Natural gas-focused energy company Questar Corp. (STR) Wednesday reported a fall in profit for the third quarter, impacted by lower gas prices. However, earnings per share before items as well as revenues came in above the Street expectations. In addition, the company raised its full-year earnings outlook.
Salt Lake City, Utah-based Questar's net income attributable to the company more than halved to $98.2 million or $0.56 per share from $204.2 million or $1.16 per share last year.
Excluding gains and losses from sales of non-core assets and mark-to-market losses on natural gas basis-only swaps, net income attributable to the company slid to $105.1 million or $0.60 per share from last year's $181.3 million or $1.03 per share.
On average, eleven analysts polled by Thomson Reuters expected the company to report earnings of $0.51 per share. Analysts' estimates typically exclude special items.
Total revenues slipped to $599.8 million from $760.0 million for the same period last year, while analysts were expecting revenues of $541.88 million for the quarter.
In the sequentially preceding second quarter, net income fell to $77.9 million or $0.44 per share from $172.6 million or $0.98 per share last year, and total revenues slipped to $613.1 million from $825.8 million for the same period last year.
For the quarter under review, total operating expenses came down to $407.9 million from $443.5 million, helped by a decline in cost of natural gas and other products sold to $80.2 million from $131.2 million for the year earlier period. However, depreciation, depletion and amortization expenses rose to $168.6 million from $126 million last year.
Market resources revenues declined to $474.9 million from $601 million a year-ago, impacted by both lower natural gas prices as well as a drop in average production volumes. The segment's natural gas production volumes dropped to 39.2 billion cubic feet or Bcf from 40.4 million Bcf for the year earlier period. Total production volumes declined to 43.8 billion cubic feet equivalent or Bcfe from 45.3 Bcfe.
The company's largest segment and subsidiary of market resources that explores for, develops and produces natural gas and oil, Questar E&P's net income declined 66% to $49.6 million from $146.8 million a year earlier, mainly due to a combination of a 20% drop in per-unit realized prices, a 17% rise in per-unit production costs and a $36.5 million after-tax gain in the prior-year quarter related to the sale of non-core assets.
Wexpro, a Market Resources subsidiary which manages, develops and produces cost-of-service reserves for gas utility affiliate Questar Gas, reported a 1% rise in net income to $20.6 million from $20.4 million for the year-ago period.
Questar pipeline revenues dropped moderately to $42.6 million from $43.8 million for the same period last year and the segments' net income declined by 8% year-over-year to $14.1 million mainly due to lower NGL prices and higher general and administrative expenses.
Questar gas revenues declined to $82.3 million from $115.2 million a year earlier and segments' net loss attributable to Questar narrowed to $8.1 million from $8.8 million in the prior-year period. .
For the recent quarter, total operating expenses came down to $407.9 million from $443.5 million for the year-ago period, helped by a decline in cost of natural gas and other products sold to $80.2 million from $131.2 million for the year earlier period. However, depreciation, depletion and amortization expenses rose to $168.6 million from $126 million last year.
For the nine months, net income declined to $243.3 million or $1.38 per share from $562.6 million or $3.19 per share a year-ago, and total revenues came down to $2.13 billion from $2.59 billion for the same period last year.
On a non-GAAP basis, net income attributable to the company was $351.2 million or $1.99 per share, compared with $518.8 million or $2.94 per share a year earlier.
Amongst others in the industry Occidental Petroleum Corp. (OXY) on October 22, reported a decline in net income to $927 million or $1.14 per share from $2.27 billion or $2.77 per share for the same quarter last year and quarterly net sales declined to $4.10 billion from the previous year's $7.06 billion.
Yet another competitor, ConocoPhillips (COP) today reported a huge decline in its third-quarter profit to $1.50 billion or $1.00 per share from $5.19 billion or $3.39 per share last year. Quaterly revenues and other income fell to $41.31 billion from $71.37 billion in the prior-year quarter.
Looking ahead to the full year 2009, the company now expects net income in the range of $2.45 - $2.55 per share, up from its earlier guidance of $2.35 - $2.45 per share. Analysts currently expect the company to report earnings of $2.57 for the full year.
Further looking ahead, the company initiated guidance for the full-year 2010 EBITDA to be in the range of $1.48 billion - $1.58 billion.
STR closed Wednesday's trading at $39.94, down $0.65 or 1.60%, on a volume of about 2.69 million shares. In the 52-week period, the stock traded between $22.59 - $43.46, on a 3-month average volume of about 1.39 million shares.
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