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Questar’s net income just above last year’s

Company boosted by exploration and production revenue

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Boosted by a 63 percent jump in exploration and production revenue, Salt Lake-based energy company Questar Corp. said Monday it had net income of $26.9 million, or 33 cents per diluted share, during the second quarter.

That was slightly above the year-ago figure of $26.2 million, or 33 cents per share, which included $4.6 million from the sale of securities.

Questar said July 9 that earnings per share would be between 31 and 35 cents per share during the 2001 second quarter. The 33 cent figure was 1 cent lower than the consensus estimate of Wall Street analysts.

Revenues for the quarter totaled $285.1 million, up from $232.5 million in the prior-year period.

Questar's nonregulated market resources group, which includes oil and natural gas exploration and production, increased year-to-year quarterly income by $5.8 million, or 7 cents per share.

Questar's other primary businesses — interstate natural gas transmission and retail distribution — had 15 percent higher combined earnings year-over-year.

"We intend to drive shareholder value by consistently delivering yearly double-digit earnings growth," said R.D. Cash, Questar chairman and chief executive officer.

"The second quarter of 2001 represented the sixth straight quarter in which we have delivered at least a 10 percent year-to-year increase in recurring earnings. Our excellent exploration and production results were enhanced by a 15 percent year-to-year earnings improvement from our regulated businesses, which provide consistently strong cash flows and earnings for our enterprise."

Cash said the company's basic strategies "are still on track." The Rocky Mountain area needs gas pipelines, transmission and storage, and while electricity and gas prices have been lower recently, the energy crisis remains in place, he said. Supplies are still tight and demand could be strongly affected by weather, he added.

Questar Market Resources' net income of $23 million in the quarter was up from $17.2 million a year ago. Questar Exploration and Production, which operates in the Rocky Mountains, mid-continent and western Canada, increased its net income by $6 million, to $15.6 million.

Helping the company was a 33 percent higher average net selling price of natural gas, although gas production declined 10 percent due to a property sale in the fourth quarter of 2000 and normal reserve depletion. The average selling price for oil and natural gas liquids rose 3 percent, while production dropped 7 percent.

Wexpro, which provides gas to regulated customers in Utah, earned $6.5 million during the quarter, up a half-million dollars.

Questar Regulated Services, which includes retail gas distribution and interstate transmission and storage subsidiaries, saw combined earnings rise from $3.9 million in the second quarter of 2000 to $4.5 million in the current-year period.

Questar Pipeline, an interstate gas-transmission and storage subsidiary, earned $6.9 million, down from $7.1 million. The drop was caused in part by $1 million in after-tax operating losses for the TransColorado Pipeline, in which a subsidiary has a 50 percent interest.

Questar Gas, a retail gas-distribution company, reduced its seasonal loss by $800,000, to $2.5 million. Questar Gas saw a 24 percent year-over-year increase in its residential deliveries because of new customers and greater heating demand. Industrial deliveries were up 7 percent.

For the first six months of 2001, Questar Corp.'s net income was $91.7 million, or $1.12 per share, up from $76.4 million, or 95 cents per share, a year earlier. Revenues totaled $847.8 million, up from $569.2 million.

In the past year, the company's net income was $172 million, or $2.11 per share, on revenues of $1.5 billion. That is up from $108 million, or $1.35 per share, on revenues of $1 billion.

Questar Corp. stock was trading at $23.60 early Tuesday, down 35 cents from Monday's close. In the past year, it has ranged from $19.25 to $33.75.


E-MAIL: bwallace@desnews.com