SALT LAKE CITY, July 25 /PRNewswire-FirstCall/ -- Questar Corp. -- a natural gas-focused energy company -- grew net income 24% in the second quarter of 2007 to $112.2 million, or $0.64 per diluted share, compared to $90.4 million, or $0.52 per diluted share, for the second quarter of 2006. For the first half of 2007, Questar net income was $263.3 million, or $1.50 per diluted share, compared to $227.5 million or $1.30 per diluted share for the 2006 period, a 16% increase. The company split its common shares two- for-one on June 18, 2007. Historical share and per-share amounts have been restated for the stock split.
NET INCOME (LOSS) BY LINE OF BUSINESS
(in millions, except earnings per share)
3 Months Ended 6 Months Ended
June 30, June 30,
2007 2006 Change 2007 2006 Change
Market Resources
Questar E&P $66.7 $56.1 19% $143.9 $126.6 14%
Wexpro 14.7 12.0 23 28.6 23.9 20
Gas Management 14.9 10.2 46 27.3 19.9 37
Energy Trading
and other 5.8 1.0 480 11.8 3.5 237
Market Resources
Total 102.1 79.3 29 211.6 173.9 22
Questar Pipeline 10.0 11.0 (9) 21.2 23.0 (8)
Questar Gas (1.1) (0.7) (57) 28.0 28.7 (2)
Corporate 1.2 0.8 50 2.5 1.9 32
QUESTAR CORPORATION
TOTAL $112.2 $90.4 24% $263.3 $227.5 16%
Earnings per
diluted share $0.64 $0.52 $1.50 $1.30
Average diluted
shares 175.9 175.0 175.7 175.0
"Questar E&P grew natural gas and oil-equivalent production 13% in the second quarter, despite curtailments related to low natural gas prices in the Rockies," said Keith O. Rattie, Questar Chairman, President and CEO. "But the real story in our second-quarter results was the favorable impact of our price-risk management discipline -- hedging."
Second Quarter Highlights
-- Questar Exploration & Production (Questar E&P) grew natural gas, oil
and natural gas liquids (NGL) production to 35.5 billion cubic feet
of natural gas equivalent (Bcfe) compared to 31.3 Bcfe for the 2006
period, a 13% increase. The company shut in approximately 1 Bcfe
(net) of unhedged June natural gas and associated liquid hydrocarbon
production in response to low regional market prices for natural gas
in the Rocky Mountain producing area. Low regional prices result
from insufficient takeaway capacity on interstate pipelines that
transport natural gas from Rockies producing basins to markets
outside the region. Start-up of the Rockies Express Pipeline -- West
Project, currently scheduled for January 1, 2008, should relieve the
current transportation bottleneck.
-- Natural gas comprised 87% of reported volumes.
-- Realized natural gas prices at Questar E&P increased $0.47 per
thousand cubic feet (Mcf), or 8%, while realized crude oil and NGL
prices increased $0.44 per barrel (bbl), or 1%. Natural gas hedges
increased reported revenues by $59.9 million, while oil hedges
reduced revenues by $1.6 million.
-- Net mark-to-market losses on NYMEX/Rockies natural gas basis swaps
reduced net income $4.1 million in the 2007 quarter, compared to a
$3.5 million reduction in the prior-year period.
-- Wexpro investment base grew 21% to $267.2 million at June 30, 2007,
compared to $220.1 million a year earlier. Wexpro produced 9.6 Bcf
of cost-of-service gas for delivery to affiliate Questar Gas.
-- A 57% increase in third-party gathering volumes helped boost Gas
Management gathering revenues 37% to $24.6 million compared to $18.0
million a year earlier. Fee-based processing volumes increased 26%
while net processing revenues increased 42% to $17.2 million due to
increased frac-spread.
-- Energy Trading net income was up 480% to $5.8 million, driven
primarily by increased trading margins. Gross marketing margin
totaled $9.4 million compared to $1.7 million in the year-ago
period.
-- Questar Pipeline earned $10.0 million in the second quarter 2007,
down 9% from 2006. Operating expense, depreciation expense and
property taxes increased when the company put the Overthrust
Pipeline Opal expansion project in service at the end of last year.
The company began collecting revenues from this project a year
earlier when service was initiated at an interim Kern River delivery
point.
-- The seasonal loss at Questar Gas increased to $1.1 million from a
year ago, primarily because the year-ago period included a $1.7
million after-tax one-time adjustment to unbilled revenues.
-- Questar earned a 17.4% return on assets (ROA - defined as earnings
before interest and income taxes divided by average total assets)
for the trailing 12-month period ended June 30, 2007. Market
Resources ROA was 21.9%, Questar Pipeline ROA was 10.6%, and Questar
Gas ROA was 8.3%.
Questar Reaffirms 2007 Earnings and Production Guidance
Questar expects full-year 2007 earnings to range from $2.60 to $2.68 per diluted share, unchanged from previous guidance. The company expects that better-than-forecast performance from Wexpro, Gas Management, and Energy Trading will offset the impact of lower natural gas prices for the rest of the year on Questar E&P results. The company expects Questar E&P 2007 production to range from 135 to 138 Bcfe, despite shut-in volumes totaling approximately 2.0 Bcfe of net production over the June and July period, and the likelihood of continued shut-ins in August. The guidance assumes Rockies basis differential will average $3.25 per million Btu (MMBtu) for the remainder of 2007. Rockies basis differential is the difference between the NYMEX/Henry Hub price of natural gas and the price the company realizes for natural gas produced and sold in the Rocky Mountain region. The lower end of the guidance range assumes an average NYMEX price of $6.50 per MMBtu for currently unhedged 2007 natural gas production for the rest of the year and an average prompt- month NYMEX oil price of $70.00 per bbl applied to unhedged volumes. The upper end assumes an average NYMEX gas price of $7.50 per MMBtu and an average prompt-month NYMEX oil price of $75.00 per bbl applied to unhedged 2007 production. The guidance excludes one-time items, assumes hedges in place on the date of this release, and assumes natural gas and oil prices and basis differentials as summarized in the following table:
Earnings Guidance Assumptions
2007 2007
Current Previous
Earnings per diluted share $2.60-$2.68 $2.60-$2.68
Average diluted shares (millions) 176.2 176.2
Questar E&P production - Bcfe 135-138 135-138
Pinedale well completions 48-52 48-52
NYMEX gas price per MMBtu* $6.50-$7.50 $7.25-$8.25
NYMEX/Rockies basis differential
per MMBtu* $3.25 $3.25
NYMEX/Midcontinent basis differential
per MMBtu* $1.00 $1.00
NYMEX crude oil price per bbl* $70.00-$75.00 $60.00-$65.00
* On unhedged volumes for the remainder of 2007
-- Questar E&P has hedged about 76% of forecast natural gas and oil-
equivalent production for the second half of 2007 with fixed-price
swaps. Additionally, the company has hedged about 8% of forecast
second half 2007 production with NYMEX/Rockies basis swaps (see
table at the end of this release).
-- The company estimates that a $1.00-per-MMBtu change in the average
NYMEX price of natural gas for the remainder of 2007 would result in
about a $0.02 change in earnings per diluted share.
-- A $10.00-per-bbl change in the average NYMEX price of oil for the
remainder of 2007 would result in about a $0.02 change in earnings
per diluted share.
Questar E&P Net Income Increases 19% in Second Quarter, 14% for First Six Months of 2007
Questar E&P -- a Market Resources subsidiary that acquires, explores for, develops and produces natural gas and oil -- grew production 13% to 35.5 Bcfe in the 2007 second quarter despite shutting in 1 Bcfe of production during June. Growing production, combined with higher realized prices for natural gas, more than offset a 17% higher average cost structure, resulting in a 19% increase in second quarter 2007 net income to $66.7 million compared to the year-earlier quarter of $56.1 million. Basis-only swaps reduced net income $4.1 million in the 2007 quarter and $3.5 million in the 2006 quarter. For the first six months of 2007, Questar E&P net income rose 14% to $143.9 million compared to $126.6 million a year earlier, driven by an 11% increase in production, higher realized gas prices, increased net mark-to-market gains on NYMEX/Rockies natural gas basis swaps, and reduced exploration expense.
Questar E&P - Production by Region
3 Months Ended 6 Months Ended
June 30, June 30,
2007 2006* Change 2007 2006** Change
(Bcfe) (Bcfe)
Pinedale Anticline 11.4 8.2 39% 23.6 17.9 32%
Uinta Basin 6.7 6.2 8 12.6 12.4 2
Rockies Legacy 4.9 4.9 - 9.4 10.0 (6)
Subtotal -
Rocky Mountains 23.0 19.3 19 45.6 40.3 13
Midcontinent 12.5 12.0 4 24.8 23.3 6
Total Questar E&P 35.5 31.3 13% 70.4 63.6 11%
* Includes 0.3 Bcfe working-interest adjustment in Rockies Legacy.
** Includes 0.7 Bcfe gas-imbalance settlement and 0.3 Bcfe working-
interest adjustment in Rockies Legacy.
Questar E&P - Realized Prices and Hedging Impact
3 Months Ended 6 Months Ended
June 30, June 30,
2007 2006 Change 2007 2006 Change
Realized natural
gas price
($ per Mcf) $6.47 $6.00 8% $6.41 $6.13 5%
Natural gas
hedging impact
($ per Mcf) 1.94 0.69 1.46 0.05
Realized oil and
NGL price
($ per bbl) 50.55 50.11 1 49.63 50.27 (1)
Oil and NGL
hedging impact
($ per bbl) (2.13) (10.80) (0.52) (8.38)
Net mark-to-market
gains (losses)
on basis swaps
($ million -
before tax) (6.6) (5.6) 5.2 (5.6)
Questar may hedge sales prices on up to 100% of forecast production from proved reserves to lock in acceptable returns on invested capital and to protect returns, cash flow and net income from a decline in commodity prices. The company uses NYMEX/Rockies basis-only swaps to protect cash flows and net income from widening natural gas-price basis differentials that may result from capacity constraints on regional gas pipelines.
Questar E&P production costs (the sum of depreciation, depletion and amortization expense, lease operating expense, general and administrative expense, allocated interest expense, and production taxes) per unit of gas- equivalent production increased 17% in the second quarter 2007 compared to the 2006 period.
Questar E&P - Production Cost Structure
3 Months Ended 6 Months Ended
June 30, June 30,
(per Mcfe) (per Mcfe)
2007 2006 Change 2007 2006 Change
Depreciation,
depletion and
amortization $1.71 $1.38 24% $1.70 $1.33 28%
Lease operating
expense 0.62 0.54 15 0.61 0.54 13
General and
administrative
expense 0.44 0.27 63 0.40 0.31 29
Allocated interest
expense 0.18 0.26 (31) 0.18 0.23 (22)
Production taxes 0.41 0.41 - 0.43 0.46 -
Production costs $3.36 $2.86 17% $3.32 $2.87 7%
-- Production volume-weighted average depreciation, depletion and
amortization rate increased in both periods due to higher costs for
drilling, completion and related services, increased cost of steel
casing, other tubulars and wellhead equipment, the ongoing depletion
of older, lower-cost reserves and the increasing component of
Questar E&P production derived from higher-cost fields such as Elm
Grove in the Midcontinent and Vermillion Basin in the Rockies.
-- Lease operating expense per Mcfe increased in both periods due to
increased costs of materials and consumables, increased produced-
water disposal costs and increased well-workover activity.
-- General and administrative expense per Mcfe increased due to higher
labor and legal expenses in the 2007 quarter and the reversal of a
legal expense accrual in the year-earlier quarter.
-- Allocated interest expense per unit of production decreased in the
2007 periods due to increased current-year production and
refinancing costs incurred in the second quarter 2006.
Wexpro Net Income Up 23% in Second Quarter, 20% for First Six Months of 2007
Wexpro -- a Market Resources subsidiary that develops and produces cost- of-service reserves for Questar Gas -- reported higher net income driven by a 21% increase in its investment base at June 30, 2007, to $267.2 million compared to $220.1 million a year ago. Realized oil and NGL prices declined 13% in the second quarter 2007 compared to the 2006 quarter. For the first six months of 2007, Wexpro net income was $28.6 million compared to $23.9 million in the prior year period, a 20% increase. Wexpro first six months 2007 results benefited from a higher investment base compared to the prior-year 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 about 19 to 20% on its investment base -- the investment in commercial wells and related facilities, adjusted for working capital and reduced for deferred income taxes and accumulated depreciation.
Gas Management Net Income Up 46% in Second Quarter, 37% for First Six Months of 2007
Questar Gas Management (Gas Management) -- Market Resources' gas-gathering and processing-services business -- posted higher net income driven by higher gathering volumes in the second quarter and first half 2007. Gas-gathering throughput grew 21% or 13.3 million MMBtu compared to the second quarter of 2006, primarily due to a 57% increase in third-party volumes. Fee-based gas- processing volumes were 33.4 million MMBtu in the second quarter of 2007, a 26% increase compared to the 2006 period. Fee-based gas-processing revenues increased 36% or $1.3 million, while gross margin from keep-whole processing increased 45% or $3.6 million in the 2007 second quarter. Approximately 74% of Gas Management net operating revenue (total revenue less processing plant- shrink) is derived from fee-based contracts, compared to 75% in the 2006 period. For the first six months of 2007, Gas Management net income increased 37% to $27.3 million compared to $19.9 million in the 2006 period, driven by higher gathering and processing volumes.
Questar Pipeline Net Income Down 9% in Second Quarter, Down 8% for First Six Months of 2007
Questar Pipeline -- a subsidiary that provides interstate natural gas transportation and storage services -- reported lower net income primarily from increased operating, depreciation and interest expense from the western expansion of the Overthrust Pipeline to Opal, Wyoming, placed in service in January 2007. The company began collecting revenues from this project at the beginning of 2006 at an interim delivery point pending construction and start- up of new pipeline facilities, which were completed at the end of the year. Second-quarter revenues from this project remained essentially the same as a year ago, but second-quarter 2007 expenses included operating, maintenance, depreciation and interest expense for the new facilities. Total revenues decreased $0.5 million as lower liquids volumes and reduced gas analysis and wellhead automation equipment sales offset higher transportation and gas- processing revenues. Operating, maintenance, general and administrative expenses totaled $0.15 per decatherm transported, up from $0.13 in the year- earlier quarter, as a result of a 2% increase in transportation volumes and a 17% increase in expenses. Questar Pipeline net income was $21.2 million in the first six months of 2007, compared to $23.0 million in the year-ago period. Net income fell due to lower liquids volumes and wellhead automation equipment sales combined with higher operating and maintenance, general and administrative, depreciation and interest expenses associated with system expansion projects.
Questar Gas Seasonal Net Loss Increases to $1.1 Million in Second Quarter, Net Income Down 2% for First Six Months of 2007
Questar Gas -- which provides retail natural gas distribution services in Utah, Wyoming and Idaho -- reported a $0.4 million increase in its seasonal net loss in the quarter over the year-ago period. Second quarter 2006 results included a $2.7 million before-tax or $1.7 million after-tax adjustment to increase unbilled revenues. Second quarter 2007 total operating expenses decreased $1.9 million, due primarily to lower bad-debt and depreciation expenses. Operating, maintenance, general and administrative expenses totaled $32 per customer in the second quarter of 2007 compared to $34 per customer in the 2006 period. Questar Gas net income was $28.0 million in the first six months of 2007, 2% lower than the year-earlier period. At June 30, 2007, Questar Gas served 862,000 customers, up 27,000 or 3.2% from June 30, 2006.
Second Quarter 2007 Earnings Teleconference
Questar management will discuss second quarter 2007 results and the outlook for the remainder of 2007 in a conference call with investors Thursday, July 26, beginning at 9:30 a.m. EDT. The call can be accessed on the company Internet site at http://www.questar.com/.
About Questar
Questar Corp. is a natural gas-focused energy company with an enterprise value of about $10 billion. Questar finds, develops, produces, gathers, processes, transports, stores and distributes natural gas.
Forward-Looking Statements
This release includes forward-looking statements within the meaning of Section 27(a) of the Securities Act of 1933, as amended, and Section 21(e) of the Securities Exchange Act of 1934, as amended. Such statements are based on management's current expectations, estimates and projections, which are subject to a wide range of uncertainties and business risks. Factors that could cause actual results to differ from those anticipated are discussed in the company's periodic filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2006. Questar undertakes no obligation to publicly correct or update the forward- looking statements in this news release, 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 Questar's Internet site at: http://www.questar.com/.
Hedge Positions - July 25, 2007
Rocky Mid- Rocky Mid-
Time Periods Mountains continent Total Mountains continent Total
Gas (Bcf) Estimated Average Price
Fixed-Price Swaps Per Mcf, Net to the Well
2007
Second half 28.6 17.4 46.0 $6.72 $7.76 $7.12
2008
First half 22.0 17.3 39.3 $7.18 $7.93 $7.51
Second half 23.0 17.5 40.5 7.16 7.93 7.49
12 months 45.0 34.8 79.8 7.17 7.93 7.50
2009
First half 20.1 12.0 32.1 $7.11 $7.66 $7.31
Second half 20.5 12.2 32.7 7.11 7.66 7.31
12 months 40.6 24.2 64.8 7.11 7.66 7.31
2010
First half 3.3 6.9 10.2 $6.95 $7.58 $7.37
Second half 3.4 6.9 10.3 6.95 7.58 7.37
12 months 6.7 13.8 20.5 6.95 7.58 7.37
Gas (Bcf) Estimated Average Basis
Basis-Only Swaps Per Mcf vs. NYMEX
2007
Second half 5.1 5.1 $2.40 $2.40
2008
First half 15.3 15.3 $1.63 $1.63
Second half 15.4 15.4 1.63 1.63
12 months 30.7 30.7 1.63 1.63
2009
First half 10.1 10.1 $1.15 $1.15
Second half 10.3 10.3 1.15 1.15
12 months 20.4 20.4 1.15 1.15
Oil (Mbbl) Estimated Average Price
Fixed-Price Swaps Per Bbl, Net to the Well
2007
Second half 534 202 736 $52.01 $57.91 $53.63
2008
First half 218 146 364 $60.93 $66.93 $63.33
Second half 221 147 368 60.93 66.93 63.33
12 months 439 293 732 60.93 66.93 63.33
2009
First half 217 145 362 $60.55 $66.55 $62.95
Second half 221 147 368 60.55 66.55 62.65
12 months 438 292 730 60.55 66.55 62.95
QUESTAR CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
3 Months Ended 6 Months Ended
June 30, June 30,
2007 2006 2007 2006
(in millions, except per share amounts)
REVENUES
Market Resources $384.6 $384.1 $818.5 $799.2
Questar Pipeline 30.4 30.2 62.1 59.6
Questar Gas 141.7 181.9 548.2 648.8
Total Revenues 556.7 596.2 1,428.8 1,507.6
OPERATING EXPENSES
Cost of natural
gas and other
products sold 119.6 220.8 512.0 683.6
Operating and
maintenance 72.7 68.3 150.4 142.4
General and
administrative 42.1 30.3 79.3 62.6
Production and
other taxes 27.2 25.9 57.0 59.4
Depreciation,
depletion and
amortization 92.6 73.2 183.7 146.0
Exploration 3.1 10.1 5.1 13.4
Abandonment and
impairment 2.1 1.8 4.1 3.5
Total Operating
Expenses 359.4 430.4 991.6 1,110.9
Net gain from
asset sales 0.1 0.3 0.5 0.2
OPERATING INCOME 197.4 166.1 437.7 396.9
Interest and other
income 2.9 3.4 5.9 5.9
Income from
unconsolidated
affiliates 2.2 1.7 4.4 3.5
Net mark-to-market
gain (loss) on
basis-only swaps (6.6) (5.6) 5.2 (5.6)
Loss on early
extinguishment of debt (1.7) (1.7)
Interest expense (17.7) (19.8) (35.7) (37.2)
INCOME BEFORE
INCOME TAXES 178.2 144.1 417.5 361.8
Income taxes 66.0 53.7 154.2 134.3
NET INCOME $112.2 $90.4 $263.3 $227.5
EARNINGS PER COMMON SHARE
Basic $0.65 $0.53 $1.53 $1.33
Diluted 0.64 0.52 1.50 1.30
Weighted-average common
shares outstanding
Used in basic
calculation 172.0 170.7 171.8 170.6
Used in diluted
calculation 175.9 175.0 175.7 175.0
Dividends per
common share $0.1225 $0.1175 $0.24 $0.23
QUESTAR CORPORATION
OPERATIONS BY LINE OF BUSINESS
(Unaudited)
3 Months Ended 6 Months Ended
June 30, June 30,
2007 2006 2007 2006
(in millions)
Revenues from
Unaffiliated Customers
Questar E&P $239.0 $198.4 $468.8 $409.2
Wexpro 4.9 3.7 11.4 10.0
Gas Management 49.4 40.5 93.4 81.7
Energy Trading
and other 91.3 141.5 244.9 298.3
Market Resources
total 384.6 384.1 818.5 799.2
Questar Pipeline 30.4 30.2 62.1 59.6
Questar Gas 141.7 181.9 548.2 648.8
$556.7 $596.2 $1,428.8 $1,507.6
Revenues from
Affiliated Companies
Wexpro $42.1 $36.5 $82.8 $75.2
Gas Management 4.1 3.6 8.4 7.5
Energy Trading
and other 133.3 159.0 289.3 409.2
Market Resources
total 179.5 199.1 380.5 491.9
Questar Pipeline 19.3 20.0 39.9 40.7
Questar Gas 2.1 1.2 3.2 2.8
$200.9 $220.3 $423.6 $535.4
Operating Income
Questar E&P $119.9 $104.2 $237.0 $223.0
Wexpro 22.5 18.3 43.9 36.5
Gas Management 22.8 15.3 41.6 30.0
Energy Trading
and other 7.9 0.8 16.1 4.1
Market Resources
total 173.1 138.6 338.6 293.6
Questar Pipeline 21.4 23.3 45.2 47.9
Questar Gas 1.9 2.7 52.8 53.9
Corporate 1.0 1.5 1.1 1.5
$197.4 $166.1 $437.7 $396.9
Net Income (Loss)
Questar E&P $66.7 $56.1 $143.9 $126.6
Wexpro 14.7 12.0 28.6 23.9
Gas Management 14.9 10.2 27.3 19.9
Energy Trading
and other 5.8 1.0 11.8 3.5
Market Resources
total 102.1 79.3 211.6 173.9
Questar Pipeline 10.0 11.0 21.2 23.0
Questar Gas (1.1) (0.7) 28.0 28.7
Corporate 1.2 0.8 2.5 1.9
$112.2 $90.4 $263.3 $227.5
QUESTAR CORPORATION
SELECTED OPERATING STATISTICS
(Unaudited)
3 Months Ended 6 Months Ended
June 30, June 30,
2007 2006 2007 2006
MARKET RESOURCES
Questar E&P
production volumes
Natural gas (Bcf) 30.9 27.5 61.8 56.1
Oil and natural gas
liquids (MMbbl) 0.7 0.6 1.4 1.2
Total production
(Bcfe) 35.5 31.3 70.4 63.6
Average daily
production (MMcfe) 389.9 343.8 389.1 351.2
Questar E&P average
realized price, net
to the well
(including hedges)
Natural gas
(per Mcf) $6.47 $6.00 $6.41 $6.13
Oil and NGL
(per bbl) $50.55 $50.11 $49.63 $50.27
Wexpro investment
base at June 30, net
of depreciation and
deferred income
taxes (millions) $267.2 $220.1
Natural gas
processing volumes
NGL sales (MMgal) 20.2 21.9 38.0 44.5
Fee-based processing
(in millions
of MMBtu) (1) 33.4 26.5 64.0 56.6
Natural gas
processing revenues
NGL sales price
(per gal) $0.95 $0.89 $0.92 $0.88
Fee-based processing
(per MMBtu) $0.15 $0.14 $0.15 $0.14
Natural gas gathering
volumes (in millions
of MMBtu) (1)
For unaffiliated
customers 44.4 28.3 83.9 53.7
For affiliated
customers 31.3 34.2 68.9 70.0
Total gathering 75.7 62.5 152.8 123.7
Gathering revenue
(per MMBtu) (1) $0.33 $0.29 $0.31 $0.29
Natural gas and oil
marketing volumes
(MMdthe)
For unaffiliated
customers 24.4 25.8 50.0 55.3
For affiliated
customers 23.6 24.3 50.9 49.9
Total marketing 48.0 50.1 100.9 105.2
QUESTAR PIPELINE
Natural gas
transportation
volumes (MMdth)
For unaffiliated
customers 84.0 78.2 160.9 140.9
For Questar Gas 25.4 27.2 67.5 68.1
For other affiliated
customers 3.9 5.9 8.6 9.6
Total transportation 113.3 111.3 237.0 218.6
Transportation revenue
(per dth) $0.28 $0.27 $0.26 $0.27
Firm-daily
transportation demand
at June 30, (MMdth) 2.2 2.1
Natural gas processing
NGL sales (MMgal) 1.4 2.3 3.9 4.5
NGL sales price
(per gal) $1.20 $1.25 $1.05 $1.22
QUESTAR GAS
Natural gas volumes
(MMdth)
Residential and
commercial 15.1 16.7 61.0 59.0
Industrial 0.4 1.2 0.8 2.3
Transportation for
industrial customers 11.0 7.3 20.9 15.8
Total industrial 11.4 8.5 21.7 18.1
Total deliveries 26.5 25.2 82.7 77.1
Natural gas revenue
(per dth)
Residential and
commercial sales $8.51 $9.73 $8.53 $10.24
Industrial 5.88 7.44 6.39 7.91
Transportation for
industrial customers $0.21 $0.19 $0.22 $0.19
Temperatures -
(warmer) than
normal (16%) (25%) (7%)
Temperature-adjusted
usage per
customer (dth) 16.8 18.1 65.4 68.5
Customers at June 30,
(in thousands) 862.1 835.5
(1) one dth = one MMBtu
QUESTAR CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2007 2006
(Unaudited)
(in millions)
ASSETS
Current Assets
Cash and cash equivalents $24.6
Accounts receivable, net $266.9 410.8
Fair value of derivative contracts 109.9 155.5
Inventories 95.3 134.8
Other current assets 22.4 27.7
Total Current Assets 494.5 753.4
Property, Plant and Equipment 7,011.1 6,414.1
Accumulated depreciation, depletion
and amortization (2,477.4) (2,322.7)
Net Property, Plant and Equipment 4,533.7 4,091.4
Investment in unconsolidated affiliates 45.2 37.5
Goodwill 70.7 70.7
Fair value of derivative contracts 3.4 49.0
Other noncurrent assets, net 66.6 62.7
Total Assets $5,214.1 $5,064.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Checks outstanding in excess of cash $23.5
Short-term debt 62.5 $40.0
Accounts payable and accrued expenses 395.8 551.4
Fair value of derivative contracts 2.4 8.2
Purchased-gas adjustment 54.1 34.3
Deferred income taxes - current 16.1 35.0
Current portion of long-term debt 53.0 10.0
Total Current Liabilities 607.4 678.9
Long-term debt, less current portion 979.4 1,022.4
Deferred income taxes 827.8 763.9
Fair value of derivative contracts 17.2 0.2
Other long-term liabilities 413.4 393.8
Common Shareholders' Equity 2,368.9 2,205.5
Total Liabilities and Common
Shareholders' Equity $5,214.1 $5,064.7
QUESTAR CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
6 Months Ended June 30,
2007 2006
(in millions)
OPERATING ACTIVITIES
Net income $263.3 $227.5
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation, depletion and amortization 187.0 150.5
Deferred income taxes 88.6 17.8
Share-based compensation 6.1 4.5
Abandonment and impairment 4.1 3.5
Dry exploratory well expenses 9.9
Net (gain) from asset sales (0.5) (0.2)
Income from unconsolidated affiliates (4.4) (3.5)
Distributions from unconsolidated affiliates 3.2 2.8
Net mark-to-market (gain) loss on
basis-only swaps (5.2) 5.6
Loss on early extinguishment of debt 1.7
Changes in operating assets and liabilities 11.1 92.9
NET CASH PROVIDED FROM OPERATING ACTIVITIES 553.3 513.0
INVESTING ACTIVITIES
Capital expenditures (593.5) (372.4)
Proceeds from disposition of assets 3.8 2.8
NET CASH USED IN INVESTING ACTIVITIES (589.7) (369.6)
FINANCING ACTIVITIES
Common stock (2.4) 1.4
Change in long-term debt 47.0
Early extinguishment of debt costs (1.7)
Change in short-term debt 22.5 (94.5)
Checks in excess of cash balances 23.5
Dividends paid (41.4) (39.4)
Excess tax benefits from share-based
compensation 9.6 4.2
NET CASH PROVIDED FROM (USED IN)
FINANCING ACTIVITIES 11.8 (83.0)
Change in cash and cash equivalents (24.6) 60.4
Beginning cash and cash equivalents 24.6 13.4
Ending cash and cash equivalents $- $73.8
