UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report July 27, 2011
(Date of earliest event reported)
QUESTAR CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF UTAH | 001-08796 | 87-0407509 |
(State or other jurisdiction of incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) |
180 East 100 South Street, P.O. Box 45433 Salt Lake City, Utah 84145-0433
(Address of principal executive offices)
Registrant's telephone number, including area code (801) 324-5000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On July 27, 2011, Questar Corporation (the Registrant) issued a press release to report the Registrants financial results for the period ended June 30, 2011. A copy of the Registrants release is attached hereto as Exhibit 99.1, and the information contained therein is incorporated herein by reference. The information contained in Item 2.02 to this Form 8-K, including the exhibit, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and the information shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(c)
Exhibits.
Exhibit No.
Exhibit
99.1
Press release issued July 27, 2011, by Questar Corporation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
QUESTAR CORPORATION
(Registrant)
July 27, 2011
/s/Kevin W. Hadlock
Kevin W. Hadlock
Executive Vice President and
Chief Financial Officer
List of Exhibits:
Exhibit No.
Exhibit
99.1
Press release issued July 27, 2011, by Questar Corporation.
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Exhibit 99.1
QUESTAR REPORTS 13% INCREASE IN INCOME FROM CONTINUING
OPERATIONS FOR THE SECOND QUARTER OF 2011
· Announces $100 Million Share Repurchase Program and Affirms 2011 Net Income
Guidance Range of $1.07 to $1.11 per Diluted Share
· Cash Flow From Operations Up 29% in the First Half of 2011
SALT LAKE CITY Questar Corporation (NYSE:STR) reported second-quarter net income of $40.3 million or $0.22 per diluted share compared to second-quarter 2010 income from continuing operations of $28.7 million or $0.16 per diluted share, including separation costs. Excluding separation costs, second-quarter 2010 income was $35.8 million or $0.20 per diluted share. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $115.9 million compared to $108.7 million in the year-ago period. Return on average equity (ROE) was 19.4% for the 12 months ended June 30, 2011, compared to 18.1% in the year-ago period.
INCOME (LOSS) FROM CONTINUING OPERATIONS
| 3 Months Ended June 30, |
| |
| 2011 | 2010 | Change |
| (in millions, except earnings per share) | ||
Wexpro | $23.7 | $22.0 | $ 1.7 |
Questar Pipeline | 16.6 | 15.9 | 0.7 |
Questar Gas | 0.4 | (2.2) | 2.6 |
Corporate | (0.4) | 0.1(a) | (0.5) |
Total | $40.3 | $35.8(a) | $ 4.5 |
Earnings from continuing operations per diluted share | $0.22 | $0.20(b) | $0.02 |
Average diluted shares | 178.8 | 177.6 | 1.2 |
(a)
Excludes $7.1 million after-tax impact of separation costs in the second quarter of 2010.
(b)
Excludes $0.04 per diluted share impact of separation costs in the second quarter of 2010.
EBITDA BY SUBSIDIARY
| 3 Months Ended June 30, |
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| 2011 | 2010 | Change | |
| (in millions) |
| ||
Wexpro | $ 52.2 | $ 48.8 | $3.4 | |
Questar Pipeline | 45.6 | 44.2 | 1.4 | |
Questar Gas | 17.9 | 14.0 | 3.9 | |
Corporate, Other | 0.2 | 1.7 | (1.5) | |
Total (a) | $115.9 | $108.7 | $7.2 | |
(a) See computation in attached schedule. |
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Net income increased at each business unit in the second quarter of 2011 compared to 2010, said Ronald W. Jibson, president and CEO of Questar. Wexpro and Questar Pipeline grew net income by 8% and 4% respectively, while Questar Gas generated positive net income instead of the slight seasonal loss typical for the period. Capital spending programs are on track and operating performance is in line with our 2011 plan. Accordingly, we remain confident in our earlier net income guidance for 2011 of $1.07 to $1.11 per diluted share. In addition, the Questar board of directors has approved a $100 million share repurchase program, which will be effective through 2012, to manage our common share count back to Questars pre-spin levels, Jibson said.
Other highlights include:
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Wexpro earned a 20.0% after-tax return on an average investment base that was 4.5% higher for the 12-months ended June 30, 2011, compared to the same period ended June 30, 2010;
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Questar Pipelines Overthrust Loop Expansion Project was placed in service in February 2011, which resulted in higher transportation revenues;
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Questar Gas recognized $1.3 million of increased margin from customer growth, higher rates and feeder-line replacement-cost recovery in the second quarter of 2011. In addition, Questar Gas drove a $1.6 million reduction in operating costs in the second quarter of 2011 compared to the second quarter of 2010 as the company increased focus on process improvements and cost-containment initiatives; and
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Questars net cash flow from operating activities before working capital changes increased 29% to $257.4 million in the first half of 2011 compared to the first half of 2010, aided by deferred taxes from 100% bonus depreciation.
Wexpro
Wexpro grew second-quarter 2011 net income to $23.7 million, an increase of 8% from the second quarter of 2010, and generated $52.2 million of EBITDA in the quarter, driven by a higher average investment base. Wexpro earned a 20.4% return on average equity for the 12 months ended June 30, 2011. Wexpros average investment base for the 12 months ended June 30, 2011, was $446.4 million, 4.5% higher than the 2010 period. Wexpro continues to deliver approximately half of Questar Gas Companys annual gas-supply needs. Wexpro produced 11.8 Bcf of cost-of-service gas during the second quarter of 2011 compared to 12.1 Bcf in the 2010 period. Under a long-standing agreement with the states of Utah and Wyoming, Wexpro recovers its costs and earns an unlevered after-tax return of approximately 20% on its investment base the investment in commercial wells and related facilities, reduced for
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deferred income taxes and accumulated depreciation. Investment base is expected to increase during the remainder of 2011, in spite of increased deferred taxes due to 100% bonus depreciation allowed for income tax purposes. While bonus depreciation slows the growth of Wexpros investment base, it helps lower the price of cost-of-service gas. A summary of changes in Wexpros investment base is provided below:
Change in Wexpro Investment Base
| 12 Months Ended |
June 30, 2011 | |
| (in millions) |
Beginning investment base | $436.2 |
Successful development wells | 96.0 |
Depreciation, depletion and amortization | (59.1) |
Change in deferred taxes | (29.6) |
Ending investment base | $443.5 |
Wexpro remains on track to spend at least $108 million of capital during 2011. Wexpros efforts to pursue drilling efficiencies and reduce finding costs is evidenced by drilling performance that has exceeded expectations. In the Vermillion Basin, drilling times in the second quarter of 2011 were as short as seven days and reserve estimates have ranged from 2.5 Bcfe to 3.5 Bcfe per well. This has resulted in average finding costs of less than $1.00 per Mcfe for recently completed wells that Wexpro operates in this area, further increasing the competitiveness of cost-of-service gas in the current low-price environment.
Questar Pipeline
Questar Pipeline earned net income of $16.6 million in the second-quarter of 2011, up 4% from $15.9 million in the second quarter of 2010, and generated $45.6 million of EBITDA in the 2011 quarter.
Questar Pipelines net income increase was largely driven by additional revenues from the Overthrust Loop Expansion Project, lower interest expense as well as stable operating and maintenance costs. Questar Pipeline earned an 11.3% return on average equity for the 12 months ended June 30, 2011. A summary of Questar Pipeline revenues is provided below:
3
Questar Pipeline Revenues
| 3 Months Ended June 30, |
| |
2011 | 2010 | Change | |
| (in millions) |
| |
Transportation | $49.1 | $47.4 | $1.7 |
Storage | 9.5 | 9.3 | 0.2 |
NGL sales transportation | 2.2 | 2.4 | (0.2) |
NGL sales field services | 2.8 | 3.1 | (0.3) |
Energy services | 4.3 | 3.7 | 0.6 |
Other | 1.3 | 0.8 | 0.5 |
Total Revenues | $69.2 | $66.7 | $2.5 |
At June 30, 2011, Questar Pipeline held net firm-transportation contracts totaling 4,987 thousand decatherms (Mdth) per day, compared to 4,671 Mdth per day at June 30, 2010, a 7% increase. Transportation revenues increased due to the Overthrust Loop Expansion Project that was completed on time and under budget and placed in service in February 2011. The project will add long-term firm-transportation contracts of 548 Mdth per day. To-date the project has added 485 Mdth per day and the remaining 63 Mdth per day will be added by 2015. The project is expected to generate an ROE of about 12.9%.
As anticipated, NGL sales decreased in the second quarter of 2011 due to activation of a third-party processing plant upstream of Questar Pipelines processing facilities located in Price, Utah. NGL sales decreased 9%, and volumes decreased 38% in the second quarter of 2011 versus the same 2010 period. In the second quarter of 2011, the average NGL price rose 46% from the prior-year quarter to about $78 per barrel. Increased transportation revenues from the Overthrust Loop Expansion Project more than offset the drop in NGL sales. The sum of operating, maintenance, general and administrative expenses for the quarter ended June 30, 2011, totaled $0.11 per decatherm transported, the same as in the 2010 period. Questar Pipelines continued strong cash flow generation will support corporate-wide capital projects as well as additional dividend growth and the share repurchase program.
Questar Gas
Questar Gas had second-quarter 2011 net income of $0.4 million, compared to a $2.2 million loss in the second quarter of 2010. It generated $17.9 million of EBITDA in the 2011 quarter compared to $14.0 million in the year-ago quarter. Questar Gas earned an 11.0% return on average equity for the 12 months ended
June 30, 2011. Changes in Questar Gass margin (revenues less cost of gas sold) are summarized in the following table:
4
Change in Questar Gas Margin
| 3 Months Ended June 30, |
| 2011 vs. 2010 |
| (in millions) |
New customers | $0.4 |
Change in rates | 0.5 |
Feeder line cost recovery | 0.4 |
Demand-side-management cost recovery | (0.4) |
Recovery of gas-cost portion of bad-debt costs | 1.0 |
Other | 1.1 |
Total | $3.0 |
As of June 30, 2011, Questar Gas served almost 914,000 customers, an increase of about 8,000 customers, or nearly 1%, from the same time last year. Customer growth and an increase in rates associated with the companys revenue-decoupling mechanism contributed to higher margins in the 2011 period. Changes in margin from demand-side-management (DSM) cost-recovery revenues are offset by equivalent changes in the programs expenses. Operating, maintenance, general and administrative expenses, excluding DSM costs, were $140 per customer for the 12 months ended June 30, 2011, compared to $134 per customer in the prior-year period.
A general rate case settlement with the Public Service Commission of Utah, effective August 2010, granted Questar Gas an allowed return on equity of 10.35%, up from 10.0%. The stipulation also extended indefinitely the existing revenue-decoupling mechanism, increased customer rates by $5 million annually, and approved an infrastructure-cost-tracking mechanism for the companys multi-year pipeline-replacement program. Once the new facilities are in service, the company can place them into rate base and earn its allowed return on those expenditures.
2011 EPS Guidance
Questar management continues to expect that 2011 net income should range between $1.07 and $1.11 per diluted share, consistent with prior guidance. Even with the impact of 100% bonus depreciation, Wexpro expects its average investment base and earnings to grow. Questar Pipeline expects higher transportation revenues to offset lower NGL revenues and continue to generate strong cash flows that support Questars capital requirements, dividend growth and the share repurchase program. Questar Gas expects to grow its rate base and returns with its multi-year pipeline replacement program and positive customer growth. Finally, Questar expects to maintain dividend growth at 5% to 10% annually and to utilize the $100 million share repurchase program to manage the common share count back to the pre-spin level of approximately 175 million shares.
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2011 Earnings Teleconference
Questar management will discuss second-quarter 2011 results from continuing operations and the outlook for the remainder of 2011 in a conference call with investors Thursday, July 28, beginning at 9:30 a.m. ET. The call and related presentation slides can be accessed at www.questar.com.
About Questar Corporation
Questar is a Rockies-based integrated natural gas company with an enterprise value of about $4.4 billion, operating through three principal subsidiaries:
·
Wexpro develops and produces natural gas on behalf of Questar Gas;
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Questar Pipeline operates interstate natural gas pipelines and storage facilities in the western U.S. and provides other energy services; and
·
Questar Gas provides retail natural gas distribution in Utah, Wyoming and Idaho.
Forward-Looking Statements
This document may contain or incorporate by reference information that includes or is based upon "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Any or all forward-looking statements may turn out to be wrong. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. Actual results could differ materially from those expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to the following:
·
general economic conditions, including the performance of financial markets and interest rates;
·
changes in industry trends;
·
changes in laws or regulations; and
·
other factors, most of which are beyond Questars control.
Questar undertakes no obligation to publicly correct or update the forward-looking statements in this document, in other documents, or on the Web site to reflect future events or circumstances. All such statements are expressly qualified by this cautionary statement.
For more information, visit Questars Web site at www.questar.com.
6
QUESTAR CORPORATION |
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CONSOLIDATED STATEMENTS OF INCOME |
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(Unaudited) |
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| 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
| June 30, | June 30, | June 30, | |||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 |
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REVENUES |
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Questar Gas | $164.0 | $148.6 | $577.9 | $509.3 | $970.4 | $884.0 |
Questar Pipeline | 50.5 | 48.2 | 98.8 | 95.9 | 200.1 | 184.1 |
Wexpro | 8.4 | 4.3 | 16.2 | 10.5 | 30.3 | 22.5 |
Total Revenues | 222.9 | 201.1 | 692.9 | 615.7 | 1,200.8 | 1,090.6 |
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OPERATING EXPENSES |
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Cost of sales (excluding operating expenses shown separately) | 31.2 | 18.4 | 241.1 | 176.7 | 345.3 | 273.0 |
Operating and maintenance | 39.8 | 39.3 | 91.2 | 91.1 | 175.9 | 176.3 |
General and administrative | 26.2 | 25.0 | 59.2 | 51.2 | 116.5 | 98.5 |
Separation costs | - | 11.5 | - | 11.5 | - | 11.5 |
Production and other taxes | 13.1 | 13.2 | 26.7 | 27.8 | 49.5 | 47.5 |
Depreciation, depletion and amortization | 38.9 | 37.4 | 78.3 | 76.3 | 155.4 | 151.3 |
Total Operating Expenses | 149.2 | 144.8 | 496.5 | 434.6 | 842.6 | 758.1 |
Net gain (loss) from asset sales | - | - | 0.1 | - | 0.5 | (0.1) |
OPERATING INCOME | 73.7 | 56.3 | 196.5 | 181.1 | 358.7 | 332.4 |
Interest and other income | 2.3 | 2.6 | 5.2 | 5.4 | 11.5 | 11.7 |
Income from unconsolidated affiliate | 1.0 | 0.9 | 1.9 | 1.9 | 3.8 | 3.8 |
Interest expense | (14.8) | (14.0) | (30.8) | (28.3) | (59.6) | (57.1) |
INCOME FROM CONTINUING OPERATIONS |
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BEFORE INCOME TAXES | 62.2 | 45.8 | 172.8 | 160.1 | 314.4 | 290.8 |
Income taxes | (21.9) | (17.1) | (62.6) | (59.2) | (112.8) | (107.7) |
INCOME FROM CONTINUING OPERATIONS | 40.3 | 28.7 | 110.2 | 100.9 | 201.6 | 183.1 |
Discontinued operations, net of income taxes | - | 69.5 | - | 148.2 | - | 315.7 |
Discontinued operations, noncontrolling interest | - | (0.7) | - | (1.3) | - | (2.8) |
Total Discontinued Operations, Net Of Income Taxes | - | 68.8 | - | 146.9 | - | 312.9 |
NET INCOME ATTRIBUTABLE TO QUESTAR | $40.3 | $97.5 | $110.2 | $247.8 | $201.6 | $496.0 |
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EARNINGS PER COMMMON SHARE ATTRIBUTABLE TO QUESTAR |
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Basic from continuing operations | $0.22 | $0.17 | $0.62 | $0.58 | $1.13 | $1.05 |
Basic from discontinued operations | - | 0.39 | - | 0.84 | - | 1.80 |
Basic total | $0.22 | $0.56 | $0.62 | $1.42 | $1.13 | $2.85 |
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Diluted from continuing operations | $0.22 | $0.16 | $0.62 | $0.57 | $1.13 | $1.03 |
Diluted from discontinued operations | - | 0.39 | - | 0.83 | - | 1.77 |
Diluted total | $0.22 | $0.55 | $0.62 | $1.40 | $1.13 | $2.80 |
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Weighted-average common shares outstanding |
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Used in basic calculation | 177.5 | 175.1 | 177.2 | 175.0 | 177.0 | 174.6 |
Used in diluted calculation | 178.8 | 177.6 | 178.7 | 177.4 | 179.0 | 176.9 |
Dividends per common share | $0.1525 | $0.13 | $0.305 | $0.26 | $0.585 | $0.515 |
7
QUESTAR CORPORATION |
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OPERATIONS BY LINE OF BUSINESS |
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(Unaudited) |
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| 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
| June 30, | June 30, | June 30, | |||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 |
| (in millions) | |||||
Revenues from Unaffiliated Customers |
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Wexpro | $ 8.4 | $ 4.3 | $ 16.2 | $ 10.5 | $ 30.3 | $ 22.5 |
Questar Pipeline | 50.5 | 48.2 | 98.8 | 95.9 | 200.1 | 184.1 |
Questar Gas | 164.0 | 148.6 | 577.9 | 509.3 | 970.4 | 884.0 |
Total | $222.9 | $201.1 | $692.9 | $615.7 | $1,200.8 | $1,090.6 |
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Revenues from Affiliated Companies |
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Wexpro | $ 61.1 | $ 60.2 | $122.0 | $120.7 | $ 241.5 | $ 233.0 |
Questar Pipeline | 18.7 | 18.5 | 37.3 | 37.3 | 74.0 | 73.4 |
Questar Gas | 1.0 | 0.1 | 1.8 | 0.4 | 2.5 | 0.9 |
Total | $ 80.8 | $ 78.8 | $161.1 | $158.4 | $ 318.0 | $ 307.3 |
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Operating Income (Loss) |
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Wexpro | $ 36.1 | $ 33.3 | $ 70.6 | $ 66.1 | $ 138.2 | $ 131.9 |
Questar Pipeline | 31.7 | 31.3 | 61.0 | 64.8 | 127.0 | 120.8 |
Questar Gas | 5.7 | 1.1 | 64.5 | 59.7 | 93.4 | 87.8 |
Corporate | 0.2 | (9.4) | 0.4 | (9.5) | 0.1 | (8.1) |
Total | $ 73.7 | $ 56.3 | $196.5 | $181.1 | $ 358.7 | $ 332.4 |
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Income (Loss) from Continuing Operations |
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Wexpro | $ 23.7 | $ 22.0 | $ 46.0 | $ 43.2 | $ 90.9 | $ 85.3 |
Questar Pipeline | 16.6 | 15.9 | 31.9 | 33.1 | 66.2 | 61.6 |
Questar Gas | 0.4 | (2.2) | 33.8 | 30.9 | 46.8 | 42.7 |
Corporate | (0.4) | (7.0) | (1.5) | (6.3) | (2.3) | (6.5) |
Total | $ 40.3 | $ 28.7 | $110.2 | $100.9 | $ 201.6 | $ 183.1 |
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QUESTAR CORPORATION |
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SELECTED OPERATING STATISTICS |
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(Unaudited) |
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| 3 Months Ended June 30, | 6 Months Ended June 30, | 12 Months Ended June 30, | |||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 |
WEXPRO |
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Production volumes |
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Natural gas (Bcf) | 11.8 | 12.1 | 24.5 | 25.1 | 49.6 | 48.5 |
Oil and NGL (MMbbl) | 0.1 | 0.1 | 0.2 | 0.2 | 0.4 | 0.4 |
Oil and NGL sales price (per bbl) | $90.33 | $64.12 | $85.71 | $64.29 | $75.92 | $60.64 |
Investment base at June 30 ($ in millions) | $443.5 | $436.2 |
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QUESTAR PIPELINE |
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Natural gas-transportation volumes (MMdth) |
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For unaffiliated customers | 159.1 | 162.7 | 321.6 | 318.4 | 645.6 | 624.2 |
For Questar Gas | 28.7 | 29.6 | 71.8 | 73.6 | 110.2 | 115.4 |
Total transportation | 187.8 | 192.3 | 393.4 | 392.0 | 755.8 | 739.6 |
Transportation revenue (per dth) | $ 0.26 | $ 0.25 | $ 0.25 | $ 0.24 | $ 0.25 | $ 0.25 |
Net firm-daily transportation demand at June 30 (Mdth) | 4,987 | 4,671 |
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Natural gas processing |
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NGL sales (Mbbl) | 64 | 103 | 130 | 184 | 373 | 337 |
NGL sales price (per bbl) | $78.23 | $53.43 | $73.87 | $57.47 | $61.54 | $52.79 |
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QUESTAR GAS |
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Natural gas volumes (MMdth) |
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Residential and commercial | 19.3 | 18.5 | 68.2 | 63.1 | 110.9 | 110.2 |
Industrial | 1.1 | 1.2 | 2.3 | 2.3 | 4.5 | 3.0 |
Transportation for industrial customers | 11.1 | 13.0 | 25.3 | 29.5 | 55.1 | 57.4 |
Total industrial | 12.2 | 14.2 | 27.6 | 31.8 | 59.6 | 60.4 |
Total deliveries | 31.5 | 32.7 | 95.8 | 94.9 | 170.5 | 170.6 |
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Natural gas revenue (per dth) |
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Residential and commercial sales | $7.59 | $7.11 | $7.96 | $7.50 | $8.14 | $7.49 |
Industrial | 6.06 | 5.15 | 6.09 | 5.57 | 6.14 | 5.70 |
Transportation for industrial customers | $0.23 | $0.19 | $0.21 | $0.18 | $0.17 | $0.20 |
Temperatures - colder than normal | 53% | 35% | 14% | 7% | 5% | 9% |
Temperature-adjusted usage per customer (dth) | 17.0 | 16.5 | 67.0 | 63.1 | 110.8 | 107.6 |
Customers at June 30 (thousands) | 913.6 | 905.7 |
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QUESTAR CORPORATION |
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PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Unaudited) |
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| June 30, | June 30, | December 31, |
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ASSETS |
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Current Assets |
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Cash and cash equivalents | $ - | $ - | $ 21.8 |
Accounts receivable, net | 85.1 | 82.8 | 159.2 |
Unbilled gas accounts receivable | 15.0 | 15.3 | 81.6 |
Inventories | 40.2 | 40.5 | 62.7 |
Current regulatory assets | 33.2 | 62.1 | 53.5 |
Prepaid expenses and other | 9.0 | 8.0 | 9.0 |
Deferred income taxes - current | 14.8 | 14.3 | 11.8 |
Total Current Assets | 197.3 | 223.0 | 399.6 |
Property, Plant and Equipment | 4,759.8 | 4,456.1 | 4,642.8 |
Accumulated depreciation, depletion and amortization | (1,825.5) | (1,689.6) | (1,758.2) |
Net Property, Plant and Equipment | 2,934.3 | 2,766.5 | 2,884.6 |
Investment in unconsolidated affiliate | 27.4 | 28.2 | 27.9 |
Noncurrent regulatory and other assets | 62.4 | 59.6 | 61.5 |
TOTAL ASSETS | $3,221.4 | $3,077.3 | $3,373.6 |
|
|
|
|
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY |
|
| |
Current Liabilities |
|
|
|
Checks outstanding in excess of cash balances | $ 4.5 | $ 5.8 | $ - |
Short-term debt | 137.0 | 345.0 | 242.0 |
Accounts payable and accrued expenses | 136.0 | 198.3 | 225.1 |
Current regulatory liabilities | 24.8 | 7.2 | 6.0 |
Current portion of long-term debt | 82.0 | 100.0 | 182.0 |
Total Current Liabilities | 384.3 | 656.3 | 655.1 |
Long-term debt, less current portion | 901.8 | 731.1 | 898.5 |
Deferred income taxes | 536.5 | 396.4 | 474.7 |
Other long-term liabilities | 292.7 | 322.7 | 309.2 |
COMMON SHAREHOLDERS' EQUITY |
|
|
|
Common Shareholders' Equity | 1,106.1 | 970.8 | 1,036.1 |
TOTAL LIABILITIES AND COMMON SHAREHOLDERS' EQUITY | $3,221.4 | $3,077.3 | $2,337.5 |
10
QUESTAR CORPORATION |
|
|
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| |
(Unaudited) |
|
|
|
|
|
| 6 Months Ended June 30, | |
| 2011 | 2010 |
| (in millions) | |
OPERATING ACTIVITIES |
|
|
Net income | $110.2 | $249.1 |
Discontinued operations, net of income taxes | - | (148.2) |
Adjustments to reconcile net income to net cash provided |
|
|
by operating activities from continuing operations: |
|
|
Depreciation, depletion and amortization | 83.1 | 80.0 |
Deferred income taxes | 58.5 | 9.1 |
Share-based compensation | 5.9 | 9.6 |
Net (gain) from asset sales | (0.1) | - |
(Income) from unconsolidated affiliate | (1.9) | (1.9) |
Distribution from unconsolidated affiliate | 2.4 | 1.8 |
Unrealized (gain) on interest rate swap | (0.7) | - |
Changes in operating assets and liabilities | 112.0 | 56.2 |
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
|
FROM CONTINUING OPERATIONS | 369.4 | 255.7 |
|
|
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INVESTING ACTIVITIES |
|
|
Property, plant and equipment | (143.4) | (139.5) |
Equity investment in QEP | - | (250.0) |
Cash used in disposition of assets | (1.1) | (1.0) |
Proceeds from disposition of assets | 0.2 | 0.5 |
Change in notes receivable | - | 39.3 |
NET CASH USED IN INVESTING ACTIVITIES BY CONTINUING OPERATIONS | (144.3) | (350.7) |
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FINANCING ACTIVITIES |
|
|
Common stock | 3.0 | 0.9 |
Change in short-term debt | (105.0) | 176.0 |
Change in notes payable | - | (52.9) |
Long-term debt repaid | (100.0) | - |
Long-term debt issuance costs | - | (2.9) |
Checks outstanding in excess of cash balances | 4.5 | 5.8 |
Dividends paid | (54.1) | (45.5) |
Tax benefits from share-based compensation | 4.7 | 2.1 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
|
BY CONTINUING OPERATIONS | (246.9) | 83.5 |
CASH USED IN CONTINUING OPERATIONS | (21.8) | (11.5) |
Cash provided by operating activities of discontinued operations | - | 468.2 |
Cash used in investing activities of discontinued operations | - | (598.6) |
Cash provided by financing activities of discontinued operations | - | 111.1 |
Effect of change in cash and cash equivalents of discontinued operations | - | 19.3 |
Change in cash and cash equivalents | (21.8) | (11.5) |
Beginning cash and cash equivalents | 21.8 | 11.5 |
Ending cash and cash equivalents | $ - | $ - |
11
QUESTAR CORPORATION |
|
NON-GAAP FINANCIAL MEASURES |
|
(Unaudited) |
|
In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains non-GAAP financial measures. The Company believes that such non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results. The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.
1. The following table reconciles GAAP income from continuing operations and diluted earnings per common share and non-GAAP income from continuing operations before separation costs and diluted earnings per common share associated with the June 30, 2010, spinoff of QEP Resources, Inc.
| 3 Months Ended June 30, | |
| 2011 | 2010 |
| (in millions, except earnings per share) | |
Income from continuing operations | $40.3 | $28.7 |
Separation costs | - | 11.5 |
Income taxes on separation costs | - | (4.4) |
After-tax separation costs | - | 7.1 |
Income from continuing operations before separation costs | $40.3 | $35.8 |
|
|
|
EARNINGS PER COMMON SHARE |
|
|
Diluted from continuing operations | $0.22 | $0.16 |
Diluted from after-tax separation costs | - | 0.04 |
Earnings per diluted share from continuing operations before separation costs | $0.22 | $0.20 |
|
|
|
Weighted-Average Common Shares Outstanding |
|
|
Diluted | 178.8 | 177.6 |
12
2. Management defines EBITDA as income (loss) from continuing operations before the following items: depreciation, depletion, and amortization, separation costs, interest expense and income taxes. Management believes EBITDA is an important measure of the Company's cash flow and liquidity, and a key measure for comparing the Company's financial performance to other companies.
The following table reconciles Questar's income (loss) from continuing operations to EBITDA for the three months ended June 30, 2011:
| Questar | Wexpro | Questar | Questar |
|
| Consolidated | Company | Pipeline | Gas | Corporate |
| (in millions) | ||||
Income (loss) from continuing operations | $40.3 | $23.7 | $16.6 | $0.4 | ($0.4) |
Depreciation, depletion and amortization | 38.9 | 15.2 | 12.8 | 10.9 | - |
Interest expense | 14.8 | - | 6.8 | 6.5 | 1.5 |
Income taxes | 21.9 | 13.3 | 9.4 | 0.1 | (0.9) |
EBITDA | $115.9 | $52.2 | $45.6 | $17.9 | $0.2 |
The following table reconciles Questar's income (loss) from continuing operations to EBITDA for the three months ended June 30, 2010:
| Questar | Wexpro | Questar | Questar |
|
| Consolidated | Company | Pipeline | Gas | Corporate |
| (in millions) | ||||
Income (loss) from continuing operations | $ 28.7 | $22.0 | $15.9 | ($2.2) | ($7.0) |
Depreciation, depletion and amortization | 37.4 | 14.4 | 11.8 | 11.2 | - |
Separation costs | 11.5 | - | - | - | 11.5 |
Interest expense | 14.0 | 0.1 | 7.3 | 6.5 | 0.1 |
Income taxes | 17.1 | 12.3 | 9.2 | (1.5) | (2.9) |
EBITDA | $108.7 | $48.8 | $44.2 | $14.0 | $1.7 |
13