Wexpro II acquisition approved
Questar Fueling announces additional CNG
station
Provides 2014 EPS and capital
guidance
Questar Corporation (NYSE:STR) reported net income of $161.2
million for 2013, or $0.92 per diluted share. This included a
noncash impairment charge for the eastern segment of Southern
Trails Pipeline of $52.4 million after-tax, or $0.29 per diluted
share. Excluding the impairment charge, 2013 adjusted earnings were
$213.6 million, or $1.21 per diluted share, compared to 2012 net
income of $212.0 million, or $1.19 per diluted share. Adjusted
earnings before interest, taxes, depreciation and amortization
(Adjusted EBITDA) for the year rose 5% to $595.0 million compared
to $567.8 million for 2012. The return on average common equity
(ROE) was 14.4% for 2013. Excluding the impairment charge,
Questar’s 2013 adjusted ROE was 18.7%.
NET INCOME (LOSS) BY SUBSIDIARY
3 Months Ended December 31, 12 Months Ended
December 31,
2013
2012 (b)
Change
2013
2012 (b)
Change (in millions, except earnings per share) Questar Gas
$ 26.0 $ 23.8 9 %
$ 52.8
$ 47.1 12 % Wexpro
28.4 27.4 4 %
110.6
103.9 6 % Questar Pipeline
15.8 14.9 6 %
60.6 64.7 (6
%) Corporate and other
(2.1 ) (2.3 )
(9 %)
(10.4 ) (3.7
) NM Adjusted earnings
$ 68.1 $
63.8 7 %
$ 213.6 $ 212.0 1 %
Asset impairment (a)
(52.4 ) NM Net income
$ 68.1 $ 63.8 7 %
$ 161.2 $ 212.0
(24 %) Adjusted earnings per diluted share
$
0.39 $ 0.36 8 %
$ 1.21 $ 1.19 2 % Asset
impairment (a)
(0.29 ) NM
Earnings per diluted share
$ 0.39
$ 0.36 8 %
$ 0.92
$ 1.19 (23 %) Weighted-average diluted
shares
175.9 175.9 — %
176.0 177.5 (1 %)
(a) Impairment of the eastern segment of
Questar Pipeline's Southern Trails Pipeline. See computations at
the end of the attached financial statements.
(b) Includes $3.0 million ($0.02 per
diluted share) after-tax impact of the retirement incentive costs
in the fourth quarter of 2012. Subsidiaries and corporate each bore
a proportionate share of the charge: Questar Gas, $1.5 million;
Questar Pipeline, $0.6 million; Wexpro, $0.1 million; and
corporate, $0.8 million.
ADJUSTED EBITDA BY
SUBSIDIARY(a)
3 Months Ended December 31, 12 Months Ended
December 31,
2013 2012 Change
2013 2012 Change (in millions)
Questar Gas
$ 60.7 $ 56.6 $ 4.1
$ 156.7 $ 148.0 $ 8.7 Wexpro
71.1 60.7 10.4
258.7 236.1 22.6 Questar Pipeline
44.6 44.5 0.1
177.1 180.8 (3.7 ) Corporate and other
(0.5 ) (0.1 ) (0.4 )
2.5 2.9 (0.4 ) Total
$ 175.9 $ 161.7 $
14.2
$ 595.0 $
567.8 $ 27.2
(a) Management defines Adjusted EBITDA as
net income (loss) before interest expense, income taxes,
depreciation, depletion and amortization, gains and losses from
asset sales, abandonments and impairments and other special items.
See computations at the end of the attached financial
statements.
“All Questar businesses executed well in the fourth quarter and
for all of 2013. On a consolidated basis, a strong fourth quarter
at all business units enabled Questar to reach adjusted 2013
earnings of $1.21 per diluted share, exceeding our tightened 2013
earnings guidance range of $1.16 to $1.20 per share,” said Ronald
W. Jibson, Questar chairman, president and CEO. “Questar Gas posted
strong 12% earnings growth for the year, reflecting customer
growth, infrastructure upgrades and ongoing cost-containment
efforts. Wexpro's net income rose 6% while Questar Pipeline's
income, before the impairment charge, was down 6% compared to 2012.
Adjusted EBITDA in the fourth quarter grew 9% to $175.9 million and
for all of 2013 grew 5% to $595 million.”
“We achieved several key milestones in 2013. First, early in
2013 the Wexpro II Agreement was approved, allowing us to add to
the existing inventory of properties from which Wexpro develops and
produces cost-of-service gas supplies for Questar Gas customers.
Subsequently, Wexpro acquired an additional 42% working interest in
the Trail Unit of the Vermillion Basin, our lowest-cost producing
basin. The Wexpro II Agreement required us to file with Utah and
Wyoming utility commissions to include the acquisition in the
existing inventory of properties to develop. I am happy to report
that last month, the utility commissions from both states approved
the inclusion of the acquired properties under the terms of the
Wexpro II Agreement.”
“Another accomplishment was Questar Fueling Company's completion
of two new compressed natural gas (CNG) fueling facilities,
including the nation’s largest in Houston, Texas, which serves the
fleet trucking operations of Swift Transportation and Central
Freight Lines and is also open to other CNG vehicles. Questar
Fueling also opened a large public CNG-fueling facility in Topeka,
Kan. anchored by Frito-Lay and Dart Transit Company. More recently,
Questar Fueling announced construction of a new CNG-fueling
facility in San Antonio, Texas, with more announcements
forthcoming.”
2013 highlights include:
- Questar Gas invested about $13.5
million in its infrastructure-replacement program in the quarter
and $56.9 million for the full year.
- Questar Gas's customer growth rate
increased to 1.6% in 2013, compared to 1.3% in 2012.
- Questar Gas completed hearings and
negotiations in its current general rate case before the Utah
Public Service Commission and expects a ruling in the coming
weeks.
- Questar Gas issued $150 million of
30-year and 35-year private-placement notes in December 2013 at a
weighted-average rate of 4.80% to replace maturing debt and provide
growth capital.
- The Wexpro II Agreement was approved by
Utah and Wyoming regulators, allowing Wexpro the opportunity to
acquire additional oil and gas properties and perpetuate the
cost-of-service development and production model of the original
Wexpro Agreement.
- Wexpro acquired an additional 42%
working interest in the Trail Unit of the Vermillion Basin, which
was subsequently approved in January 2014 by Utah and Wyoming
utility commissions for cost-of-service development and production
under the new Wexpro II Agreement.
- Wexpro's investment base grew by 11%
over the past 12 months to $589.7 million, up from $531.1 million
one year earlier.
- Questar Pipeline completed its
expansion project to meet the capacity and delivery needs of the
new natural gas-fired Lake Side 2 power plant being built in
northern Utah by Rocky Mountain Power.
- Questar Pipeline completed a new gas
pipeline augmenting its existing facilities in the Uinta
Basin.
- Questar Pipeline continued work with
its partner, a unit of Spectra Energy, to recommission and market
the 96-mile western segment of its Southern Trails Pipeline as a
crude oil transport pipeline and develop a rail terminal to offload
crude into the pipeline for the final journey to refineries in
Southern California.
- Questar Fueling announced plans to open
a new CNG-fueling station in San Antonio, Texas.
Questar Gas
For 2013, Questar Gas reported net income of $52.8 million and
generated $156.7 million of Adjusted EBITDA, up 12% and 6%,
respectively, compared to 2012. On a financial basis, Questar Gas
earned a 10.1% ROE in 2013. Changes in Questar Gas margin (revenues
less cost of gas sold) are summarized below:
CHANGE IN QUESTAR GAS MARGIN
3 Months EndedDecember 31,2013 vs.
2012
12 Months EndedDecember 31,2013 vs.
2012
(in millions) Customer growth $ 1.3 $ 4.2 Customers switching to
transportation service 0.6 2.0 Infrastructure-replacement cost
recovery 2.9 8.0 Demand-side-management cost recovery 3.9 (6.9 )
Recovery of gas-cost portion of bad-debt costs (0.7 ) (0.5 )
Alternative fuel tax credit and other (1.3 ) (0.5 )
Increase $ 6.7 $ 6.3
As of December 31, Questar Gas served nearly 946,000 customers,
an increase of more than 15,000 customers, or 1.6% in 2013,
compared to a 1.3% growth rate in 2012. Customer growth has
generally accelerated over the past few years. New customers
increased margin by about $4.2 million during 2013. Combined
operating and maintenance (O&M) and general and administrative
(G&A) expenses, excluding demand-side-management (DSM) costs,
were up less than 1% to $144 per customer in 2013, compared to $143
a year earlier, a credit to cost-control efforts throughout the
year. Changes in margin from DSM cost-recovery revenues are offset
by equivalent changes in the program's O&M expenses.
Questar Gas invested $56.9 million in its multi-year
infrastructure-upgrade program during 2013, continuing its focus on
replacing older large-diameter steel pipe. Questar Gas expects to
spend about $55 to $65 million on similar infrastructure upgrades
annually for the next several years. In 2010, the Utah Public
Service Commission approved an infrastructure-cost-tracking
mechanism that enables the timely inclusion of these expenditures
in rate base. Questar Gas recognized about $8.0 million of
increased margin under this tracker in 2013. This cost-tracking
mechanism was reviewed by Utah regulators as part of the current
general rate case filed with the Utah Public Service Commission in
2013. In the rate-case filing, Questar Gas requested a $19 million
increase in revenues, an expansion of the infrastructure-cost
tracker and a continuation of its current 10.35% authorized return
on equity. A commission order on all major issues, including the
cost-tracker and the authorized return on equity is expected on or
before March 1, 2014.
Wexpro
Wexpro grew 2013 net income 6% to $110.6 million, compared to
$103.9 million in 2012. Adjusted EBITDA in 2013 rose 10% to $258.7
million versus $236.1 million a year earlier. Wexpro earned a 19.7%
after-tax return on its average investment base in 2013. Under the
terms of the 1981 Wexpro Agreement between Wexpro and the states of
Utah and Wyoming, Wexpro recovers its costs and earns an unlevered
after-tax return of approximately 20% on its average investment
base. Natural gas production is delivered to Questar Gas customers
in Utah and Wyoming. In 2013, Wexpro provided about 59% of Questar
Gas's gas-supply requirement. In addition, Wexpro's oil and NGL
revenues are shared with Questar Gas customers. Revenues from oil
and natural gas liquids (NGL) sales increased 11% in 2013 compared
to 2012. Wexpro’s efficient operations have resulted in low finding
costs and a cost-of-service gas price on new production that is
competitive with market prices. Wexpro's investment base changes
are summarized below:
CHANGE IN WEXPRO INVESTMENT
BASE
12 Months Ended December 31,
2013
2012 (in millions) Beginning investment base
$
531.1 $ 474.4 Successful development wells
158.5 149.3 Depreciation, depletion and amortization
(79.2 ) (73.9 ) Change in deferred taxes
(20.7 ) (18.7 ) Ending investment base
$ 589.7 $ 531.1
Wexpro’s Vermillion Basin acquisition approved for inclusion
in Wexpro II
In September 2013, Wexpro completed its acquisition of an
additional 42% working interest in the Trail Unit of the Vermillion
Basin in western Wyoming at an adjusted purchase price of $104.3
million. Wexpro now estimates that the acquisition added about 137
billion cubic feet equivalent (Bcfe) of net proved natural gas
reserves. The acquisition’s proved plus probable and possible
reserves are estimated at 195 Bcfe.
In November 2013, in accordance with the terms of the Wexpro II
Agreement, Questar Gas filed applications with the Utah and Wyoming
utility commissions to include the acquired properties for
cost-of-service development and production of gas supplies for its
gas-service customers. In January 2014, the Utah and Wyoming
commissions gave final approval to add the acquired properties to
the inventory of properties from which Wexpro develops and produces
natural gas for the benefit of Questar Gas utility customers.
“We consider it a monumental achievement for the company and our
utility customers to not only get the Wexpro II Agreement approved,
but to now receive approval of Utah and Wyoming regulators to add
the newly acquired Vermillion assets to our gas-development
inventory,” said Jibson. “We appreciate the long-term perspective
of the Utah and Wyoming commissions to approve the addition of
these properties in one of our lowest-cost and most-successful
development areas. The acquisition has the potential to materially
add to the long-term and low-cost gas supplies available to our
utility customers and helps to perpetuate the Wexpro model that has
saved customers over $1 billion since 1981.”
Questar Pipeline
In 2013, Questar Pipeline reported net income of $8.2 million,
which included a noncash impairment of its entire investment in the
eastern segment of its Southern Trails Pipeline of $80.6 million,
or $52.4 million after income taxes. Excluding the impairment
charge, Questar Pipeline’s adjusted net income was $60.6 million in
2013 compared to $64.7 million in 2012.
Questar Pipeline generated $177.1 million of Adjusted EBITDA in
2013 and earned a 1.4% ROE for the year, or 10.0% before the
impairment charge. Much of the drop in adjusted earnings is
attributable to lower NGL revenue in 2013 and the fact that 2012
results included a $1.6 million after-tax gain from asset sales.
NGL revenues were down 38% in 2013 compared to 2012, reflecting
lower NGL sales volumes. Depreciation and amortization expenses
were up 2% in 2013, reflecting higher property, plant and equipment
levels compared to the 2012 period. Combined O&M and G&A
costs were down 7% for 2013 when compared to 2012, reflecting lower
maintenance, processing, communications and labor-related costs.
These lower costs resulted in O&M and G&A expense of $0.09
per decatherm transported in 2013, compared to $0.10 per decatherm
transported in 2012. A summary of changes in Questar Pipeline
revenues is provided below:
CHANGE IN QUESTAR PIPELINE
REVENUES
3 Months EndedDecember 31,2013 vs 2012
12 Months EndedDecember 31,2013 vs
2012
(in millions) Transportation $ 0.7 $ 0.1 Storage (0.3 ) (1.0 ) NGL
sales - transportation (0.2 ) 0.6 NGL sales - field services (0.8 )
(6.5 ) Gathering and processing (0.4 ) (1.3 ) Energy services (1.1
) (2.6 ) Other (1.0 ) (0.6 ) Decrease $ (3.1 )
$ (11.3 )
As of December 31, 2013, Questar Pipeline held net
firm-transportation contracts totaling 5,121 thousand decatherms
(Mdth) per day, up 2% from 5,039 Mdth per day at December 31, 2012.
The modest increase in transportation revenues for the fourth
quarter and for 2013 overall was driven by revenues from a new
Uinta Basin pipeline expansion project. The lower NGL sales revenue
was primarily due to upstream third-party processing. The decline
in gathering and processing revenues reflect reduced gathering
volumes and some terminated processing contracts. Energy services
revenue fell $2.6 million when compared with 2012, driven by lower
demand for well-head automation products and services due to lower
gas drilling activity in the Rockies.
Southern Trails Pipeline Update
In the fourth quarter of 2012, Questar Pipeline initiated a
strategic review of the noncore Questar Southern Trails Pipeline.
All strategic options were analyzed, including joint ventures,
asset sales and other alternatives. The western segment of Southern
Trails Pipeline extends 96 miles from Whitewater to Long Beach,
Calif. This segment has not been placed in service. The eastern
segment of Southern Trails Pipeline is in natural gas service and
extends 487 miles from the San Juan Basin in New Mexico to
connections with other pipelines in the eastern portion of Southern
California.
As a result of that review, Questar Pipeline entered into an
agreement with an affiliate of Spectra Energy to evaluate and
potentially recommission the western portion of its Southern Trails
Pipeline to its original purpose as a crude oil transport pipeline
and to develop a rail terminal to offload crude into the pipeline
for transportation to refineries in Southern California. This
project is in the marketing and engineering phase and a decision
whether or not to proceed with the development is expected in
2014.
Corporate and other
Corporate and other operations reported a net loss of $10.4
million in 2013, compared to a net loss of $3.7 million in 2012.
The increased loss was primarily due to short-term financing costs
carried at the corporate level, income tax-related adjustments and
start-up costs at Questar Fueling Company.
Questar Fueling to build additional CNG-fueling
facilities
Questar Fueling Company recently announced plans to open a new
CNG-fueling station in San Antonio, Texas. In addition, plans are
in development for CNG facilities in several other locations,
including Arizona, California, Connecticut, Kansas, Utah and
multiple sites in Texas. The new San Antonio station will serve
natural gas-powered trucks operated by Central Freight Lines and is
expected to open this summer. The station will also be open to
other fleets and the general public who drive natural gas vehicles
(NGVs). Central Freight Lines is projected to use more than 1
million diesel-gallon equivalents of natural gas per year. The
trucks will use a private time-fill facility in which trucks can
fill while parked as well as a six-lane, high-speed-fueling station
with public access for anyone driving an NGV.
“Our business is growing because many companies in the trucking
industry are transitioning to clean-burning, low-cost CNG,” said
Craig Wagstaff, executive vice president and COO of Questar
Fueling. “Companies like Swift Trucking, Central Freight, Dart
Transit and Frito-Lay are demonstrating their commitment to a
cleaner environment and using America’s abundant and economical
supply of natural gas. In addition, other motorists in these areas
will have public access to the new CNG stations’ clean, low-cost
fuel.”
In 2013, Questar Fueling opened its first two CNG-fueling
stations in Houston, Texas and Topeka, Kan. The Houston CNG station
is the largest in the nation, with five lanes of high-speed,
public-access fueling along with 120 private time-fill spaces
for trucks parked between shifts. In all, as many as 200 natural
gas-powered trucks operated by Swift Transportation and Central
Freight Lines will be fueling at this site. This new Houston CNG
facility can dispense up to 5 million diesel-gallon equivalents per
year. The Topeka location serves Frito-Lay and Dart Transit Company
NGV fleets. It will also be open to the public and can dispense up
to 3 million diesel-gallon equivalents of natural gas per year.
2014 EPS and capital guidance provided
For 2014, the company provided initial EPS guidance of $1.18 to
$1.28 per diluted share and established an initial 2014 capital
investment forecast of about $440 million. Consolidated capital
investment for 2013 was about $504 million, including the $104
million property acquisition by Wexpro. Investment capital has been
allocated to its lines of business as follows:
CAPITAL INVESTMENT FORECAST
2014 Forecast 2013 Actual (in
millions) Questar Gas $ 190 $ 166 Wexpro 100 250 Questar Pipeline
120 73 Corporate and other 30 15 Total
$ 440 $ 504
“I am very pleased that we were able to exceed our earnings
guidance in 2013, due in large part to the extraordinary efforts of
our employees to control costs in spite of continuing challenges
with the economy and uncertainties such as tax variables, pension
and benefits issues, and other expenses,” Jibson said. “The 2012
retirement incentive helped to reduce direct employee costs, but
more was needed and our employees found ways to do it. Looking
forward, many of these same uncertainties continue that could
materially impact future earnings, including the outcome of the
Questar Gas rate case. With this in mind, our initial 2014 earnings
guidance is between $1.18 and $1.28 per diluted share.”
2013 earnings teleconference
Questar management will discuss 2013 results and the outlook for
2014 in a conference call with investors Thursday, February 20,
beginning at 9:30 a.m. ET. The call can be accessed on the company
website at www.questar.com.
About Questar Corporation
Questar is a Rockies-based integrated natural gas company with
an enterprise value of about $5.6 billion, operating through three
principal subsidiaries:
- Questar Gas Company provides
retail natural gas distribution in Utah, Wyoming and Idaho;
- Wexpro Company develops and
produces natural gas from cost-of-service reserves for Questar Gas
customers; and
- Questar Pipeline Company
operates interstate natural gas pipelines and storage facilities in
the western U.S. and provides other energy services.
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:
- the risk factors discussed in Part I,
Item 1A of the Company's Annual Report on Form 10-K for the year
ended December 31, 2013;
- general economic conditions, including
the performance of financial markets and interest rates;
- changes in energy commodity
prices;
- changes in industry trends;
- actions of regulators;
- changes in laws or regulations;
and
- other factors, most of which are beyond
Questar's control.
Questar undertakes no obligation to publicly correct or update
the forward-looking statements in this document, in other
documents, or on the website to reflect future events or
circumstances. All such statements are expressly qualified by this
cautionary statement.
For more information, visit Questar's website at
www.questar.com.
QUESTAR CORPORATIONCONSOLIDATED STATEMENTS
OF INCOME(Unaudited)
3 Months Ended 12 Months Ended December 31,
December 31,
2013 2012
2013 2012 (in millions, except per-share amounts)
REVENUES Questar Gas
$ 337.4 $ 281.0
$ 985.2 $ 859.7 Wexpro
13.1 9.0
45.1
36.1 Questar Pipeline
47.2 53.0
189.5 203.1 Other
0.2 —
0.2
— Total Revenues
397.9
343.0
1,220.0
1,098.9 OPERATING EXPENSES Cost of sales (excluding
operating expenses shown separately)
128.5 93.2
285.9
192.3 Operating and maintenance
52.1 47.6
174.3 180.8
General and administrative
30.8 32.8
121.0 120.8
Retirement incentive
— 4.9
— 4.9 Production and other
taxes
12.2 9.9
57.4 47.9 Depreciation, depletion and
amortization
51.4 46.0
194.8 181.6 Asset impairment
— —
80.6
— Total Operating Expenses
275.0 234.4
914.0 728.3 Net gain (loss) from asset sales
(0.3 ) —
(0.2
) 5.1 OPERATING INCOME
122.6 108.6
305.8 375.7 Interest and other income
0.7 1.3
9.9 7.0 Income from unconsolidated affiliate
0.9 0.9
3.7 3.7 Interest expense
(14.2 )
(13.6 )
(56.9 ) (57.9 ) INCOME
BEFORE INCOME TAXES
110.0 97.2
262.5 328.5 Income
taxes
(41.9 ) (33.4 )
(101.3 ) (116.5 ) NET INCOME
$
68.1 $ 63.8
$
161.2 $ 212.0 EARNINGS PER
COMMON SHARE Basic
$ 0.39 $ 0.36
$ 0.92
$ 1.20 Diluted
0.39 0.36
0.92 1.19 Weighted-average
common shares outstanding Used in basic calculation
175.5
175.2
175.4 176.5 Used in diluted calculation
175.9
175.9
176.0 177.5 Dividends per common share
$
0.18 $ 0.17
$ 0.71 $ 0.665
QUESTAR CORPORATIONPRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Unaudited)
3 Months Ended 12 Months Ended December 31,
December 31,
2013 2012
2013 2012 (in millions) Net income
$
68.1 $ 63.8
$ 161.2 $ 212.0
Other comprehensive income (loss): Pension and other postretirement
benefits
144.1 (52.8 )
168.8 (33.0 ) Interest rate
cash flow hedges
0.1 —
0.5 0.4 Change in fair value
of long-term investment
— —
(0.1 ) 0.1 Income
taxes
(55.3 ) 20.2
(64.7 ) 12.3 Net other comprehensive
income (loss)
88.9 (32.6 )
104.5 (20.2 ) COMPREHENSIVE INCOME
$ 157.0 $ 31.2
$ 265.7 $ 191.8
QUESTAR CORPORATIONOPERATIONS BY LINE OF
BUSINESS(Unaudited)
3 Months Ended 12 Months Ended December 31,
December 31,
2013 2012
2013 2012 (in millions)
Revenues from Unaffiliated
Customers Questar Gas
$ 337.4 $
281.0
$ 985.2 $ 859.7 Wexpro
13.1 9.0
45.1 36.1 Questar Pipeline
47.2 53.0
189.5
203.1 Other
0.2 —
0.2 — Total
$
397.9 $ 343.0
$
1,220.0 $ 1,098.9
Revenues
from Affiliated Companies Questar Gas
$ — $ 0.2
$ 0.6 $ 2.5 Wexpro
79.6 69.5
294.8
274.1 Questar Pipeline
21.9 19.2
76.7 74.4 Total
$ 101.5 $ 88.9
$ 372.1 $ 351.0
Operating Income (Loss) Questar Gas
$ 46.6 $
40.3
$ 101.9 $ 92.9 Wexpro
45.8 40.2
167.7 158.1 Questar Pipeline
29.8 28.8
35.5
124.0 Corporate and other
0.4 (0.7 )
0.7 0.7 Total
$ 122.6 $ 108.6
$ 305.8 $ 375.7
Net
Income (Loss) Questar Gas
$ 26.0 $ 23.8
$
52.8 $ 47.1 Wexpro
28.4 27.4
110.6 103.9
Questar Pipeline
15.8 14.9
8.2 64.7 Corporate and
other
(2.1 ) (2.3 )
(10.4 ) (3.7 ) Total
$
68.1 $ 63.8
$
161.2 $ 212.0
QUESTAR CORPORATIONSELECTED OPERATING
STATISTICS(Unaudited)
3 Months Ended 12 Months Ended December 31,
December 31,
2013 2012
2013 2012
QUESTAR GAS Natural
gas volumes (MMdth) Residential and commercial sales
39.5 31.9
114.9
96.2 Industrial sales
1.2 1.1
4.4 4.7 Transportation for industrial customers
18.6 16.2
64.5
62.0 Total industrial
19.8
17.3
68.9
66.7 Total deliveries
59.3 49.2
183.8 162.9
Natural gas revenue (per dth) Residential and commercial sales
$ 8.02 $ 8.13
$ 7.92 $ 8.19 Industrial
sales
7.04 7.84
6.47 5.79 Transportation for
industrial customers
0.21 0.20
0.22 0.19 Colder
(warmer) than normal temperatures
3 % (16 %)
8
% (16 %) Temperature-adjusted usage per customer (dth)
37.0 34.9
108.0 108.4 Customers at Dec. 31,
(thousands)
946 931
WEXPRO Production volumes
Natural gas - cost-of-service deliveries (Bcf)
15.7 13.6
59.2 57.5 Natural gas - sales (Bcf)
1.0 —
1.4
— Oil and NGL (Mbbl)
159 182
617 665 Natural gas
average sales price (per Mcf)
$ 3.78 $ —
$
3.74 $ — Oil and NGL average sales price (per bbl)
$
82.70 $ 76.69
$ 85.20 $ 80.61 Investment base
at Dec. 31, (in millions)
$ 589.7 $ 531.1
QUESTAR PIPELINE Natural gas transportation volumes (MMdth)
For unaffiliated customers
188.1 204.0
753.4 785.4
For Questar Gas
37.8 23.4
119.5 107.2 Total transportation
225.9 227.4
872.9 892.6 Transportation
revenue (per dth)
$ 0.22 $ 0.21
$ 0.22
$ 0.22 Net firm-daily transportation demand at Dec. 31, (Mdth)
5,121 5,039 Natural gas processing NGL sales (Mbbl)
36 52
163 253 NGL average sales price (per bbl)
$ 60.24 $ 57.45
$ 59.00 $ 61.16
QUESTAR CORPORATIONPRELIMINARY CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited)
December 31, December 31,
2013 2012 (in millions) ASSETS Current Assets Cash
and cash equivalents
$ 16.0 $ 16.8 Accounts and notes
receivable, net
123.8 114.3 Unbilled gas accounts receivable
93.4 78.3 Inventories
63.7 63.5 Prepaid expenses and
other
9.5 13.1 Current regulatory assets
35.8 46.7
Deferred income taxes - current
9.7
13.0 Total Current Assets
351.9
345.7 Property, Plant and Equipment
5,674.7 5,333.3
Accumulated depreciation, depletion and amortization
(2,124.4 ) (2,016.3 ) Net Property, Plant and
Equipment
3,550.3 3,317.0
Investment in unconsolidated affiliate
25.6 26.5 Noncurrent
regulatory and other assets
73.8 67.9
TOTAL ASSETS
$ 4,001.6 $
3,757.1 LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
Current Liabilities Short-term debt
$ 276.0 $ 263.0
Accounts payable and accrued expenses
264.8 235.2 Current
regulatory liabilities
14.1 5.8 Current portion of long-term
debt and capital lease obligation
0.9
42.7 Total Current Liabilities
555.8
546.7 Long-term debt and capital lease obligation,
less current portion
1,285.5 1,138.2 Deferred income taxes
707.2 603.4 Noncurrent regulatory and other liabilities
254.3 433.2 COMMON SHAREHOLDERS' EQUITY Common Shareholders'
Equity
1,198.8 1,035.6 TOTAL
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
$
4,001.6 $ 3,757.1
QUESTAR CORPORATIONPRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
12 Months Ended December 31,
2013
2012 (in millions) OPERATING ACTIVITIES Net income
$ 161.2 $ 212.0 Adjustments to reconcile net income
to net cash provided by operating activities: Depreciation,
depletion and amortization
201.8 189.2 Deferred income taxes
42.4 118.6 Asset impairment
80.6 — Share-based
compensation
10.2 9.9 Net (gain) loss from asset sales
0.2 (5.1 ) (Income) from unconsolidated affiliate
(3.7 ) (3.7 ) Distributions from unconsolidated
affiliate and other
5.5 4.9 Changes in operating assets and
liabilities
4.1 (58.1 ) NET CASH
PROVIDED BY OPERATING ACTIVITIES
502.3
467.7 INVESTING ACTIVITIES Property, plant and
equipment
(399.4 ) (370.7 ) Wexpro acquisition of
producing properties
(104.3 ) — Cash used in
disposition of assets
(4.9 ) (3.0 ) Proceeds from
disposition of assets
0.4 8.4
NET CASH USED IN INVESTING ACTIVITIES
(508.2 )
(365.3 ) FINANCING ACTIVITIES Common stock
(1.9 ) (80.3 ) Long-term debt issued, net of issuance
costs
147.3 148.8 Long-term debt and capital lease
obligation repaid
(42.7 ) (92.3 ) Change in
short-term debt
13.0 44.0 Dividends paid
(124.6
) (117.4 ) Tax benefits from share-based compensation
14.0 — NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
5.1 (97.2 ) Change
in cash and cash equivalents
(0.8 ) 5.2 Beginning
cash and cash equivalents
16.8 11.6
Ending cash and cash equivalents
$ 16.0
$ 16.8
QUESTAR CORPORATIONNON-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
these non-GAAP financial measures are useful to investors because
they provide alternative methods for assessing the Company's
ongoing operating results. The Company's management uses these
non-GAAP financial measures for the same purposes, and for planning
and forecasting purposes. The presentation of non-GAAP financial
measures is not meant to be a substitute for financial measures
calculated in accordance with GAAP.
1. Management believes that net income, diluted earnings per
common share and return on average common equity (ROE) before the
third quarter 2013 impairment of the eastern segment of Questar
Pipeline's Southern Trails Pipeline are useful measures to assess
ongoing results of operations because of the impairment charge's
infrequent and nonrecurring nature.
The following table reconciles GAAP net income and diluted
earnings per common share to non-GAAP adjusted earnings and diluted
earnings per common share before the third quarter 2013 impairment
of the eastern segment of Southern Trails Pipeline for the 12
months ended December 31, 2013. The table also reconciles GAAP
ROE to non-GAAP adjusted ROE before the impairment charge for the
same period.
QuestarConsolidated
QuestarPipeline
12 Months Ended December 31, 2013 Net income
[1] $ 161.2 $ 8.2 Asset impairment charge 80.6 80.6 Income taxes on
asset impairment charge (28.2 ) (28.2 ) After-tax
asset impairment charge 52.4 52.4
Adjusted earnings before asset impairment charge [3] $ 213.6
$ 60.6 EARNINGS PER COMMON SHARE
Diluted earnings per share $ 0.92 Diluted loss per share
attributable to asset impairment 0.29 Adjusted
diluted earnings per share before asset impairment $ 1.21
Weighted-average common shares outstanding Used in diluted
calculation 176.0 Return on Average Common Equity Average
common shareholders' equity [2] $ 1,117.2 $ 579.1 Change in average
shareholders' equity attributable to asset impairment 26.2
26.2 Average common shareholders' equity
before asset impairment [4] $ 1,143.4 $ 605.3
Return on average common equity [1] ÷ [2] 14.4 % 1.4
% Change in ROE attributable to asset impairment charge 4.3
% 8.6 % Adjusted ROE before asset impairment charge [3] ÷
[4] 18.7 % 10.0 %
2. Management defines Adjusted EBITDA as net income (loss)
before the following items: interest expense, income taxes,
depreciation, depletion and amortization, net gain or loss from
asset sales, abandonments and impairments, and other special items.
Management believes Adjusted EBITDA is an important measure of the
Company's financial performance and a key measure for comparing
results to other companies.
The following table reconciles Questar's net income (loss) to
Adjusted EBITDA for the three months ended December 31,
2013:
QuestarConsolidated
QuestarGas
Wexpro
QuestarPipeline
Corporate,Other
(in millions) Net income (loss) $ 68.1 $ 26.0
$
28.4
$ 15.8 $ (2.1 ) Interest expense 14.2 5.6 — 6.3 2.3
Income taxes 41.9 16.3 18.2 9.2 (1.8 ) Depreciation, depletion and
amortization 51.4 12.8 24.2 13.3 1.1 Net loss from asset sales
0.3 — 0.3 — — Adjusted
EBITDA $ 175.9 $ 60.7 $ 71.1 $ 44.6
$ (0.5 )
The following table reconciles Questar's net income (loss) to
Adjusted EBITDA for the three months ended December 31,
2012:
QuestarConsolidated
QuestarGas
Wexpro
QuestarPipeline
Corporate,Other
(in millions) Net income (loss) $ 63.8 $ 23.8
$ 27.4 $ 14.9 $ (2.3 ) Interest expense 13.6 5.0 —
6.5 2.1 Income taxes 33.4 13.2 13.8 8.6 (2.2 ) Depreciation,
depletion and amortization 46.0 12.2 19.2 13.7 0.9 Net (gain) loss
from asset sales — — 0.1 (0.1 ) — Retirement incentive 4.9
2.4 0.2 0.9 1.4 Adjusted
EBITDA $ 161.7 $ 56.6 $ 60.7 $ 44.5
$ (0.1 )
The following table reconciles Questar's net income (loss) to
Adjusted EBITDA for the twelve months ended December 31,
2013:
QuestarConsolidated
QuestarGas
Wexpro
QuestarPipeline
Corporate,Other
(in millions) Net income (loss) $ 161.2 $ 52.8
$ 110.6 $ 8.2 $ (10.4 ) Interest expense 56.9 22.3
0.1 25.8 8.7 Income taxes 101.3 31.9 62.0 7.0 0.4 Depreciation,
depletion and amortization 194.8 49.7 85.8 55.5 3.8 Net loss from
asset sales 0.2 — 0.2 — — Asset impairment 80.6 —
— 80.6 — Adjusted EBITDA $ 595.0
$ 156.7 $ 258.7 $ 177.1 $ 2.5
The following table reconciles Questar's net income (loss) to
Adjusted EBITDA for the twelve months ended December 31,
2012:
QuestarConsolidated
QuestarGas
Wexpro
QuestarPipeline
Corporate,Other
(in millions) Net income (loss) $ 212.0 $ 47.1
$ 103.9 $ 64.7 $ (3.7 ) Interest expense 57.9 24.1 —
26.3 7.5 Income taxes 116.5 27.2 57.0 37.3 (5.0 ) Depreciation,
depletion and amortization 181.6 47.2 77.4 54.3 2.7 Net (gain) from
asset sales (5.1 ) — (2.4 ) (2.7 ) — Retirement incentive
4.9 2.4 0.2 0.9
1.4 Adjusted EBITDA $ 567.8 $ 148.0
$ 236.1 $ 180.8 $ 2.9
Questar CorporationInvestors: Tony Ivins,
801-324-5218Media: Chad Jones, 801-324-5495
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