Questar First-Quarter Recurring Earnings Rise 45%

Apr 27, 2001, 01:00 ET from Questar Corp.

    SALT LAKE CITY, April 27 /PRNewswire/ -- Questar Corp. (NYSE:   STR)
 reported a 45% increase in recurring earnings for the first quarter of 2001,
 led by continued strong results from oil and gas exploration and production
 and other nonregulated activities.
     The diversified natural gas company earned $64.9 million, or $.80 per
 share, in the current-year quarter compared with $50.2 million, or $.62 per
 share in the 2000 quarter.  The prior-year quarterly results included
 $5.5 million ($.07 per share) from security sales.
     A nonregulated subsidiary, Questar Exploration and Production, had net
 income of $23.7 million in the 2001 period versus $8.4 million a year earlier.
 Strong commodity prices and a declining full-cost amortization rate offset a
 7% decline in natural gas production due primarily to an asset sale in the
 fourth quarter of 2000 and weather-related operational delays.  The average
 realized natural gas price rose 92% to $4.17 per thousand cubic feet (Mcf) in
 the first quarter of 2001, while production totaled 15.8 billion cubic feet
 (Bcf).
 
     Earnings Exceed Projections
     Corporate earnings -- which exceeded the First Call projections -- also
 reflected improved results from regulated activities.  Questar Pipeline Co.,
 an interstate gas-transmission and storage subsidiary, and Questar Gas Co.,
 which conducts retail gas distribution, reported combined net income of
 $31.6 million, $3.7 million higher than the 2000 period.  Transmission volumes
 increased 24% in response to higher regional gas demand, and utility earnings
 improved because of a 3.9% general rate increase implemented in 2000 and
 efficiency programs.
     There was an average 81.5 million diluted common shares outstanding in the
 2001 quarter compared with 80.8 million in the prior-year period.
     R.D. Cash, Questar chairman and chief executive officer, said: "We are
 capitalizing on the growing demand in the nation and the West for natural gas,
 especially for electricity generation.  We are stepping up drilling
 activities, expanding transmission and storage capacity, and exploring new
 initiatives, such as power generation.  We expect favorable natural gas
 price-and-supply fundamentals to remain strong for the foreseeable future, and
 see opportunities to accelerate our growth."
 
     Continuing Nonregulated Emphasis
     Questar's nonregulated Market Resources group -- including exploration and
 production -- accounted for 52% of corporate earnings in the first quarter of
 2001.  The group earned $33.9 million in first-quarter 2001 versus $15 million
 in the prior-year quarter.  Wexpro, a contract-management subsidiary, earned
 $6.6 million during the period compared with $5.8 million a year earlier.
 Wexpro increased its investment in gas-development projects on behalf of
 Questar's distribution subsidiary, for which it receives a specified return.
     Questar's energy-trading and midstream subsidiaries earned a combined
 $3.6 million in the current-year quarter, including a $700,000 after-tax gain
 from an asset sale.  In the prior-year period, the two companies earned
 $800,000.
 
     Improved Regulated Earnings
     Questar Pipeline, which operates interstate natural gas-transmission and
 storage systems, earned $7.7 million in first-quarter 2001, $600,000 higher
 than a year earlier.  Transportation volumes rose 24% to 83 million decatherms
 (dth), with more than half of the total for nonQuestar-related customers.
 Deliveries for Questar Gas and other affiliates rose 8%, primarily
 attributable to the utility's growing customer base and heating demand.
     Questar Gas reported first-quarter net income of $23.7 million, a
 $3 million increase over the 2000 period.  The utility operates in Utah and
 portions of southwestern Wyoming and southeastern Idaho. Gas deliveries were
 7% higher at 54.7 million dth, and the customer base expanded 2.4% to 706,000.
 A 3.8% general rate increase for Utah was implemented in August 2000, and the
 company also completed an early retirement program during the fourth quarter
 that reduced operating costs.
 
     Corporate and Other Operations
     Corporate and Other Operations incurred a $600,000 loss in first-quarter
 2001 compared with a $7.3 million gain in 2000, primarily from the absence of
 security sales.  During the 2000 period, Questar sold shares of Nextel
 Communications and XO Communications for an after-tax gain of $5.5 million
 ($.07 per share).
     Questar posted a $1.7 million loss from its 84% interest in Consonus, an
 internet-services company, in first-quarter 2001 versus a $200,000 gain in the
 2000 quarter.  The loss resulted from lower revenues from web hosting and
 related services due to the economic slowdown in the internet sector, and from
 the amortization of goodwill associated with an acquisition in mid-2000.
 
     Outlook
     Questar updated full-year 2001 earnings guidance the company provided to
 the financial community in February.  The company's first-quarter 2001
 earnings of $.80 per share surpassed the $.67 per share First Call consensus
 estimate in February and the most recent $.77 per share estimate.  Chairman
 Cash said: "We gave guidance in February that we thought first-quarter
 earnings would exceed the First Call estimate by 10% to 20%.  Given our strong
 first quarter, we are confident that we can meet or exceed the current First
 Call estimate of $2.03 per share for full-year 2001, barring an unexpected
 plunge in gas prices or another unexpected event."
     Cash reiterated various factors that could increase 2001 earnings for the
 Market Resources subsidiary, which conducts oil and gas exploration and
 production and other nonregulated activities:
 
     -- Hedged-gas volumes drop from about 63% in the first quarter of 2001 to
 about 52% for the remainder of the year.  Hedges with ceilings are about $3
 per Mcf, while hedges with floors are about $2.75.  This compares with a 2000
 average realized price of $2.80 per Mcf.  Essentially all hedges expire at
 year-end 2001.  If gas prices increase markedly, Questar will be evaluating
 possible 2001 and 2002 hedge positions.
 
     -- The current NYMEX gas-strip price would yield a price for the balance
 of the year of $3.65 per Mcf, net to the well.  A $3.50 NYMEX price for the
 balance of the year would yield  $2.90 per Mcf, net to the well, approximately
 $.10 above the year 2000 average realized price.
 
     -- Questar Market Resources' full-year earnings could increase 10% over a
 year earlier with flat production, a $3.50 NYMEX price for the remainder of
 the year, and no extraordinary events.
 
     -- Questar E&P's U.S. amortization rate for the second quarter of 2001 is
 $.81 per Mcfe, reflecting the increasing cost of future development activity.
 
     Market Resources' 2000 earnings of $85 million included a one-time,
 $12 million pre-tax litigation expense.
     Cash said Market Resources' production in first-quarter 2001 fell
 nominally below the fourth-quarter 2000 level because of operational and
 drilling-program delays due to adverse weather and other factors.  He expects
 production to improve in the second half of the year, especially with the May
 resumption of the Pinedale drilling program.  Cash said federal
 land-management agencies have recognized the nation's critical need to boost
 gas supplies, and have been cooperating with Questar to accelerate the
 program, in which 10-20 wells are expected to be drilled this year.
     Beginning April 1, Questar Pipeline began recording its 50% share of
 losses from the TransColorado Pipeline partnership.  These losses in 2000
 ranged from $300,000 to $1.2 million per month before income taxes.  The
 company expects to mitigate the impact of these losses with revenues from
 other projects, cost cutting and other measures in the Regulated Services
 area.
     Questar is a $2.5 billion diversified natural gas company headquartered in
 Salt Lake City.  Through subsidiaries, it engages in energy development and
 production; gas gathering and processing; wholesale gas, electricity and
 liquids trading; retail energy services; interstate gas transmission and
 storage; retail gas distribution; and information systems and technologies.
 
     Forward-Looking Statements:
     This release contains statements expressing expectations of future plans,
 objectives and performance that constitute forward-looking statements made
 pursuant to the safe harbor provisions of the Private Securities Litigation
 Reform Act of 1995.  All statements based on future expectations rather than
 on historical facts are forward-looking statements that are dependent on
 certain events, risks and uncertainties that could cause actual results to
 differ materially from those anticipated.  A discussion of risks and
 uncertainties, which could affect future results of Questar and its
 subsidiaries, is included in the company's periodic reports filed with the
 Securities and Exchange Commission.
 
 
                                                        2001            2000
 
                                     (In thousands, except per share amounts)
                                                           (unaudited)
 
     Three months ended March 31
     Revenues                                        $562,638       $336,702
     Operating income                                 112,914         82,140
     Net income                                        64,850         50,230
 
     Earnings per common share
       Basic                                              .80            .62
       Diluted                                            .80            .62
 
     Average common shares outstanding
       Basic                                           80,732         80,782
       Diluted                                         81,519         80,782
 
 
     Twelve months ended March 31
     Revenues                                      $1,492,089       $983,107
     Operating income                                 290,684        194,696
     Net income                                       171,331        105,696
 
     Earnings per common share
       Basic                                             2.13           1.30
       Diluted                                           2.11           1.29
 
     Average common shares outstanding
       Basic                                           80,424         81,655
       Diluted                                         81,124         81,755
 
     VISIT QUESTAR'S INTERNET SITE at: http://www.questar.com. For more
 information, see Company News On-Call: http://www.prnewswire.com or fax
 800-758-5804, ext. 728887
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X21205693
 
 

SOURCE Questar Corp.
    SALT LAKE CITY, April 27 /PRNewswire/ -- Questar Corp. (NYSE:   STR)
 reported a 45% increase in recurring earnings for the first quarter of 2001,
 led by continued strong results from oil and gas exploration and production
 and other nonregulated activities.
     The diversified natural gas company earned $64.9 million, or $.80 per
 share, in the current-year quarter compared with $50.2 million, or $.62 per
 share in the 2000 quarter.  The prior-year quarterly results included
 $5.5 million ($.07 per share) from security sales.
     A nonregulated subsidiary, Questar Exploration and Production, had net
 income of $23.7 million in the 2001 period versus $8.4 million a year earlier.
 Strong commodity prices and a declining full-cost amortization rate offset a
 7% decline in natural gas production due primarily to an asset sale in the
 fourth quarter of 2000 and weather-related operational delays.  The average
 realized natural gas price rose 92% to $4.17 per thousand cubic feet (Mcf) in
 the first quarter of 2001, while production totaled 15.8 billion cubic feet
 (Bcf).
 
     Earnings Exceed Projections
     Corporate earnings -- which exceeded the First Call projections -- also
 reflected improved results from regulated activities.  Questar Pipeline Co.,
 an interstate gas-transmission and storage subsidiary, and Questar Gas Co.,
 which conducts retail gas distribution, reported combined net income of
 $31.6 million, $3.7 million higher than the 2000 period.  Transmission volumes
 increased 24% in response to higher regional gas demand, and utility earnings
 improved because of a 3.9% general rate increase implemented in 2000 and
 efficiency programs.
     There was an average 81.5 million diluted common shares outstanding in the
 2001 quarter compared with 80.8 million in the prior-year period.
     R.D. Cash, Questar chairman and chief executive officer, said: "We are
 capitalizing on the growing demand in the nation and the West for natural gas,
 especially for electricity generation.  We are stepping up drilling
 activities, expanding transmission and storage capacity, and exploring new
 initiatives, such as power generation.  We expect favorable natural gas
 price-and-supply fundamentals to remain strong for the foreseeable future, and
 see opportunities to accelerate our growth."
 
     Continuing Nonregulated Emphasis
     Questar's nonregulated Market Resources group -- including exploration and
 production -- accounted for 52% of corporate earnings in the first quarter of
 2001.  The group earned $33.9 million in first-quarter 2001 versus $15 million
 in the prior-year quarter.  Wexpro, a contract-management subsidiary, earned
 $6.6 million during the period compared with $5.8 million a year earlier.
 Wexpro increased its investment in gas-development projects on behalf of
 Questar's distribution subsidiary, for which it receives a specified return.
     Questar's energy-trading and midstream subsidiaries earned a combined
 $3.6 million in the current-year quarter, including a $700,000 after-tax gain
 from an asset sale.  In the prior-year period, the two companies earned
 $800,000.
 
     Improved Regulated Earnings
     Questar Pipeline, which operates interstate natural gas-transmission and
 storage systems, earned $7.7 million in first-quarter 2001, $600,000 higher
 than a year earlier.  Transportation volumes rose 24% to 83 million decatherms
 (dth), with more than half of the total for nonQuestar-related customers.
 Deliveries for Questar Gas and other affiliates rose 8%, primarily
 attributable to the utility's growing customer base and heating demand.
     Questar Gas reported first-quarter net income of $23.7 million, a
 $3 million increase over the 2000 period.  The utility operates in Utah and
 portions of southwestern Wyoming and southeastern Idaho. Gas deliveries were
 7% higher at 54.7 million dth, and the customer base expanded 2.4% to 706,000.
 A 3.8% general rate increase for Utah was implemented in August 2000, and the
 company also completed an early retirement program during the fourth quarter
 that reduced operating costs.
 
     Corporate and Other Operations
     Corporate and Other Operations incurred a $600,000 loss in first-quarter
 2001 compared with a $7.3 million gain in 2000, primarily from the absence of
 security sales.  During the 2000 period, Questar sold shares of Nextel
 Communications and XO Communications for an after-tax gain of $5.5 million
 ($.07 per share).
     Questar posted a $1.7 million loss from its 84% interest in Consonus, an
 internet-services company, in first-quarter 2001 versus a $200,000 gain in the
 2000 quarter.  The loss resulted from lower revenues from web hosting and
 related services due to the economic slowdown in the internet sector, and from
 the amortization of goodwill associated with an acquisition in mid-2000.
 
     Outlook
     Questar updated full-year 2001 earnings guidance the company provided to
 the financial community in February.  The company's first-quarter 2001
 earnings of $.80 per share surpassed the $.67 per share First Call consensus
 estimate in February and the most recent $.77 per share estimate.  Chairman
 Cash said: "We gave guidance in February that we thought first-quarter
 earnings would exceed the First Call estimate by 10% to 20%.  Given our strong
 first quarter, we are confident that we can meet or exceed the current First
 Call estimate of $2.03 per share for full-year 2001, barring an unexpected
 plunge in gas prices or another unexpected event."
     Cash reiterated various factors that could increase 2001 earnings for the
 Market Resources subsidiary, which conducts oil and gas exploration and
 production and other nonregulated activities:
 
     -- Hedged-gas volumes drop from about 63% in the first quarter of 2001 to
 about 52% for the remainder of the year.  Hedges with ceilings are about $3
 per Mcf, while hedges with floors are about $2.75.  This compares with a 2000
 average realized price of $2.80 per Mcf.  Essentially all hedges expire at
 year-end 2001.  If gas prices increase markedly, Questar will be evaluating
 possible 2001 and 2002 hedge positions.
 
     -- The current NYMEX gas-strip price would yield a price for the balance
 of the year of $3.65 per Mcf, net to the well.  A $3.50 NYMEX price for the
 balance of the year would yield  $2.90 per Mcf, net to the well, approximately
 $.10 above the year 2000 average realized price.
 
     -- Questar Market Resources' full-year earnings could increase 10% over a
 year earlier with flat production, a $3.50 NYMEX price for the remainder of
 the year, and no extraordinary events.
 
     -- Questar E&P's U.S. amortization rate for the second quarter of 2001 is
 $.81 per Mcfe, reflecting the increasing cost of future development activity.
 
     Market Resources' 2000 earnings of $85 million included a one-time,
 $12 million pre-tax litigation expense.
     Cash said Market Resources' production in first-quarter 2001 fell
 nominally below the fourth-quarter 2000 level because of operational and
 drilling-program delays due to adverse weather and other factors.  He expects
 production to improve in the second half of the year, especially with the May
 resumption of the Pinedale drilling program.  Cash said federal
 land-management agencies have recognized the nation's critical need to boost
 gas supplies, and have been cooperating with Questar to accelerate the
 program, in which 10-20 wells are expected to be drilled this year.
     Beginning April 1, Questar Pipeline began recording its 50% share of
 losses from the TransColorado Pipeline partnership.  These losses in 2000
 ranged from $300,000 to $1.2 million per month before income taxes.  The
 company expects to mitigate the impact of these losses with revenues from
 other projects, cost cutting and other measures in the Regulated Services
 area.
     Questar is a $2.5 billion diversified natural gas company headquartered in
 Salt Lake City.  Through subsidiaries, it engages in energy development and
 production; gas gathering and processing; wholesale gas, electricity and
 liquids trading; retail energy services; interstate gas transmission and
 storage; retail gas distribution; and information systems and technologies.
 
     Forward-Looking Statements:
     This release contains statements expressing expectations of future plans,
 objectives and performance that constitute forward-looking statements made
 pursuant to the safe harbor provisions of the Private Securities Litigation
 Reform Act of 1995.  All statements based on future expectations rather than
 on historical facts are forward-looking statements that are dependent on
 certain events, risks and uncertainties that could cause actual results to
 differ materially from those anticipated.  A discussion of risks and
 uncertainties, which could affect future results of Questar and its
 subsidiaries, is included in the company's periodic reports filed with the
 Securities and Exchange Commission.
 
 
                                                        2001            2000
 
                                     (In thousands, except per share amounts)
                                                           (unaudited)
 
     Three months ended March 31
     Revenues                                        $562,638       $336,702
     Operating income                                 112,914         82,140
     Net income                                        64,850         50,230
 
     Earnings per common share
       Basic                                              .80            .62
       Diluted                                            .80            .62
 
     Average common shares outstanding
       Basic                                           80,732         80,782
       Diluted                                         81,519         80,782
 
 
     Twelve months ended March 31
     Revenues                                      $1,492,089       $983,107
     Operating income                                 290,684        194,696
     Net income                                       171,331        105,696
 
     Earnings per common share
       Basic                                             2.13           1.30
       Diluted                                           2.11           1.29
 
     Average common shares outstanding
       Basic                                           80,424         81,655
       Diluted                                         81,124         81,755
 
     VISIT QUESTAR'S INTERNET SITE at: http://www.questar.com. For more
 information, see Company News On-Call: http://www.prnewswire.com or fax
 800-758-5804, ext. 728887
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X21205693
 
 SOURCE  Questar Corp.