Basis of Presentation of Interim Financial Statements

3 Months Ended

Mar. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation of Interim Financial Statements

Note 2 - Basis of Presentation of Interim Financial Statements

The interim financial statements contain the accounts of Questar and its wholly-owned subsidiaries. The 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. All significant intercompany accounts and transactions have been eliminated in consolidation.

The financial statements reflect all normal, recurring adjustments and accruals that are, in the opinion of management, necessary for a fair presentation of 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, 2012.

The preparation of 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 12 months ended March 31, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

Questar uses the equity method to account for its investment in an unconsolidated affiliate where it does not have control, but has significant influence. White River Hub, LLC is a limited liability company and FERC-regulated transporter of natural gas. Questar Pipeline owns 50% of White River Hub, LLC and is the operator. Generally, the investment in White River Hub, LLC on the Company's balance sheets equals the Company's proportionate share of equity reported by White River Hub, LLC. The investment is assessed for possible impairment when events indicate that the fair value of the investment may be below the Company's carrying value. When such a condition is deemed to be other-than-temporary, the carrying value of the investment is written down to its fair value, and the amount of the write-down is included in the determination of net income.

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. Questar Gas also obtains transportation and storage services from Questar Pipeline. These intercompany revenues and expenses are eliminated in the Questar Consolidated Statements of Income by reducing revenues and cost of sales. The underlying costs of Wexpro's production and Questar Pipeline's transportation and storage services are disclosed in other categories in the Consolidated Statements of Income, including operating and maintenance expense and depreciation, depletion and amortization expense. 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 reported balance in consolidated cost of sales may be a negative amount during the second and third quarters because of the entries to record injection of gas into storage and the elimination of intercompany transactions.

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

	3 Months Ended						12 Months Ended
	March 31,						March 31,
	2013			2012			2013			2012
	(in millions)
Questar Gas
Gas purchases	$	103.3		$	61.5		$	146.0		$	164.2
Operator service fee	72.8			65.7			281.1			258.3
Transportation and storage	22.0			20.6			81.0			78.0
Gathering	4.6			6.1			19.0			25.2
Royalties	11.1			10.2			32.9			40.7
Storage (injection) withdrawal, net	28.8			27.4			3.3			(2.3		)
Purchased-gas account adjustment	46.7			43.4			19.4			24.0
Other	1.3			1.3			5.0			5.1
Total Questar Gas cost of natural gas sold	290.6			236.2			587.7			593.2
Elimination of Questar Gas cost of natural gas sold - affiliated parties	(92.1		)	(84.0		)	(355.8		)	(331.9		)
Total Questar Gas cost of natural gas sold - unaffiliated parties	198.5			152.2			231.9			261.3
Questar Pipeline
Total Questar Pipeline cost of sales	1.2			0.5			7.4			3.0
Total cost of sales	$	199.7		$	152.7		$	239.3		$	264.3