, oil and NGL expense
|
40.6 | 154.7 | (114.1 | ) | 113.1 | 154.7 | (41.6 | ) | ||||||||||||||||
Lease operating expense
|
41.4 | 35.0 | 6.4 | 82.2 | 68.4 | 13.8 | ||||||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
57.2 | 42.3 | 14.9 | 107.6 | 85.8 | 21.8 | ||||||||||||||||||
General and administrative
|
29.2 | 22.9 | 6.3 | 62.1 | 46.8 | 15.3 | ||||||||||||||||||
Production and property taxes
|
18.2 | 25.4 | (7.2 | ) | 41.1 | 47.6 | (6.5 | ) | ||||||||||||||||
Depreciation, depletion and amortization
|
197.2 | 172.5 | 24.7 | 380.3 | 349.6 | 30.7 | ||||||||||||||||||
Exploration expenses
|
2.1 | 2.3 | (0.2 | ) | 4.1 | 5.1 | (1.0 | ) | ||||||||||||||||
Abandonment and impairment
|
55.7 | 5.3 | 50.4 | 62.3 | 10.7 | 51.6 | ||||||||||||||||||
Total Operating Expenses
|
441.6 | 460.4 | (18.8 | ) | 852.8 | 768.7 | 84.1 | |||||||||||||||||
Net gain from asset sales
|
- | 0.2 | (0.2 | ) | 1.5 | 0.2 | 1.3 | |||||||||||||||||
Operating (Loss) Income
|
(106.1 | ) | 95.3 | (201.4 | ) | (119.0 | ) | 183.2 | (302.2 | ) | ||||||||||||||
Realized gain (loss) on derivative instruments
|
116.7 | (27.6 | ) | 144.3 | 200.2 | (58.8 | ) | 259.0 | ||||||||||||||||
Unrealized (loss) gain on derivative instruments
|
(34.9 | ) | 27.6 | (62.5 | ) | 88.8 | 58.8 | 30.0 | ||||||||||||||||
Interest and other income (loss)
|
0.7 | (0.5 | ) | 1.2 | 2.4 | 0.2 | 2.2 | |||||||||||||||||
Income from unconsolidated affiliates
|
0.1 | 0.1 | - | 0.1 | 0.1 | - | ||||||||||||||||||
Interest expense
|
(23.4 | ) | (20.4 | ) | (3.0 | ) | (47.0 | ) | (40.3 | ) | (6.7 | ) | ||||||||||||
(Loss) Income before Income Taxes
|
(46.9 | ) | 74.5 | (121.4 | ) | 125.5 | 143.2 | (17.7 | ) | |||||||||||||||
Income taxes
|
16.6 | (27.7 | ) | 44.3 | (47.7 | ) | (53.3 | ) | 5.6 | |||||||||||||||
Net (Loss) Income Attributable to QEP
|
$ | (30.3 | ) | $ | 46.8 | $ | (77.1 | ) | $ | 77.8 | $ | 89.9 | $ | (12.1 | ) |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(per Mcfe)
|
||||||||||||||||||||||||
Depreciation, depletion and amortization
|
$ | 2.48 | $ | 2.67 | $ | (0.19 | ) | $ | 2.47 | $ | 2.68 | $ | (0.21 | ) | ||||||||||
Lease operating expense
|
0.52 | 0.54 | (0.02 | ) | 0.53 | 0.52 | 0.01 | |||||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
0.72 | 0.65 | 0.07 | 0.70 | 0.66 | 0.04 | ||||||||||||||||||
General and administrative expense
|
0.37 | 0.35 | 0.02 | 0.40 | 0.36 | 0.04 | ||||||||||||||||||
Allocated interest expense
|
0.29 | 0.32 | (0.03 | ) | 0.31 | 0.31 | - | |||||||||||||||||
Production taxes
|
0.23 | 0.39 | (0.16 | ) | 0.27 | 0.37 | (0.10 | ) | ||||||||||||||||
Total Operating Expenses
|
$ | 4.61 | $ | 4.92 | $ | (0.31 | ) | $ | 4.68 | $ | 4.90 | $ | (0.22 | ) |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(per Mcfe)
|
||||||||||||||||||||||||
Northern Region
|
$ | 0.60 | $ | 0.62 | $ | (0.02 | ) | $ | 0.59 | $ | 0.61 | $ | (0.02 | ) | ||||||||||
Southern Region
|
0.46 | 0.48 | (0.02 | ) | 0.49 | 0.46 | 0.03 | |||||||||||||||||
Average production cost
|
0.52 | 0.54 | (0.02 | ) | 0.53 | 0.52 | 0.01 |
Operated Completions
|
Non-operated Completions
|
|||||||||||||||||||||||||||||||
Three Months Ended
June 30, 2012
|
Six Months Ended
June 30, 2012
|
Three Months Ended
June 30, 2012
|
Six Months Ended
June 30, 2012
|
|||||||||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||||||||
Northern Region
|
||||||||||||||||||||||||||||||||
Pinedale
|
39 | 27.2 | 51 | 36.4 | - | - | - | - | ||||||||||||||||||||||||
Uinta Basin
|
16 | 14.3 | 26 | 24.3 | 67 | 0.2 | 132 | 0.4 | ||||||||||||||||||||||||
Legacy
|
6 | 4.5 | 9 | 7.3 | 33 | 1.7 | 49 | 2.3 | ||||||||||||||||||||||||
Southern Region
|
||||||||||||||||||||||||||||||||
Haynesville/Cotton Valley
|
6 | 4.7 | 29 | 16.7 | 3 | 0.2 | 6 | 0.7 | ||||||||||||||||||||||||
Midcontinent
|
6 | 4.3 | 13 | 9.9 | 35 | 4.0 | 61 | 6.9 |
Operated
|
Non-operated
|
|||||||||||||||||||||||||||||||
Drilling
|
Waiting on completion
|
Drilling
|
Waiting on completion
|
|||||||||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||||||||
Northern Region
|
||||||||||||||||||||||||||||||||
Pinedale
|
22 | 14.1 | 42 | 31.5 | - | - | - | - | ||||||||||||||||||||||||
Uinta Basin
|
2 | 1.6 | 2 | 2.0 | - | - | - | - | ||||||||||||||||||||||||
Legacy
|
6 | 5.0 | 7 | 5.9 | 12 | 0.6 | 14 | 0.3 | ||||||||||||||||||||||||
Southern Region
|
||||||||||||||||||||||||||||||||
Haynesville/Cotton Valley
|
- | - | 5 | 2.4 | 1 | 0.1 | - | - | ||||||||||||||||||||||||
Midcontinent
|
4 | 4.0 | 6 | 5.2 | 11 | 1.1 | 34 | 3.1 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
NGL sales
|
$ | 36.3 | $ | 46.3 | $ | (10.0 | ) | $ | 83.8 | $ | 75.8 | $ | 8.0 | |||||||||||
Processing (fee based)
|
17.6 | 12.2 | 5.4 | 33.6 | 22.2 | 11.4 | ||||||||||||||||||
Other processing fees
|
- | - | - | 3.0 | - | 3.0 | ||||||||||||||||||
Gathering
|
45.8 | 38.7 | 7.1 | 87.7 | 78.1 | 9.6 | ||||||||||||||||||
Other gathering
|
9.3 | 25.0 | (15.7 | ) | 20.6 | 42.7 | (22.1 | ) | ||||||||||||||||
Purchased gas, oil and NGL sales
|
4.6 | - | 4.6 | 4.6 | - | 4.6 | ||||||||||||||||||
Total Revenues
|
113.6 | 122.2 | (8.6 | ) | 233.3 | 218.8 | 14.5 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Purchased gas, oil and NGL expense
|
4.1 | - | 4.1 | 4.1 | - | 4.1 | ||||||||||||||||||
Processing
|
3.7 | 3.1 | 0.6 | 7.4 | 5.8 | 1.6 | ||||||||||||||||||
Processing plant fuel and shrinkage
|
8.4 | 11.4 | (3.0 | ) | 18.5 | 21.6 | (3.1 | ) | ||||||||||||||||
Gathering
|
8.3 | 12.4 | (4.1 | ) | 17.9 | 24.3 | (6.4 | ) | ||||||||||||||||
Natural gas, oil and NGL transportation and other handling costs
|
12.0 | 1.2 | 10.8 | 20.8 | 2.1 | 18.7 | ||||||||||||||||||
General and administrative
|
9.0 | 6.8 | 2.2 | 13.5 | 15.8 | (2.3 | ) | |||||||||||||||||
Taxes other than income taxes
|
1.2 | 1.6 | (0.4 | ) | 2.9 | 3.0 | (0.1 | ) | ||||||||||||||||
Depreciation, depletion and amortization
|
16.1 | 13.5 | 2.6 | 31.4 | 26.7 | 4.7 | ||||||||||||||||||
Total Operating Expenses
|
62.8 | 50.0 | 12.8 | 116.5 | 99.3 | 17.2 | ||||||||||||||||||
Net gain from asset sales
|
- | 0.1 | (0.1 | ) | - | 0.1 | (0.1 | ) | ||||||||||||||||
Operating Income
|
50.8 | 72.3 | (21.5 | ) | 116.8 | 119.6 | (2.8 | ) | ||||||||||||||||
Interest and other income
|
0.1 | - | 0.1 | 0.1 | - | 0.1 | ||||||||||||||||||
Income from unconsolidated affiliates
|
1.3 | 1.2 | 0.1 | 3.2 | 2.1 | 1.1 | ||||||||||||||||||
Realized gains on derivative instruments
|
3.3 | - | 3.3 | 4.4 | - | 4.4 | ||||||||||||||||||
Unrealized gains on derivative instruments
|
1.5 | - | 1.5 | 4.5 | - | 4.5 | ||||||||||||||||||
Interest expense
|
(3.6 | ) | (3.1 | ) | (0.5 | ) | (5.9 | ) | (6.6 | ) | 0.7 | |||||||||||||
Income before Income Taxes
|
53.4 | 70.4 | (17.0 | ) | 123.1 | 115.1 | 8.0 | |||||||||||||||||
Income taxes
|
(19.2 | ) | (25.5 | ) | 6.3 | (42.7 | ) | (41.6 | ) | (1.1 | ) | |||||||||||||
Net income
|
34.2 | 44.9 | (10.7 | ) | 80.4 | 73.5 | 6.9 | |||||||||||||||||
Net income attributable to noncontrolling interest
|
(0.9 | ) | (0.7 | ) | (0.2 | ) | (1.7 | ) | (1.3 | ) | (0.4 | ) | ||||||||||||
Net Income Attributable to QEP
|
$ | 33.3 | $ | 44.2 | $ | (10.9 | ) | $ | 78.7 | $ | 72.2 | $ | 6.5 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
|||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
Purchased gas, oil and NGL sales
|
$ | 196.6 | $ | 293.2 | $ | (96.6 | ) | $ | 439.8 | $ | 572.2 | $ | (132.4 | ) | ||||||||||
Other
|
2.0 | 2.6 | (0.6 | ) | 3.9 | 5.1 | (1.2 | ) | ||||||||||||||||
Total Revenues
|
198.6 | 295.8 | (97.2 | ) | 443.7 | 577.3 | (133.6 | ) | ||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Purchased gas, oil and NGL expense
|
197.4 | 292.5 | (95.1 | ) | 445.0 | 570.4 | (125.4 | ) | ||||||||||||||||
Gathering, processing and other
|
0.5 | 0.4 | 0.1 | 0.7 | 0.7 | - | ||||||||||||||||||
General and administrative
|
0.1 | 0.8 | (0.7 | ) | 0.1 | 1.6 | (1.5 | ) | ||||||||||||||||
Production and property taxes
|
- | 0.1 | (0.1 | ) | 0.1 | 0.2 | (0.1 | ) | ||||||||||||||||
Depreciation, depletion and amortization
|
0.8 | 0.6 | 0.2 | 1.6 | 1.1 | 0.5 | ||||||||||||||||||
Total Operating Expenses
|
198.8 | 294.4 | (95.6 | ) | 447.5 | 574.0 | (126.5 | ) | ||||||||||||||||
Net loss from asset sales
|
- | (0.1 | ) | 0.1 | - | (0.1 | ) | 0.1 | ||||||||||||||||
Operating (Loss) Income
|
(0.2 | ) | 1.3 | (1.5 | ) | (3.8 | ) | 3.2 | (7.0 | ) | ||||||||||||||
Realized gain on derivative instruments
|
0.7 | - | 0.7 | 4.1 | - | 4.1 | ||||||||||||||||||
Unrealized loss on derivative instruments
|
(5.0 | ) | - | (5.0 | ) | (3.4 | ) | - | (3.4 | ) | ||||||||||||||
Interest and other income
|
26.8 | 24.8 | 2.0 | 52.7 | 49.2 | 3.5 | ||||||||||||||||||
Loss on extinguishment of debt
|
(0.6 | ) | - | (0.6 | ) | (0.6 | ) | - | (0.6 | ) | ||||||||||||||
Interest expense
|
(27.9 | ) | (23.3 | ) | (4.6 | ) | (52.6 | ) | (46.5 | ) | (6.1 | ) | ||||||||||||
(Loss) Income before Income Taxes
|
(6.2 | ) | 2.8 | (9.0 | ) | (3.6 | ) | 5.9 | (9.5 | ) | ||||||||||||||
Income taxes
|
2.5 | (1.0 | ) | 3.5 | 1.6 | (2.0 | ) | 3.6 | ||||||||||||||||
Net (Loss) Income Attributable to QEP
|
$ | (3.7 | ) | $ | 1.8 | $ | (5.5 | ) | $ | (2.0 | ) | $ | 3.9 | $ | (5.9 | ) |
June 30,
2012
|
December 31,
2011
|
|||||||
(in millions, except %)
|
||||||||
Cash and cash equivalents
|
$ | 146.4 | $ | - | ||||
Amount available under the credit facility (1)
|
1,495.9 | 893.5 | ||||||
Total liquidity
|
$ | 1,642.3 | $ | 893.5 | ||||
Total debt (2)
|
$ | 1,866.6 | $ | 1,679.4 | ||||
Total common shareholders' equity
|
3,367.0 | 3,301.5 | ||||||
Ratio of debt to total capital (3)
|
36 | % | 34 | % |
(1)
|
See discussion of Credit Facility below. Includes outstanding letters of credit of $4.1 million.
|
(2)
|
Includes all outstanding long-term debt which is discussed in detail below.
|
(3)
|
Defined as total debt divided by the sum of total debt plus common shareholders’ equity.
|
|
•
|
$176.8 million 6.05% Senior Notes due September 2016
|
|
•
|
$134.0 million 6.80% Senior Notes due April 2018
|
|
•
|
$136.0 million 6.80% Senior Notes due March 2020
|
|
•
|
$625.0 million 6.875% Senior Notes due March 2021
|
|
•
|
$500.0 million 5.375% Senior Notes due October 2022
|
Six Months Ended June 30,
|
||||||||||||
2012
|
2011
|
Change
|
||||||||||
(in millions)
|
||||||||||||
Net income
|
$ | 156.2 | $ | 167.3 | $ | (11.1 | ) | |||||
Noncash adjustments to net income
|
476.4 | 438.0 | 38.4 | |||||||||
Changes in operating assets and liabilities
|
61.7 | 23.3 | 38.4 | |||||||||
Net cash provided from operating activities
|
$ | 694.3 | $ | 628.6 | $ | 65.7 |
Six Months Ended
June 30,
|
Current
Forecast
Twelve Months
Ended (2)
|
Prior Forecast
Twelve Months
Ended (1)
|
||||||||||||||||||
2012
|
2011
|
Change
|
December 31,
2012
|
December 31,
2012
|
||||||||||||||||
(in millions)
|
||||||||||||||||||||
QEP Energy
|
$ | 641.5 | $ | 639.6 | $ | 1.9 | $ | 1,320.0 | $ | 1,315.0 | ||||||||||
QEP Field Services
|
85.9 | 33.2 | 52.7 | 170.0 | 170.0 | |||||||||||||||
QEP Marketing
|
0.6 | 0.2 | 0.4 | 1.0 | 1.0 | |||||||||||||||
Corporate
|
2.8 | 1.1 | 1.7 | 9.0 | 14.0 | |||||||||||||||
Total accrued capital expenditures
|
730.8 | 674.1 | 56.7 | 1,500.0 | 1,500.0 | |||||||||||||||
Change in accruals
|
(45.3 | ) | (12.3 | ) | (33.0 | ) | - | - | ||||||||||||
Total cash capital expenditures
|
$ | 685.5 | $ | 661.8 | $ | 23.7 | $ | 1,500.0 | $ | 1,500.0 |
(1)
|
Forecast as reported in the 2012 First Quarter Report on Form 10-Q, filed on April 26, 2012.
|
(2)
|
Represents the upper end of the most recent guidance.
|
Commodity
derivative contracts
|
||||
(in millions)
|
||||
Net fair value of gas and oil derivative contracts outstanding at Dec. 31, 2011
|
$ | 395.9 | ||
Contracts settled
|
(208.8 | ) | ||
Change in gas and oil prices on futures markets
|
143.7 | |||
Contracts added
|
13.2 | |||
Net fair value of gas, oil and NGL derivative contracts outstanding at June 30, 2012
|
$ | 344.0 |
June 30, 2012
|
||||
(in millions)
|
||||
Net fair value - asset (liability)
|
$ | 344.0 | ||
Fair value if market prices of gas, oil and NGL and basis differentials decline by 10%
|
419.0 | |||
Fair value if market prices of gas, oil and NGL and basis differentials increase by 10%
|
264.1 |
§
|
QEP’s growth strategies;
|
§
|
volatility of natural gas, oil and NGL prices and factors affecting such volatility;
|
§
|
plans to drill or participate in wells;
|
§
|
future expenses and operating costs;
|
§
|
the outcome of contingencies such as legal proceedings;
|
§
|
expected contributions related to the Company’s pension plans;
|
§
|
results from planned drilling operations and production operations;
|
§
|
amount and allocation of forecasted capital expenditures and plans for funding capital expenditures and operating expenses;
|
§
|
the amount and timing of the settlement of derivative contracts;
|
§
|
incurrence of unrealized derivative gains and losses;
|
§
|
expected mix of revenues from the Company’s gathering business;
|
§
|
impact on earnings from discontinuing hedge accounting;
|
§
|
the significance of Adjusted EBITDA as a measure of cash flow and liquidity;
|
§
|
the ability of QEP to use derivative instruments to manage commodity price risk;
|
§
|
QEP’s ability to develop reserves and grow production as necessary to satisfy delivery commitments and its ability to purchase natural gas, crude oil and NGLs in the market to cover any shortfalls;
|
§
|
payment of dividends;
|
§
|
plans to hedge a portion of forecasted production;
|
§
|
payment of required royalties and outcome of litigation;
|
§
|
potential for future asset impairments;
|
§
|
maintaining an appropriate debt rating; and
|
§
|
acquisition plans.
|
§
|
the risk factors discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011;
|
§
|
changes in natural gas, oil and NGL prices;
|
§
|
general economic conditions, including the performance of financial markets and interest rates;
|
§
|
global geopolitical and macroeconomic factors;
|
§
|
drilling results;
|
§
|
shortages of oilfield equipment, services and personnel;
|
§
|
operating risks such as unexpected drilling conditions;
|
§
|
weather conditions;
|
§
|
changes in maintenance and construction costs, including possible inflationary pressures;
|
§
|
the availability and cost of debt financing;
|
§
|
changes in laws or regulations, including the implementation of the Dodd-Frank Act;
|
§
|
actions, or inaction, by federal, state, local or tribal governments;
|
§
|
derivatives and hedging activities;
|
§
|
legislative or regulatory changes, including initiatives related to drilling and completion techniques, including hydraulic fracturing;
|
§
|
liabilities from litigation; and
|
§
|
other factors, most of which are beyond the Company’s control.
|
ITEM 4.
|
ITEM 1.
|
ITEM 1A.
|
ITEM 3.
|
ITEM 4.
|
ITEM 5.
|
ITEM 6.
|
EXHIBITS |
Exhibit No.
|
Exhibits
|
|
31.1
|
Certification signed by C. B. Stanley, QEP Resources, Inc.’s Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification signed by Richard J. Doleshek, QEP Resources, Inc.’s Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification signed by C. B. Stanley and Richard J. Doleshek, QEP Resources, Inc.’s Chief Executive Officer and Chief Financial Officer, respectively, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Schema Document
|
|
101.CAL
|
XBRL Calculation Linkbase Document
|
|
101.LAB
|
XBRL Label Linkbase Document
|
|
101.PRE
|
XBRL Presentation Linkbase Document
|
|
101.DEF
|
XBRL Definition Linkbase Document
|
|
|
QEP RESOURCES, INC.
|
|
|
(Registrant)
|
July 31, 2012
|
|
/s/ C. B. Stanley
|
|
|
C. B. Stanley,
|
|
|
Chairman, President and Chief Executive Officer
|
July 31, 2012
|
|
/s/ Richard J. Doleshek
|
|
|
Richard J. Doleshek,
|
|
|
Executive Vice President,
|
|
|
Chief Financial Officer and Treasurer
|
Exhibit No.
|
Exhibits
|
|
Certification signed by C. B. Stanley, QEP Resources, Inc.’s Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification signed by Richard J. Doleshek, QEP Resources, Inc.’s Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification signed by C. B. Stanley and Richard J. Doleshek, QEP Resources, Inc.’s Chief Executive Officer and Chief Financial Officer, respectively, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Schema Document
|
|
101.CAL
|
XBRL Calculation Linkbase Document
|
|
101.LAB
|
XBRL Label Linkbase Document
|
|
101.PRE
|
XBRL Presentation Linkbase Document
|
|
101.DEF
|
XBRL Definition Linkbase Document
|