4Q09 Earnings Conference Call
Annual Report, SEC Filing, 2009
April 17, 2013: QEP has permits for 12 wells in one section in Heart Butte, in a 2560-acre spacing unit.
November 1, 2012: highlights of 3Q12.
August 23, 2012: The Biggest Story of the Year to Date
- QEP Pays $1.3 Billion for Larger Stake in the Bakken
- Includes 27,600 net acres in the Heart of the Bakken
- Black Hills Corporation sells some Bakken assets to QEP
- Helis, LLC sells Bakken assets to QEP
November 12, 2010: Questar approves spin-off.
July 15, 2010: Spin-off and name change, June, 2010. The exploration and development company, now known as QEP, was spun off from Questar Corp (STR) in June, 2010.
April 22, 2010: Questar is considering a tax-free spin-off of its exploration and production (E & P) businesses. One company would be involved with oil and gas exploration and production; the other company would be primarily a pipeline company.
I had not heard of Questar (NYSE: STR) until I started following the Bakken. Questar might be something to consider by those who are concerned about the more speculative, smaller companies operating in the Bakken but don't want to invest in the major players in the Bakken either. Questar seems to be somewhere in the middle.
At first blush I would not have been interested in this company because it seems to be a natural gas play more than an oil play, and I don't know the natural gas industry as well as I think I understand the oil industry. (If I understand 1% of the oil industry, I understand 0.1% of the natural gas industry.)
I do not own any Questar shares and I don't plan to buy any in the near term. Here I look at Questar just as I looked at EOG some weeks ago. I also do not own any EOG shares.
A quick look at some basic data points from Yahoo!Financial key statistics regarding STR, compared to a few other companies operating in the Bakken, follows the commentary. The more I look at STR suggests this may be one of the few publicly traded companies that is very, very safe to invest in, and is just getting into the Bakken. This might be an opportunity to actually get into the Bakken if you have not yet invested in the Bakken. But Questar has major exposure to natural gas. Just saying.
Again, here is the link to the 4Q09 conference call.
The downside for me with regard to STR is their huge exposure to natural gas. The upside is the apparent interest by STR to increase their oil presence in the Bakken. The company has lowered its earnings estimates for natural gas going forward.
With regard to earnings, Questar had the second best earnings quarter (4Q09) in the company's history, only $200,000 lower "than the high water mark set in the fourth quarter of 2008." If folks remember correctly, we saw a price spike of $150/barrel of oil in 2008.
Questar is operating in five locations: Haynesville shale (Louisiana, natural gas); Pinedale Anticline Project Area (PAPA, Wyoming, natural gas), Granite Wash (Texas), Woodford Shale (Oklahoma, natural gas), and Bakken Oil.
In addition to these five E&P plays, Questar operates the following businesses:
Wexpro: E&P in the RockiesRelatively high IPs were highlighted by Questar in their 4Q09 conference call, suggesting to me this company knows there is some value to high IPs. North Dakota passed tax incentives in 2007 to encourage drilling in the Bakken; the incentives affect the first 75,000 barrels of production.
Questar Gas Management: midstream business; could be a transforming year in 2010
Questar Pipeline: a regulated business; includes Wyoming
Questar Gas: a regulated business, natural gas distribution (Utah, SW WY)
Market caps; P/E; P/E, going forward; dividend (%); debt; operating cash flow:
EOG: $24 billion; 44; 15; 0.6%; $2.8 bilion; $2.9 billionDebt as percent (%) of market cap:
STR: $7.5 billion; 19; 15; 1.2%; $2 billion; $1.6 billion
CLR: $6.8 billion; 96; 19; 0%; $0.5 billion; $0.375 billion
MDU: $3.9 billion; N/A; 12; 2.1%; $1.5 billion; $0.8 billion
BEXP: $1.68 billion; N/A; 24; 0%; $0.16 billion; $0.03 billion
EOG: 12%Is MDU an outlier with regard to debt as percent (%) of market cap?
MDU: $1.5/$3.9 = 38%Is it possible to estimate Questar's potential recoverable oil in the Bakken?
OTTR: 502 million 730 million = 69%
BKH: 1.15 billion / $1.12 billion = 103%
Some data points: Questar has 80,000 net acres in the Bakken. (4Q09 conference call)Activity in the Bakken
80,000 acres/640 acres per section = 125 sections.
In the best field (Parshall), EOG estimates 700,000 barrels EUR (per well)
EOG has been putting one well in each section
CLR opines that dual laterals could increase the EUR by another 400,000 barrels EUR.
36 sections/township: 125 sections / 36 = 3.5 townships.
At least one of "STR's townships" seems to be a "good" area.
Now some "back of the envelope calculations":
Let's say STR's acreage is 1/4 as good as EOG's best estimate: 1/4 of 700,000 = 175,000 bbls/well
125 sections: 125 wells x 175,000 bbls = 22 million barrels
What if they had 1/2 of the 700,000 plus 1/2 of what the dual lateral would add? 350,000 + 200,000 = 550,000. 125 wells x 550,000 = 70 million barrels.
2008: three permits
17434, 880, 150-90, Deep Water Creek Bay2009: three permits
17929, permit, 150-90, Wild, nr DWCB
17940, 1,405, 150-90, Deep Water Creek Bay
18158, 780, 149-90, DWCB2010: four permits to date
18322, permit, 150-92, Van Hook
18331, permit, 152-92, Van Hook
18665, confidential, 149-91, Heart Butte
18666, confidential, 149-91, Heart Butte
18885, new permit, Deep Water Creek Bay, 150-90
18886, new permit, Deep Water Creek Bay, 150-90