QEP Resources Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

qep-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-34778

QEP RESOURCES, INC.

(Exact name of registrant as specified in its charter)


Delaware						87-0287750
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)

1050 17^th Street, Suite 800, Denver, Colorado 80265

(Address of principal executive offices)

Registrant's telephone number, including area code (303) 672-6900

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	QEP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

No ☒

At June 30, 2020, there were 242,324,832 shares of the registrant's common stock, $0.01 par value, outstanding.

QEP Resources, Inc.

Form 10-Q for the Quarter Ended June 30, 2020

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE AND SIX MONTHS ENDED JUNE 30 , 2020 AND 2019

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AT JUNE 30 , 2020 AND DECEMBER 31, 2019

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 3 0 , 2020 AND 2019

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30 , 2020 AND 2019

UNAUDITED NOTES ACCOMPANYING THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4.

CONTROLS AND PROCEDURES

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

ITEM 1A.

RISK FACTORS

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

ITEM 4.

MINE SAFETY DISCLOSURES

ITEM 5.

OTHER INFORMATION

ITEM 6.

EXHIBITS

SIGNATURES

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

QEP RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019
REVENUES	(in millions, except per share amounts)
Oil and condensate, gas and NGL sales	$	118.3	$	294.6	$	340.1	$	570.2
Other revenues	(0.2)		1.6		0.2		5.3
Purchased oil and gas sales	2.5		—		6.1		1.3
Total Revenues	120.6		296.2		346.4		576.8
OPERATING EXPENSES
Purchased oil and gas expense	3.9		—		7.4		1.4
Lease operating expense	28.8		45.7		69.0		97.2
Transportation and processing costs	12.3		9.9		25.8		20.8
Gathering and other expense	2.8		3.0		5.5		6.8
General and administrative	26.3		31.5		42.2		94.8
Production and property taxes	9.6		23.6		28.3		47.6
Depreciation, depletion and amortization	149.4		128.0		291.6		251.3
Impairment	—		—		—		5.0
Total Operating Expenses	233.1		241.7		469.8		524.9
Net gain (loss) from asset sales, inclusive of restructuring costs	—		17.8		3.7		4.6
OPERATING INCOME (LOSS)	(112.5)		72.3		(119.7)		56.5
Realized and unrealized gains (losses) on derivative contracts	(98.7)		38.5		351.2		(143.2)
Interest and other income (expense)	2.6		0.9		—		3.7
Gain from early extinguishment of debt	0.4		—		25.6		—
Interest expense	(29.8)		(33.2)		(61.4)		(67.2)
INCOME (LOSS) BEFORE INCOME TAXES	(238.0)		78.5		195.7		(150.2)
Income tax (provision) benefit	53.6		(29.7)		(12.7)		82.3
NET INCOME (LOSS)	$	(184.4)	$	48.8	$	183.0	$	(67.9)

Earnings (loss) per common share
Basic	$	(0.76)	$	0.20	$	0.76	$	(0.29)
Diluted	$	(0.76)	$	0.20	$	0.76	$	(0.29)

Weighted-average common shares outstanding
Used in basic calculation	242.3		238.0		240.7		237.5
Used in diluted calculation	242.3		238.0		240.7		237.5

Refer to Notes accompanying the Condensed Consolidated Financial Statements.

QEP RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019
	(in millions)
Net income (loss)	$	(184.4)	$	48.8	$	183.0	$	(67.9)
Other comprehensive income (loss), net of tax:
Pension and other postretirement plans adjustments:
Amortization of prior service costs	—		—		—		0.1
Amortization of actuarial losses⁽¹⁾	0.3		—		0.4		0.1
Net curtailment⁽²⁾	—		0.1		—		(0.3)
Other comprehensive income (loss)	0.3		0.1		0.4		(0.1)
Comprehensive income (loss)	$	(184.1)	$	48.9	$	183.4	$	(68.0)

____________________________

⁽¹⁾Presented net of income tax benefit of $0.1 million for the three and six months ended June 30, 2020.

⁽²⁾Presented net of income tax expense of $0.1 million for the six months ended June 30, 2019.

Refer to Notes accompanying the Condensed Consolidated Financial Statements.

QEP RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2020		December 31, 2019
ASSETS	(in millions)
Current Assets
Cash and cash equivalents	$	3.4	$	166.3
Accounts receivable, net	97.9		108.4
Income tax receivable	165.0		37.4
Fair value of derivative contracts	169.4		1.5
Prepaid expenses and other current assets	10.7		11.6
Total Current Assets	446.4		325.2
Property, Plant and Equipment (successful efforts method for oil and gas properties)
Proved properties	9,786.2		9,574.9
Unproved properties	543.6		599.1
Gathering and other	165.5		164.2
Materials and supplies	16.5		15.6
Total Property, Plant and Equipment	10,511.8		10,353.8
Less Accumulated Depreciation, Depletion and Amortization
Exploration and production	5,482.4		5,250.5
Gathering and other	66.3		61.0
Total Accumulated Depreciation, Depletion and Amortization	5,548.7		5,311.5
Net Property, Plant and Equipment	4,963.1		5,042.3
Fair value of derivative contracts	6.2		0.2
Operating lease right-of-use assets, net	54.1		56.8
Other noncurrent assets	54.3		53.3
TOTAL ASSETS	$	5,524.1	$	5,477.8
LIABILITIES AND EQUITY
Current Liabilities
Checks outstanding in excess of cash balances	$	2.3	$	18.3
Accounts payable and accrued expenses	157.0		227.2
Production and property taxes	9.2		18.9
Current portion of long-term debt	274.9		—
Interest payable	27.9		31.0
Fair value of derivative contracts	1.8		18.7
Current operating lease liabilities	20.3		18.0
Asset retirement obligations	6.2		6.0
Total Current Liabilities	499.6		338.1
Long-term debt	1,589.4		2,015.6
Deferred income taxes	416.1		274.5
Asset retirement obligations	94.9		94.9
Fair value of derivative contracts	3.2		0.5
Operating lease liabilities	39.2		44.8
Other long-term liabilities	36.8		48.8

Commitments and contingencies (Note 11)
EQUITY
Common stock – par value $0.01 per share; 500.0 million shares authorized; 247.2 million and 242.1 million shares issued, respectively	2.5		2.4
Treasury stock – 4.9 million and 4.4 million shares, respectively	(56.6)		(55.4)
Additional paid-in capital	1,463.3		1,456.5
Retained earnings	1,447.8		1,269.6
Accumulated other comprehensive income (loss)	(12.1)		(12.5)
Total Common Shareholders' Equity	2,844.9		2,660.6
TOTAL LIABILITIES AND EQUITY	$	5,524.1	$	5,477.8

Refer to Notes accompanying the Condensed Consolidated Financial Statements.

QEP RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Common Stock				Treasury Stock						Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income(Loss)	Total
	Shares	Amount		Shares	Amount
	(in millions)
Balance at March 31, 2020	247.0	$	2.5	(4.8)	$	(56.2)	$	1,459.9	$	1,632.2	$	(12.4)	$	3,026.0
Net income (loss)	—	—		—	—		—		(184.4)		—		(184.4)
Share-based compensation	0.2	—		(0.1)	(0.4)		3.4		—		—		3.0
Change in pension and postretirement liability, net of tax	—	—		—	—		—		—		0.3		0.3
Balance at June 30, 2020	247.2	$	2.5	(4.9)	$	(56.6)	$	1,463.3	$	1,447.8	$	(12.1)	$	2,844.9


Balance at December 31, 2019	242.1	$	2.4	(4.4)	$	(55.4)	$	1,456.5	$	1,269.6	$	(12.5)	$	2,660.6
Net income (loss)	—	—		—	—		—		183.0		—		183.0
Cash dividends paid, $0.02 per share	—	—		—	—		—		(4.8)		—		(4.8)
Share-based compensation	5.1	0.1		(0.5)	(1.2)		6.8		—		—		5.7
Change in pension and postretirement liability, net of tax	—	—		—	—		—		—		0.4		0.4
Balance at June 30, 2020	247.2	$	2.5	(4.9)	$	(56.6)	$	1,463.3	$	1,447.8	$	(12.1)	$	2,844.9


Balance at March 31, 2019	242.0	$	2.4	(3.9)	$	(51.8)	$	1,440.2	$	1,259.8	$	(14.5)	$	2,636.1
Net income (loss)	—	—		—	—		—		48.8		—		48.8
Share-based compensation	—	—		(0.2)	(1.8)		6.1		—		—		4.3
Change in pension and postretirement liability, net of tax	—	—		—	—		—		—		0.1		0.1
Balance at June 30, 2019	242.0	$	2.4	(4.1)	$	(53.6)	$	1,446.3	$	1,308.6	$	(14.4)	$	2,689.3


Balance at December 31, 2018	239.8	$	2.4	(3.1)	$	(45.6)	$	1,431.9	$	1,376.5	(14.3)		$	2,750.9
Net income (loss)	—	—		—	—		—		(67.9)		—		(67.9)
Share-based compensation	2.2	—		(1.0)	(8.0)		14.4		—		—		6.4
Change in pension and postretirement liability, net of tax	—	—		—	—		—		—		(0.1)		(0.1)
Balance at June 30, 2019	242.0	$	2.4	(4.1)	$	(53.6)	$	1,446.3	$	1,308.6	$	(14.4)	$	2,689.3

Refer to Notes accompanying the Condensed Consolidated Financial Statements.

QEP RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended
	June 30
	2020		2019
OPERATING ACTIVITIES	(in millions)
Net income (loss)	$	183.0	$	(67.9)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization	291.6		251.3
Deferred income taxes (benefit)	141.4		(87.7)
Impairment	—		5.0
Non-cash share-based compensation	6.4		11.2
Amortization of debt issuance costs and discounts	2.6		2.7
Net (gain) loss from asset sales, inclusive of restructuring costs	(3.7)		(4.6)
Gain from early extinguishment of debt	(25.6)		—
Unrealized (gains) losses on marketable securities	—

Price	4.36	EPS	-3
Shares	238	P/E	-2
MCap	1,037	P/FCF	3
Net Debt	1,907	EBIT	-721
TEV	2,945	TEV/EBIT	-4
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-29
10-Q	2020-03-31	Filed 2020-04-29
10-K	2019-12-31	Filed 2020-02-26
10-Q	2019-09-30	Filed 2019-10-23
10-Q	2019-06-30	Filed 2019-08-07
10-Q	2019-03-31	Filed 2019-04-24
10-K	2018-12-31	Filed 2019-02-20
10-Q	2018-09-30	Filed 2018-11-07
10-Q	2018-06-30	Filed 2018-07-25
10-Q	2018-03-31	Filed 2018-04-25
10-K	2017-12-31	Filed 2018-02-28
10-Q	2017-09-30	Filed 2017-10-25
10-Q	2017-06-30	Filed 2017-07-26
10-Q	2017-03-31	Filed 2017-04-26
10-K	2016-12-31	Filed 2017-02-22
10-Q	2016-09-30	Filed 2016-10-26
10-Q	2016-06-30	Filed 2016-07-27
10-Q	2016-03-31	Filed 2016-04-27
10-K	2015-12-31	Filed 2016-02-24
10-Q	2015-09-30	Filed 2015-10-28
10-Q	2015-06-30	Filed 2015-08-03
10-Q	2015-03-31	Filed 2015-04-29
10-K	2014-12-31	Filed 2015-02-24
10-Q	2014-09-30	Filed 2014-11-05
10-Q	2014-06-30	Filed 2014-08-06
10-Q	2014-03-31	Filed 2014-05-07
10-K	2013-12-31	Filed 2014-02-25
10-Q	2013-09-30	Filed 2013-11-05
10-Q	2013-06-30	Filed 2013-07-31
10-Q	2013-03-31	Filed 2013-04-30
10-K	2012-12-31	Filed 2013-02-22
10-Q	2012-06-30	Filed 2012-07-31
10-Q	2012-03-31	Filed 2012-04-26
10-K	2011-12-31	Filed 2012-02-24
10-Q	2011-09-30	Filed 2011-10-28
10-Q	2011-06-30	Filed 2011-07-29
10-Q	2011-03-31	Filed 2011-04-28
10-K	2010-12-31	Filed 2011-02-25
10-Q	2010-09-30	Filed 2010-11-02
10-Q	2010-06-30	Filed 2010-07-30
10-Q	2010-03-31	Filed 2010-05-06
10-K	2009-12-31	Filed 2010-03-08

8-K	2020-07-29	Earnings, Exhibits
8-K	2020-06-04
8-K	2020-05-12
8-K	2020-04-29
8-K	2020-04-10
8-K	2020-03-12
8-K	2020-03-03
8-K	2020-02-26
8-K	2019-10-21
8-K	2019-10-17
8-K	2019-08-07
8-K	2019-05-14
8-K	2019-04-24
8-K	2019-02-20
8-K	2019-01-11
8-K	2019-01-10
8-K	2018-12-05
8-K	2018-11-17
8-K	2018-11-16
8-K	2018-11-07
8-K	2018-11-06
8-K	2018-07-25
8-K	2018-05-15
8-K	2018-04-25
8-K	2018-03-01
8-K	2018-02-28

EX-31.1	qep-20200630ex311.htm
EX-31.2	qep-20200630ex312.htm
EX-32.1	qep-20200630ex321.htm

QEP 10Q Quarterly Report

QEP Resources Earnings 2020-06-30