Questar Lags Earnings, Tops Revenue - Analyst Blog
02 Maggio 2013 - 3:56PM
Zacks
Natural gas-focused energy company Questar
Corporation (STR) reported weak first-quarter 2013
earnings.
Earnings per share came in at 41 cents, down 2.4% from the profit
of 42 cents earned in the prior-year quarter, mainly due to higher
depreciation and administrative expenses. The result also missed
the Zacks Consensus Estimate by 2 cents.
Total revenue was $476.9 million, beating the Zacks Consensus
Estimate of $470.0 million. Revenues also increased 12.0% from the
year-ago level of $425.7 million due to increase in demand for
natural gas as well as strong performances by Questar Gas and
Wexpro segments.
Segment Analysis
Questar Gas: The segment generated $418.3
million in revenues, up 14.3% from the prior year. This increase
was favored by the growing demand for natural gas due to a dip in
the temperature. The segment registered an income of $64.3 million,
against an income of $61.8 million in the first quarter of
2012.
As of Mar 31, 2013, Questar Gas served 937,400 customers,
representing a hike of 14,128 or 1.5% year over year as compared to
a 1.0% hike in the previous year.
Wexpro: Consolidated sales increased
12.0% year over year to $10.3 million in the quarter. Segmental
income from continuing operations also increased to $39.8 million
from $37.2 million in the prior-year quarter, attributable to a
higher average investment base.
Quarterly production of natural gas edged up 2.7% to 15.4 billion
cubic feet (Bcf), up from 15.0 Bcf in the first quarter of
2012.
Questar Pipeline: Consolidated revenues
of $48.3 million decreased by 4.4% from the $50.5 million in the
comparable quarter last year. Income from continuing operations was
$30.2 million, reflecting a drop of 5.0% year over year. The
quarter’s performance was impacted by lesser revenues in natural
gas liquids along with a rise in depreciation and amortization
expenses.
The total natural gas transportation volumes in the quarter was
$233.7 million decatherms, up from the prior-year level of 227.2
million decatherms.
Expenses
The general and administrative expenses for this quarter have
increased by 16.2% to $33.8 million as compared to the year-ago
period.
The depreciation, depletion and amortization expenses increased by
9.8% to $48.5 million in this quarter as compared to first-quarter
2012.
Financials
As of Mar 31, 2013, Questar had long-term debt (including current
portion) of $1,140.4 million, with a debt-to-capitalization ratio
of 51.3%.
Guidance
For 2013, Questar has sustained its previous guidance for earnings
in the range of $1.12 to $1.20 per share. Questar expects that the
approval of Wexpro II by the regulators of Utah and the three
agreements signed by Questar Fueling – an affiliate of Questar –
for the production of compressed natural gas (CNG) will generate
significant cash flows for its shareholders in the future.
Questar estimated that its total investment of capital will be
roughly $450 million in 2013.
Stocks to Consider
Questar currently carries a Zacks Rank #2 (Buy), implying that it
is expected to outperform the broader U.S. equity market over the
next one to three months.
Meanwhile, one can look at other energy firms like EPL Oil
& Gas Inc. (EPL), Tesco Corporation
(TESO) and SemGroup Corporation (SEMG) as
attractive investments. All these firms – sport a Zacks Rank #1
(Strong Buy).
EPL OIL&GAS INC (EPL): Free Stock Analysis Report
SEMGROUP CORP-A (SEMG): Free Stock Analysis Report
QUESTAR (STR): Free Stock Analysis Report
TESCO CORP (TESO): Free Stock Analysis Report
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