Discontinued Operations

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

In December 2013, QEP's Board of Directors authorized the Company to develop a plan to separate its midstream business, QEP Field Services, including the Company's interest in QEP Midstream, from QEP. Between December 2013 and September 2014, the Company evaluated transaction alternatives, including selling or merging the midstream business or spinning the midstream business off to its shareholders. In June 2014, QEP filed a registration statement on Form 10 with the U.S. Securities and Exchange Commission (SEC) in preparation for a potential spinoff of QEP Field Services as a separate publicly traded company. Concurrently, the Company evaluated selling or merging its midstream business. In September 2014, based on the proposals received, the Company's Board of Directors authorized QEP's management to engage in the negotiation of terms of a definitive transaction with Tesoro.

In October 2014, the Company announced that its wholly owned subsidiary, QEP Field Services, had entered into a definitive agreement to sell substantially all of its midstream business, including the Company's ownership interest in QEP Midstream. On December 2, 2014, QEP closed the Midstream Sale for total cash proceeds of $2.5 billion, including $230.0 million to refinance debt at QEP Midstream, and QEP recorded a pre-tax gain of $1.8 billion on its Consolidated Statements of Operations in "Net income from discontinued operations, net of income tax" for the year ended December 31, 2014. Subsequent to the Midstream Sale, QEP withdrew its registration statement on Form 10 with the SEC.

As of December 31, 2014, the operating results of QEP Field Services, excluding the Haynesville Gathering System, were classified as discontinued operations on its Consolidated Statements of Operations. QEP will have continuing cash outflows to the entities sold as a part of the Midstream Sale for gathering, processing and water handling costs in Pinedale, the Uinta Basin and a portion of its Williston Basin operations. The contracts related to these cash flows vary in length from month-to-month to over a year and will be reviewed periodically in the normal course of business. Historically, these transactions were eliminated in consolidation, as they represented transactions between two related entities but are now reflected as part of the continuing operations for QEP. For the years ended December 31, 2014, 2013 and 2012, cash outflows for these transactions included in continuing operations were $145.3 million, $124.6 million and $113.5 million, respectively.

Consolidated Statement of Operations

The discontinued operations of QEP Field Services (excluding results of the Haynesville Gathering System) are summarized below:

	Year Ended December 31,
	2014			2013			2012
	(in millions)
REVENUES
NGL sales	$	109.3		$	101.9		$	137.9
Other revenues	140.9			166.6			154.1
Purchased gas, oil and NGL sales(1)	(47.1		)	(17.8		)	(13.9		)
Total Revenues	203.1			250.7			278.1
OPERATING EXPENSES
Purchased gas, oil and NGL expense(1)	(48.5		)	(17.6		)	(15.1		)
Lease operating expense(1)	(5.5		)	(3.5		)	(3.5		)
Natural gas, oil and NGL transport & other handling costs(1)	(55.4		)	(80.6		)	(49.2		)
Gathering, processing, and other	85.9			82.2			79.8
General and administrative	42.1			30.7			17.9
Production and property taxes	7.3			5.2			5.1
Depreciation, depletion and amortization	45.9			52.2			55.1
Total Operating Expenses	71.8			68.6			90.1
Net gain (loss) from asset sales	1,793.4			(0.5		)	—
OPERATING INCOME	1,924.7			181.6			188.0
Realized derivative gains	—			—			8.4
Interest and other income (expense)	0.3			(10.0		)	(8.2		)
Income from unconsolidated affiliates	4.9			5.6			6.7
Loss on early extinguishment of debt	(2.4		)	—			—
Interest expense (income)	(3.8		)	1.8			3.4
INCOME FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES (2)	1,923.7			179.0			198.3
Income tax provision	(708.2		)	(59.7		)	(68.7		)
NET INCOME FROM DISCONTINUED OPERATIONS	1,215.5			119.3			129.6
Net income attributable to noncontrolling interest	(21.6		)	(12.0		)	(3.7		)
NET INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX	$	1,193.9		$	107.3		$	125.9

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⁽¹⁾  Includes discontinued intercompany eliminations.

⁽²⁾  Includes income from discontinued operations before income taxes attributable to QEP from QEP Midstream (of which QEP owned 57.8%) of $28.9 million, $33.5 million and $38.9 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Consolidated Balance Sheet

The current and noncurrent assets and liabilities of QEP Field Services (excluding the retained Haynesville Gathering System) are as follows:

	December 31, 2013
Cash and cash equivalents	$	18.1
Accounts receivable, net	53.9
Income taxes receivable	38.4
Deferred income taxes - current	2.7
Prepaid expenses and other	8.9
Current assets of discontinued operations	$	122.0
Property, Plant and Equipment
Midstream field services	$	1,500.8
Material and supplies	4.8
Total Property, Plant and Equipment	1,505.6
Less Accumulated Depreciation, Depletion and Amortization	(381.6		)
Net Property, Plant and Equipment	1,124.0
Investment in unconsolidated affiliates	39.0
Other noncurrent assets	4.7
Noncurrent assets of discontinued operations	$	1,167.7
Accounts payable and accrued expenses	$	74.1
Production and property taxes	1.2
Current liabilities of discontinued operations	$	75.3
Deferred income taxes	$	195.7
Asset retirement obligations	28.5
Other long-term liabilities	14.1
Noncurrent liabilities of discontinued operations	$	238.3

Consolidated Statement of Cash Flows

The impact of QEP Field Services discontinued operations (excluding the Haynesville Gathering System) on the Consolidated Statements of Cash Flows for "Depreciation, depletion and amortization" contained in "Cash flows from operating activities" was $45.9 million, $52.2 million and $55.1 million for the years ended December 31, 2014, 2013, and 2012, respectively. The impact on cash used for "Property, plant and equipment, including dry hole exploratory well expense" contained in "Cash flows from investing activities" was $55.2 million, $88.9 million and $156.2 million for the years ended December 31, 2014, 2013, and 2012, respectively.