Questar Posts 19 Percent Gain in Third-Quarter Profit

By Steven Oberbeck, The Salt Lake Tribune

Oct. 26–Questar Corp. reported Wednesday that its third-quarter net income grew 19 percent, compared with the same quarter a year earlier, reaching $113.3 million, or 64 cents per share.

The Salt Lake City-based energy company is the parent of Questar Gas, the regulated utility that provides most Utah homes and businesses with natural gas.

For its nine-month period ended Sept. 30, 2007, Questar recorded net income of $376.6 million, or $2.14 per share — results that represented a 17 percent gain from the same nine-month period last year.

In announcing the results, Questar Chairman Keith O. Rattie said the company forecasts that its net income for 2007 will range from $2.75 to $2.80 per share. The company previously projected earnings of $2.60 to $2.68 for fiscal 2007.

Next year, Questar expects to earn $2.85 to $3 per share.

Questar noted that although its natural gas production during the third quarter of 33.9 billion cubic feet was little changed from the same quarter in 2006, its gas production for the first nine months of 2007 grew 7 percent from a year ago.

Third-quarter sales, however, fell 10 percent, to $497.4 million, while revenue generated during the first nine months of the year fell 6.6 percent.

Questar spokesman Chad Jones explained the decline in the corporation’s revenue was the result of a rate decrease late last year at its Questar Gas subsidiary. The action lowered by 10.3 percent the amount the utility collected from its residential customers for natural gas.

Profitcentspublic.com, a Web site that provides financial analysis of publicly held corporations, noted that even though Questar’s sales have fallen, the company is earning more from each dollar of revenue it is generating.

“The company seems to be managing sales dollars better, which is important considering that sales fell,” Profitcentspublic.com analysts pointed out in discussing the results of the company’s performance.

More importantly, Questar’s net profit margin is generally strong. “This specifically means that net profitability is excellent as compared to that of other similar companies,” the Web site reported.

Among the company’s divisions, the profit from Questar’s exploration and production arm rose 16 percent, to $76.4 million. Wexpro, which develops reserves and produces gas for Questar Gas that is supplied to the utility for the gas’ cost of production, saw its profits gain 22 percent, to $14.8 million.

The net income posted by Questar Gas was $19.5 million in the first nine months of 2007 — the same as the year earlier period. As of Sept. 30, Questar Gas served 861,000 customers, up 26,000, or 3 percent, from Sept. 30, 2006.

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