Basis of Presentation of Interim Financial Statements

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation of Interim Financial Statements

The interim financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and with the instructions for Quarterly Reports on Form 10-Q and SEC Regulations S-X and S-K. The financial statements reflect all normal, recurring adjustments and accruals that are, in the opinion of management, necessary for a fair presentation of its financial position and results of operations for the interim periods presented. Interim financial statements do not include all of the information and notes required by GAAP for audited annual financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

The preparation of the condensed financial statements and notes in conformity with GAAP requires that management make estimates and assumptions that affect the amounts of revenues, expenses, assets and liabilities, and disclosure of contingent assets and liabilities. Actual results could differ from estimates. The results of operations for the three and nine months ended September 30, 2016, are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

Certain reclassifications were made to prior year information to conform to the current year presentation. The Company has adopted Accounting Standards Update 2015-03, Interest - Imputation of Interest (Subtopic 835-30). The Company has retrospectively adjusted prior period debt issuance costs to be reflected in long-term debt. The reclassifications did not affect the Company's net income, total assets, liabilities, equity or cash flows, except as noted above.

Questar Gas obtains the majority of its gas supply from Wexpro's cost-of-service production and pays Wexpro an operator service fee based on the terms of the Wexpro Agreement and the Wexpro II Agreement (Wexpro Agreements). Questar Gas also obtains transportation and storage services from Questar Pipeline. During the second and third quarters of the year, a significant portion of the natural gas from Wexpro production is injected into underground storage. This gas is withdrawn from storage as needed during the heating season in the first and fourth quarters. The cost of natural gas sold is credited with the value of natural gas as it is injected into storage and debited as it is withdrawn from storage.

The details of Questar Gas' consolidated cost of sales are as follows:



	3 Months Ended						9 Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(in millions)
Gas purchases	$	2.0		$	0.3		$	51.1		$	43.5
Operator service fee⁽¹⁾	77.7			80.7			236.4			241.0
Transportation and storage⁽¹⁾	17.8			18.1			57.5			58.4
Gathering	6.0			5.7			17.4			16.7
Royalties	5.7			7.6			16.0			26.4
Storage (injection), net	(44.2		)	(42.8		)	(23.4		)	(28.6		)
Purchased-gas account adjustment	(26.6		)	(26.4		)	5.5			0.9
Other	1.3			1.2			3.9			3.7
Total cost of natural gas sold	$	39.7		$	44.4		$	364.4		$	362.0

⁽¹⁾See Note 9 for amounts attributable to affiliates