UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report – February 14, 2006
(Date of earliest event reported)
QUESTAR CORPORATION
(Exact name of registrant as specified in charter)
STATE OF UTAH 1-8796 87-0407509
(State of other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation or organization) Identification No.)
180 East 100 South Street, P.O. Box 45433 Salt Lake City, Utah 84145-0433
(Address of principal executive offices)
Registrant's telephone number, including area code (801) 324-5000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
On February 14, 2006, Questar Corporation issued a press release announcing its earnings for the twelve months ended December 31, 2005. A copy of this press release is furnished as Exhibit 99.1 and is incorporated by reference.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No.
Exhibit
99.1
Release issued February 14, 2006, by Questar Corporation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
QUESTAR CORPORATION
(Registrant)
February 14, 2006
/s/S. E. Parks
S. E. Parks
Senior Vice President and
Chief Financial Officer
List of Exhibits:
Exhibit No.
Exhibit
99.1
Release issued February 14, 2006, by Questar Corporation.
QUESTAR NET INCOME GROWS 42% IN 2005
Company Adjusts 2006 Earnings Guidance to Reflect Lower Price Expectations
SALT LAKE CITY — Questar Corp. (NYSE:STR) – a natural gas-focused energy company – reported a 42% increase in net income in 2005 to $325.7 million, or $3.74 per diluted share, compared to $229.3 million, or $2.67 per diluted share, for the prior year. The increase was driven by higher production and higher realized prices for natural gas, oil and natural gas liquids (NGL), and increased gas-gathering and processing volumes and margins.
Fourth-quarter and full-year results were reduced by $10.4 million, or $0.12 per diluted share, for a non-cash after-tax charge for impairment of the California segment of the Southern Trails Pipeline, which is owned by a subsidiary, Questar Pipeline. Excluding the charge, Questar 2005 net income was $336.1 million, or $3.86 per diluted share.
For the fourth quarter of 2005, Questar earned $104.0 million, or $1.19 per diluted share – including the effect of the $10.4 million charge – compared to $73.7 million, or $0.85 per diluted share, in the 2004 period.
FULL-YEAR NET INCOME BY LINE OF BUSINESS
($ millions, except where noted)
12 Months Ended | |||
| December 31, | % Change | |
2005 | 2004 | ||
Questar Market Resources | |||
Questar Exploration and Production | $172.8 | $108.2 | 60% |
Wexpro | 43.7 | 35.3 | 24 |
Questar Gas Management | 35.7 | 21.0 | 70 |
Questar Energy Trading | 6.0 | 0.9 | 573 |
Questar Market Resources Total | 258.2 | 165.4 | 56 |
Questar Pipeline | 24.4 | 27.6 | -12 |
Questar Gas | 36.0 | 31.5 | 14 |
Corporate and other operations | 7.1 | 4.8 | 46 |
QUESTAR CORPORATION TOTAL | $325.7 | $229.3 | 42% |
Diluted shares outstanding (average, in millions) | 87.1 | 85.7 | |
Earnings per diluted share | $3.74 | $2.67 | 40% |
“Like other natural gas producers, Questar E&P benefited from higher natural gas and oil prices,” said Keith O. Rattie, Questar chairman, president and CEO. “But the real story is the growth in our E&P and gathering and processing businesses. Against the backdrop of three straight years of declining U.S. natural gas production, we grew production 15% in the fourth quarter and 10% for the full year to 114.2 billion cubic feet of gas equivalent. We did it with the drill bit, not acquisitions – and we did it despite seasonal drilling restrictions in the Rockies and an industrywide shortage of rigs.”
Rattie said that the company now expects 2006 earnings to range from $4.30 to $4.60 per diluted share compared to earlier guidance of $4.50 to $5.00 per diluted share. The revised guidance reflects the recent sharp drop in natural gas prices and significantly wider basis differentials in both the Rockies and the Midcontinent, slightly offset by increased forecast production from Questar E&P. The company expects Rockies and Midcontinent basis differentials to be wider than previously assumed because existing pipelines are expected to operate at or near capacity in both regions for much of the year. New pipelines are needed to transport growing regional natural gas production, particularly in the Rockies.
2006 Guidance Update | ||
Current | Previous | |
Earnings per share | $4.30-$4.60 | $4.50-$5.00 |
Avg. diluted shares (millions) | 87.5 | 87.5 |
Questar E&P production - Bcfe | 122-124 | 120 - 122 |
Pinedale wells completed | 45-48 | 42 |
NYMEX gas price per MMBtu* | $8.00-$9.00 | $9.00-$11.50 |
NYMEX/Rockies basis differential per MMBtu gas | $2.25 | $1.50 |
NYMEX/Midcontinent basis differential per MMBtu gas | $1.50 | $1.00 |
NYMEX crude oil price per barrel* | $60-$70 | $60-$63 |
*Average on unhedged volumes |
The company has hedged about 70% of its forecast 2006 natural gas and oil-equivalent production (see table at the end of this release). Accordingly, the company estimates that a $1.00 per million Btu (MMBtu) change in the average NYMEX price of natural gas for the remainder of 2006 will result in about a $0.14 change in earnings per diluted share. Similarly, a $10.00 per-barrel change in the average NYMEX price of oil for the remainder of 2006 will result in about a $.03 per-share change in earnings per diluted share.
FULL-YEAR 2005 RESULTS
Highlights
•
Questar Exploration and Production (Questar E&P) grew natural gas and oil production 10% to 114.2 billion cubic feet of gas equivalent (Bcfe). Natural gas comprised 88% of total production.
•
Questar E&P realized prices for natural gas rose 24% while realized prices for crude oil and NGL rose 34%. Hedging reduced revenues by $198.7 million.
•
Wexpro invested $57.8 million in the Rockies, boosting its investment base 13% to $206.3 million at Dec. 31, 2005, versus $182.8 million a year earlier. Wexpro produced 42.4 Bcfe on behalf of its affiliate, Questar Gas. Wexpro 2005 net income also benefited from 35% higher realized oil and NGL prices.
•
Questar Gas Management gathering volumes rose 14%, while fee-based processing volumes rose 154% and NGL sales volumes grew 59%. Total margin from processing, both fee-based and keep-whole, increased 86%.
•
Questar Pipeline revenues grew 6%, while net income before the impairment charge and a fuel-cost reimbursement settlement rose 9% on new transportation contracts, including contracts on its southern-system expansion, and higher NGL prices.
•
Questar Gas benefited from the settlement with Utah regulators of a long-standing gas processing dispute. Temperature-adjusted average usage per customer declined 6% in the fourth quarter and 1% for the year as customers responded to the hurricane-related spike in natural gas prices. Higher revenues resulted from the addition of 30,300 customers – a 3.8% annual growth rate.
•
Questar ROA (Return on Assets, defined as earnings before interest and income taxes divided by average total assets) increased to 14.5% in 2005. Market Resources ROA was 19.2%, Questar Pipeline ROA was 10.0% excluding the impairment charge, and Questar Gas ROA was 7.4% in 2005.
Questar Market Resources Drives Net Income Growth
Questar Market Resources (Market Resources) – which conducts natural gas and oil exploration, development and production, gas gathering and processing, wholesale gas and oil marketing and gas storage – reported net income of $258.2 million in 2005.
Questar Exploration and Production
Market Resources subsidiary Questar E&P reported net income of $172.8 million in 2005. Questar E&P production grew 10% to 114.2 Bcfe compared to 103.5 Bcfe in 2004. On an energy-equivalent basis, natural gas comprised about 88% of Questar E&P 2005 production.
Questar E&P -- Production by Region
12 Months Ended | 3 Months Ended | ||||
December 31, | December 31, | ||||
2005 | 2004 | 2005 | 2004 | ||
(Bcfe) | (Bcfe) | ||||
Pinedale Anticline | 33.2 | 23.5 | 10.4 | 7.5 | |
Uinta Basin | 25.6 | 24.8 | 6.4 | 6.0 | |
Rockies Legacy | 16.7 | 18.0 | 4.3 | 4.5 | |
Rocky Mountains Total | 75.5 | 66.3 | 21.1 | 18.0 | |
Midcontinent | 38.7 | 37.2 | 10.6 | 9.6 | |
Questar E&P Total | 114.2 | 103.5 | 31.7 | 27.6 | |
Questar E&P production from the Pinedale Anticline in western Wyoming grew 41% in 2005 and comprised about 29% of Questar E&P total production for the year. Market Resources subsidiaries completed 40 new wells at Pinedale during 2005. The company operated and had an interest in 144 producing wells at year-end versus 104 wells a year earlier. On 10-acre density, Questar E&P has over 932 potential Lance Pool well locations at Pinedale. Of the 788 locations yet to be drilled, 203 were booked as proved undeveloped at year end, leaving over 585 locations unbooked. Questar E&P has an average Lance Pool working interest of 59.4% and an average net revenue interest of 47.5% in 873 of the 932 locations. Wexpro has an average Lance Pool working interest of 51.3% in 215 of the 932 locations - resulting in a combined average Lance Pool working interest for Questar E&P and Wexpro of 67.5% in the 932 locations.
In the Uinta Basin of eastern Utah, Questar E&P grew production 3% despite production constraints related to third-quarter construction and maintenance on an interstate pipeline that serves the area. Production from Questar E&P Rocky Mountain “Legacy” properties declined 7% in 2005 due to normal decline from older wells, seasonal access restrictions that delayed the drilling and completion of new wells and payout of a high-volume well that reduced the company’s working interest. Legacy assets include all Questar E&P Rocky Mountain producing properties except the Pinedale Anticline and the Uinta Basin. In the Midcontinent, Questar E&P grew production 4% to 38.7 Bcfe, driven by ongoing development drilling in the Elm Grove field in northwest Louisiana.
Questar E&P average realized natural gas price increased 24% in 2005 to $5.18 per thousand cubic feet (Mcf) compared to $4.18 per Mcf for 2004. For 2005, Questar E&P average realized price for oil and NGL was $41.54 per barrel compared with $30.97 a year earlier, a 34% increase. Hedging reduced gas revenues $173.9 million and oil revenues $24.8 million during 2005.
Questar may hedge up to 100% of its 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. During 2005, Questar E&P continued to take advantage of higher natural gas and oil prices to hedge additional production in 2006, 2007 and 2008.
Questar E&P controllable production costs (the sum of depreciation, depletion and amortization expense, lease operating expense, general and administrative expense, and allocated interest expense) per unit of production increased 9% in 2005.
Questar E&P – Controllable Production Cost Structure
12 Months Ended | 3 Months Ended | ||||||
December 31, | December 31, | ||||||
2005 | 2004 | % Chg. | 2005 | 2004 | % Chg. | ||
(Per Mcfe) | (Per Mcfe) | ||||||
Depreciation, depletion and amortization | $1.18 | $1.04 | 13% | $1.21 | $1.05 | 15% | |
Lease operating expense | 0.54 | 0.50 | 8 | 0.52 | 0.49 | 6 | |
General and administrative expense | 0.30 | 0.30 | - | 0.26 | 0.30 | -13 | |
Allocated interest expense | 0.21 | 0.21 | - | 0.20 | 0.20 |
- | |
Controllable costs (excludes taxes) | $2.23 | $2.05 | 9% | $2.19 | $2.04 | 7% | |
Depreciation, depletion and amortization increased due to higher costs for drilling, completion and related services, increased cost of steel casing, other tubulars and wellhead equipment, and the ongoing depletion of older, lower-cost reserves. Lease operating expense rose due to increased costs of materials and consumables and increased workover expense in the Legacy, Uinta Basin, and Midcontinent divisions.
Questar E&P year-end 2005 proved reserves increased 3% to 1,480 Bcfe versus 1,434 Bcfe a year earlier. The company replaced 141% of its production. The majority of the company’s 2005 activity was focused on development drilling on previously-booked proved undeveloped locations at Pinedale and the Uinta Basin.
Wexpro
Wexpro – a Market Resources subsidiary that develops and produces cost-of-service reserves for Questar Gas – reported net income of $43.7 million in 2005. Under a long-standing agreement with the states of Utah and Wyoming, Wexpro recovers its costs and earns an unlevered after-tax return of approximately 19% 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. Wexpro invested $57.8 million in the Rockies, boosting its investment base 13% to $206.3 million at Dec. 31, 2005, versus $182.8 million a year earlier. Wexpro produced 42.4 Bcfe on behalf of its affiliate, Questar Gas. Wexpro 2005 net income also benefited from 35% higher realized oil and NGL prices.
Midstream Field Services – Gas Gathering and Processing
Questar Gas Management (Gas Management) – Market Resources’ gas-gathering and processing-services business – grew net income 70% to $35.7 million in 2005. Gas Management’s 2005 results benefited from favorable gas-processing margins and a 59% increase in NGL sales volumes related to the first-quarter 2005 acquisition of a gas-processing plant in the western Green River Basin. Gathering volumes were up 14% to 257.0 million MMBtu for 2005 compared to 2004 due primarily to growing Questar E&P and third-party Pinedale production and new gathering and processing projects serving third parties in the Uinta Basin.
Questar Energy Trading
Questar Energy Trading (Energy Trading) – which sells Market Resources’ equity gas and oil, provides risk-management services, and operates a natural gas-storage facility in the Rockies – reported net income of $6.0 million in 2005 versus $0.9 million in 2004. Energy Trading benefited from increased marketing volumes, increased storage activity and improved margins.
Interstate Natural Gas Transportation & Storage
Questar Pipeline – a subsidiary that provides interstate natural gas-transportation and storage services – reported net income of $24.4 million in 2005 compared to $27.6 million in 2004. Questar Pipeline recorded a $10.4 million after-tax asset impairment for the western segment of the company’s Southern Trails Pipeline in the fourth quarter of 2005, reducing book investment to approximately $35 million.
Questar Pipeline 2004 net income was reduced $3.0 million as a result of a Federal Energy Regulatory Commission (FERC) order in a fuel-charge proceeding. In July 2005 the FERC approved a settlement under which the company refunded half the disputed amount to its customers. Questar Pipeline retained the other half, resulting in a $1.5 million increase in net income in 2005.
Excluding the effects of the 2005 asset impairment and the 2004 FERC order, Questar Pipeline 2005 net income was up 9% to $33.3 million compared to $30.6 million in 2004. Increased transportation-capacity commitments and higher NGL sales prices drove 6% revenue growth. In November 2005, Questar Pipeline placed in service a $55 million, 102 Mdth-per-day expansion of its southern system, which is expected to add about $9.6 million of revenues per year.
Retail Natural Gas Distribution
Questar Gas, the company’s retail gas-distribution utility, reported net income of $36.0 million in 2005. Higher revenues resulted from a record addition of 30,300 customers – a 3.8% annual growth rate. Questar Gas serves approximately 824,000 homes and businesses in Utah, southwestern Wyoming and southeastern Idaho. Higher revenues were partially offset by increased bad-debt expense and labor costs and a 1% decline in weather-normalized usage per customer.
Questar Gas fourth-quarter 2005 net income increased $3.0 million with the Public Service Commission of Utah approval of a gas-processing settlement agreement. The settlement resolved a long-standing dispute over rate coverage for safety-related processing and provides ongoing rate coverage of about $6 million a year through January 2008. Questar Gas 2004 net income was reduced $4.3 million for processing expense that was not covered in rates.
FOURTH-QUARTER NET INCOME (LOSS) BY LINE OF BUSINESS
($ millions except where noted)
3 Months Ended | |||
December 31, | % | ||
2005 | 2004 | Change | |
Questar Market Resources | |||
Questar Exploration and Production | $57.4 | $32.8 | 75% |
Wexpro | 11.8 | 8.8 | 34 |
Questar Gas Management | 10.6 | 6.8 | 56 |
Questar Energy Trading | 1.8 | 1.4 | 27 |
Questar Market Resources Total | 81.6 | 49.8 | 64 |
Questar Pipeline | -0.8 | 4.2 | -118 |
Questar Gas | 20.6 | 18.9 | 9 |
Corporate and other operations | 2.6 | 0.8 |
245 |
QUESTAR CORPORATION TOTAL | $104.0 | $73.7 | 41% |
Diluted shares average outstanding (millions) | 87.4 | 86.4 | |
Earnings per diluted share | $1.19 | $0.85 | 40% |
Highlights
•
Questar E&P fourth-quarter production grew 15%. Realized natural gas prices increased 33% and realized crude oil and NGL prices were up 34% compared with the 2004 period.
•
Wexpro investment base for fourth-quarter 2005 averaged $199.3 million versus $174.7 million in the 2004 period.
•
Gas Management gathering volumes were up 31% compared to the 2004 quarter. Fee-based processing volumes were up 295% from the 2004 quarter. NGL sales volumes were up 73%. Total margin from processing, both fee-based and keep-whole, increased 77% in the fourth quarter of 2005 compared with the year-ago period.
•
Questar Pipeline signed a memorandum of understanding to build, own and operate the westernmost segment of the proposed Rockies Express Pipeline Project, extending from Opal to Wamsutter, Wyoming. If built, the Kinder Morgan and Sempra Energy-owned pipeline will transport Rocky Mountain gas to the U.S. Northeast later this decade.
•
Questar Gas fourth-quarter 2005 net income was reduced by a 6% decline in average customer usage (temperature adjusted), compared to the fourth quarter of 2004. Questar Gas customers cut usage in response to higher prices.
Fourth-Quarter 2005 Results
Questar E&P production for the 2005 quarter grew 15% to 31.7 Bcfe compared to 27.6 Bcfe for the 2004 quarter. Pinedale production comprised about 33% of total production for the 2005 period. The company’s average realized natural gas price increased 33% in fourth-quarter 2005 to $5.87 per Mcf compared to $4.40 per Mcf for the comparable 2004 period. Questar E&P average realized price for oil and NGL was $44.19 per barrel compared with $33.08 a year earlier, a 34% increase. Hedging reduced revenues $110.4 million in fourth-quarter 2005.
Questar Pipeline reported a net loss of $0.8 million in the fourth quarter of 2005 due to the Southern Trails Pipeline impairment. Excluding the impairment and the 2004 FERC liquids-processing order, Questar Pipeline fourth-quarter 2005 net income was $9.7 million, up 35% from $7.2 million in the year-earlier quarter. Increased transportation revenues from the southern system expansion and higher NGL prices drove the improvement.
Questar Gas net income for fourth-quarter 2005 was $20.6 million compared to $18.9 million a year earlier. Of the 2005 $3.0 million net-income benefit from the gas-processing settlement, $0.8 million related to fourth-quarter operations. Increased revenues from customer growth were partially offset by higher bad-debt expense and a 6% decrease in weather-normalized usage per customer during the quarter. Questar Gas customers responded to the hurricane-related spike in natural gas prices and corresponding higher rates by cutting gas usage.
Questar management will discuss fourth-quarter and full-year 2005 results and its outlook for 2006 in a conference call with investors Wednesday, Feb. 15, beginning at 9:30 a.m. ET. The call can be accessed on the company Internet site at www.questar.com.
Current Hedge Positions – February 14, 2006
Time Periods | Rocky Mountains | Midcontinent | Total |
| Rocky Mountains | Midcontinent | Total | |||||||
Estimated | ||||||||||||||
Gas (Bcf) | Average price per Mcf, net to the well | |||||||||||||
First half of 2006 | 25.7 | 11.9 | 37.6 | $5.93 | $6.81 | $6.21 | ||||||||
Second half of 2006 | 26.1 | 12.2 | 38.3 | 5.93 | 6.81 | 6.21 | ||||||||
12 months of 2006 | 51.8 | 24.1 | 75.9 | 5.93 | 6.81 | 6.21 | ||||||||
First half of 2007 | 16.4 | 10.1 | 26.5 | $6.84 | $7.82 | $7.21 | ||||||||
Second half of 2007 | 16.7 | 10.3 | 27.0 | 6.84 | 7.82 | 7.21 | ||||||||
12 months of 2007 | 33.1 | 20.4 | 53.5 | 6.84 | 7.82 | 7.21 | ||||||||
First half of 2008 | 6.8 | 3.3 | 10.1 | $6.55 | $7.23 | $6.78 | ||||||||
Second half of 2008 | 6.9 | 3.4 | 10.3 | 6.55 | 7.23 | 6.78 | ||||||||
12 months of 2008 | 13.7 | 6.7 | 20.4 | 6.55 | 7.23 | 6.78 | ||||||||
Estimated | ||||||||||||||
Oil (Mbbl) | Average price per bbl, net to the well | |||||||||||||
First half of 2006 | 615 | 200 | 815 | $47.77 | $59.89 | $50.73 | ||||||||
Second half of 2006 | 626 | 202 | 828 | 47.77 | 59.89 | 50.73 | ||||||||
12 months of 2006 | 1,241 | 402 | 1,643 | 47.77 | 59.89 | 50.73 | ||||||||
First half of 2007 | 453 | 181 | 634 | $56.01 | $57.08 | $56.32 | ||||||||
Second half of 2007 | 460 | 184 | 644 | 56.01 | 57.08 | 56.32 | ||||||||
12 months of 2007 | 913 | 365 | 1,278 | 56.01 | 57.08 | 56.32 | ||||||||
First half of 2008 | 109 | 73 | 182 | $64.23 | $65.30 | $64.66 | ||||||||
Second half of 2008 | 111 | 73 | 184 | 64.23 | 65.30 | 64.66 | ||||||||
12 months of 2008 | 220 | 146 | 366 | 64.23 | 65.30 | 64.66 | ||||||||
About Questar
Questar Corp. (NYSE:STR) is a natural gas-focused energy company with an enterprise value of $7.4 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 as amended for the year ended December 31, 2004. Subject to the requirements of otherwise applicable law, the company cannot be expected to update the statements contained in this news release or take actions described herein or otherwise currently planned.
# # #
For more information, visit Questar’s internet site at: www.questar.com
QUESTAR CORPORATION | ||||
OPERATIONS BY LINE OF BUSINESS | ||||
(Unaudited) | ||||
3 Months Ended | 12 Months Ended | |||
December 31, | December 31, | |||
2005 | 2004 | 2005 | 2004 | |
(in thousands, except per share amounts) | ||||
REVENUES FROM UNAFFILIATED CUSTOMERS | ||||
Questar E & P | $192,494 | $125,816 | $620,610 | $448,706 |
Wexpro | 6,873 | 5,145 | 21,652 | 17,315 |
Gas Management | 43,752 | 24,674 | 141,495 | 87,354 |
Energy Trading and other | 319,571 | 164,541 | 884,913 | 500,479 |
Market Resources total | 562,690 | 320,176 | 1,668,670 | 1,053,854 |
Questar Pipeline | 23,006 | 13,617 | 82,589 | 67,844 |
Questar Gas | 352,095 | 269,410 | 956,403 | 759,486 |
Corporate and other operations | 3,654 | 4,872 | 17,226 | 20,247 |
$941,445 | $608,075 | $2,724,888 | $1,901,431 | |
REVENUES FROM AFFILIATED COMPANIES | ||||
Questar E & P | $22 | $90 | ||
Wexpro | $34,460 | 29,583 | $132,305 | 115,637 |
Gas Management | 4,048 | 3,255 | 13,746 | 11,589 |
Energy Trading and other | 219,459 | 110,179 | 632,384 | 426,311 |
Market Resources total | 257,967 | 143,039 | 778,435 | 553,627 |
Questar Pipeline | 19,269 | 22,465 | 83,393 | 88,635 |
Questar Gas | 1,744 | 1,453 | 6,144 | 4,707 |
Corporate and other operations | 400 | 787 | 1,859 | 15,398 |
$279,380 | $167,744 | $869,831 | $662,367 | |
OPERATING INCOME | ||||
Questar E & P | $98,214 | $51,145 | $298,579 | $187,302 |
Wexpro | 17,947 | 12,990 | 66,546 | 55,133 |
Gas Management | 14,130 | 9,734 | 50,469 | 30,787 |
Energy Trading and other | 2,748 | 3,011 | 9,640 | 3,324 |
Market Resources total | 133,039 | 76,880 | 425,234 | 276,546 |
Questar Pipeline | 2,967 | 12,289 | 58,888 | 66,033 |
Questar Gas | 37,137 | 34,446 | 72,447 | 67,466 |
Corporate and other operations | 1,913 | 1,085 | 5,160 | 5,542 |
$175,056 | $124,700 | $561,729 | $415,587 | |
NET INCOME (LOSS) | ||||
Questar E & P | $57,358 | $32,752 | $172,788 | $108,158 |
Wexpro | 11,741 | 8,751 | 43,669 | 35,303 |
Gas Management | 10,630 | 6,819 | 35,699 | 21,047 |
Energy Trading and other | 1,847 | 1,460 | 6,081 | 903 |
Market Resources total | 81,576 | 49,782 | 258,237 | 165,411 |
Questar Pipeline | (749) | 4,215 | 24,406 | 27,596 |
Questar Gas | 20,614 | 18,924 | 35,975 | 31,461 |
Corporate and other operations | 2,585 | 750 | 7,063 | 4,833 |
$104,026 | $73,671 | $325,681 | $229,301 | |
QUESTAR CORPORATION | ||||
SELECTED OPERATING STATISTICS | ||||
(Unaudited) | ||||
3 Months Ended | 12 Months Ended | |||
December 31, | December 31, | |||
2005 | 2004 | 2005 | 2004 | |
MARKET RESOURCES | ||||
Questar E&P production volumes | ||||
Natural gas (MMcf) | 28,029 | 24,255 | 99,959 | 89,801 |
Oil and natural gas liquids (Mbbl) | 613 | 564 | 2,375 | 2,281 |
Total production (Bcfe) | 31.7 | 27.6 | 114.2 | 103.5 |
Average daily production (MMcfe) | 345 | 300 | 313 | 283 |
Questar E&P average commodity price, | ||||
net to the well | ||||
Average realized price (including hedges) | ||||
Natural gas (per Mcf) | $5.87 | $4.40 | $5.18 | $4.18 |
Oil and natural gas liquids (per bbl) | $44.19 | $33.08 | $41.54 | $30.97 |
Average sales price (excluding hedges) | ||||
Natural gas (per Mcf) | $9.56 | $5.72 | $6.92 | $5.11 |
Oil and natural gas liquids (per bbl) | $55.86 | $44.81 | $51.97 | $38.10 |
Wexpro net investment base at December 31, | ||||
(millions) | $206.3 | $182.8 | ||
Natural gas gathering volumes (in thousands | ||||
of MMBtu) (1) | ||||
For unaffiliated customers | 43,285 | 29,496 | 144,978 | 128,721 |
For Questar Gas | 10,349 | 11,176 | 43,083 | 38,997 |
For other affiliated customers | 20,746 | 16,069 | 68,903 | 56,958 |
Total gathering | 74,380 | 56,741 | 256,964 | 224,676 |
Gathering revenue (per MMBtu) | $0.25 | $0.25 | $0.25 | $0.22 |
Natural gas and oil marketing volumes (Mdthe) | ||||
For unaffiliated customers | 31,179 | 24,885 | 118,499 | 91,188 |
For affiliated customers | 24,649 | 21,292 | 91,751 | 82,526 |
Total marketing | 55,828 | 46,177 | 210,250 | 173,714 |
QUESTAR PIPELINE | ||||
Natural gas transportation volumes (Mdth) | ||||
For unaffiliated customers | 71,038 | 51,402 | 259,290 | 220,514 |
For Questar Gas | 29,734 | 29,161 | 116,279 | 116,454 |
For other affiliated customers | 8,153 | 3,829 | 25,706 | 18,803 |
Total transportation | 108,925 | 84,392 | 401,275 | 355,771 |
Transportation revenue (per dth) | $0.26 | $0.31 | $0.27 | $0.30 |
Firm-daily transportation demand (Mdth) | 1,920 | 1,643 | ||
QUESTAR GAS | ||||
Natural gas volumes (Mdth) | ||||
Residential and commercial sales | 30,467 | 31,351 | 96,310 | 92,975 |
Industrial sales | 1,236 | 1,915 | 5,681 | 8,823 |
Transportation for industrial customers | 8,264 | 8,471 | 31,205 | 34,278 |
Total deliveries | 39,967 | 41,737 | 133,196 | 136,076 |
Natural gas revenue (per dth) | ||||
Residential and commercial sales | $10.71 | $7.93 | $9.01 | $7.32 |
Industrial sales | $9.00 | $6.09 | $7.06 | $5.56 |
Transportation for industrial customers | $0.20 | $0.18 | $0.19 | $0.19 |
Heating degree days | ||||
colder (warmer) than normal | (4%) | (2%) | (3%) | 3% |
Temperature-adjusted usage per | ||||
customer (dth) | 36.5 | 38.9 | 113.7 | 114.9 |
Customers at December 31, | 824,447 | 794,117 | ||
(1) one dth = one MMBtu | ||||
QUESTAR CORPORATION | ||||
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
December 31, | December 31, | |||
2005 | 2004 | |||
(Unaudited) | ||||
(in thousands) | ||||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | $13,360 | $3,681 | ||
Accounts and notes receivable, net | 463,084 | 312,525 | ||
Fair value of hedging contracts | 1,972 | 9,334 | ||
Inventories | 125,417 | 85,431 | ||
Other current assets | 156,696 | 85,556 | ||
Total current assets | 760,529 | 496,527 | ||
Property, plant and equipment | 5,527,997 | 4,877,771 | ||
Less accumulated depreciation | 2,100,455 | 1,893,179 | ||
Net property, plant and equipment | 3,427,542 | 2,984,592 | ||
Investment in unconsolidated affiliates | 30,681 | 33,229 | ||
Other assets, net | 143,010 | 160,139 | ||
$4,361,762 | $3,674,487 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities | ||||
Short-term debt | $94,500 | $68,000 | ||
Accounts payable and accrued expenses | 561,714 | 397,872 | ||
Fair value of hedging contracts | 222,049 | 64,179 | ||
Total current liabilities | 878,263 | 530,051 | ||
Long-term debt, less current portion | 983,200 | 933,195 | ||
Deferred income taxes | 624,187 | 572,446 | ||
Other long-term liabilities | 326,309 | 199,237 | ||
Common shareholders' equity | 1,549,803 | 1,439,558 | ||
$4,361,762 | $3,674,487 | |||
QUESTAR CORPORATION | |||
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
12 Months Ended | |||
December 31, | |||
2005 | 2004 | ||
(Unaudited) | |||
(in thousands) | |||
Operating activities | |||
Net income | $325,681 | $229,301 | |
Adjustments to reconcile net income to net cash | |||
provided from operating activities: | |||
Depreciation, depletion and amortization | 255,540 | 225,879 | |
Deferred income taxes | 92,154 | 106,978 | |
Abandonment and impairment of gas, oil and other properties | 7,931 | 15,758 | |
Amortization of nonvested shares | 4,194 | 2,388 | |
Impairment of California segment of Southern Trails Pipeline | 16,000 | ||
Income from unconsolidated affiliates, net of cash distributions | 2,548 | 3,164 | |
Net gain from asset sales | (4,742) | (336) | |
Other | 201 | 286 | |
Change in operating assets and liabilities | (1,247) | (1,604) | |
Net cash provided from operating activities | 698,260 | 581,814 | |
Investing activities | |||
Capital expenditures | (715,886) | (442,483) | |
Proceeds from asset dispositions | 19,228 | 7,189 | |
Net cash used in investing activities | (696,658) | (435,294) | |
Financing activities | |||
Common stock | 7,205 | 24,367 | |
Long-term debt | 49,988 | (71,993) | |
Short-term debt | 26,500 | (37,500) | |
Other financing | (255) | ||
Common dividends paid | (75,616) | (71,363) | |
Net cash provided from (used in) financing activities | 8,077 | (156,744) | |
Change in cash and cash equivalents | 9,679 | (10,224) | |
Beginning cash and cash equivalents | 3,681 | 13,905 | |
Ending cash and cash equivalents | $13,360 | $3,681 | |