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QUESTAR REPORTS SLIGHT INCREASE IN THIRD-QUARTER EARNINGS

 SALT LAKE CITY, Oct. 26 /PRNewswire/ -- Questar Corp. (NYSE: STR) today announced third-quarter 1993 income from continuing operations increased slightly over the year-earlier period, while nine-month results were 33 percent higher.
 The integrated natural gas company earned $6,970,000, or $.17 per share, during the 1993 quarter and $6,857,000, or $.17 per share, in the comparable year-earlier period. Third-quarter 1993 net income, after the loss from discontinued operations, was $5,860,000, or $.14 per share, compared with $6,224,000, or $.15 per share, in the 1992 period. (Discontinued operations relate to Questar Telecom Inc. More information on a Nextel Communications Corp. acquisition of Questar Telecom appears later in this story.)
 Questar reported income from continuing operations of $59,020,000, or $1.46 per share, for the first nine months of 1993 vs. $44,332,000, or $1.11 a share, a year earlier. Questar earned $56,248,000 in the first nine months of 1993, after the loss from discontinued operations, vs. $42,395,000 in the comparable 1992 period. The corporation also recognized a cumulative effect in the first nine months of 1992 of $9.3 million, or $.23 per share, from a change in the method of accounting for income taxes.
 During the third quarter of 1993, the federal income tax rate increased to 35 percent, retroactive to the beginning of the year. The new rate decreased third-quarter 1993 net income by $800,000.
 There was an average of 40 million shares outstanding during the first nine months of 1993, and 39.4 million average shares outstanding in 1992.
 Questar Chairman, President and Chief Executive Officer R.D. Cash said the first nine months of 1993 have surpassed expectations. "We are pleased with our results to this point and optimistic we'll achieve our financial and operating goals for the year. In assessing our fourth quarter, critical factors will be whether temperatures can meet the 8 percent colder-than-normal level experienced in the fourth quarter of 1992, gas prices remain higher than last year, and oil prices rebound."
 Cash said the key to Questar's year-to-date performance is the continuing success of the oil and gas exploration and production subsidiaries. In the third quarter of 1993, exploration and production net income was up 47 percent to $8,928,000, compared to $6,075,000 in the year-earlier period. The group's income was up 54 percent for the first nine months of this year to $26,198,000.
 The exploration and production companies recognized $1.4 million in tax credits in the quarter. The credits are available under Section 29 of the federal tax code. In the same quarter last year, the companies recognized $361,000 in Section 29 credits. During the first nine months of this year, the exploration and production group reported $3.9 million in Section 29 credits vs. $361,000 during the same 1992 period.
 Third-quarter 1993 revenues benefited from an 18 percent increase in gas production and a 19 percent increase in gas prices. For the first nine months of the year, gas production was up 43 percent, while prices increased 17 percent to an average of $1.84 per thousand cubic feet. Gas production has risen from 10.8 billion cubic feet (Bcf) in the first nine months of 1991, to 16.7 Bcf in the 1992 period, to 23.9 Bcf in the 1993 period.
 Questar produced 527,000 barrels of oil and natural gas liquids in the current-year quarter, a 6 percent increase over the 1992 quarter. Nine-month oil and natural gas liquid production was down 1 percent in comparison with the 1992 period. Oil and natural gas liquid prices decreased 16 percent in the third quarter of 1993 to an average of $16.16 a barrel. Oil and natural gas liquid prices were down 5 percent during the first nine months of 1993.
 Due to efficient drilling and reserve-acquisition programs, the full-cost amortization rate declined from $.83 per thousand cubic feet equivalent (Mcfe) in the first nine months of 1992 to $.80 Mcfe in the present-year period.
 Net income for Questar's natural gas transmission company, Questar Pipeline Co., was $4,459,000 during the third quarter of 1993, compared with $3,611,000 for the same 1992 period. For the first nine months of the year, net income was $16,619,000 vs. $14,302,000 a year earlier.
 From January through August, Questar Pipeline operated under a rate structure that differed from 1992. The structure shifted revenues from the first and fourth quarters to the second and third quarters. On Sept. 1, 1993, Questar Pipeline began operating in compliance with Federal Energy Regulatory Commission Order No. 636. The order eliminated the merchant, or sales-for-resale, function, and allows a greater percentage of the cost of service to be collected through demand charges.
 Mountain Fuel Supply Co., Questar's retail gas-distribution utility, reported a $6,886,000 loss for the third quarter of 1993 -- typically a loss quarter. The loss was primarily due to the normal seasonal decline in gas consumption and higher expenses, which included start-up costs associated with a new gas supply function required by FERC Order 636 regulations, costs associated with rapid customer growth, lower gas- production tax credits, a new federal tax rate and first-year recording of post-retirement benefit costs. These increased costs are being addressed in a general rate case that has been filed with the Public Service Commission of Utah. The year-earlier quarterly loss was $3,213,000.
 During the 1993 quarter, Mountain Fuel recognized $1.1 million in Section 29 tax credits, compared with $2.2 million in the 1992 quarter. The 1992 credits related primarily to prior periods.
 Year-to-date net income for Mountain Fuel was $15,729,000 vs. $12,114,000 in 1992. For the first nine months of the year, temperatures as measured in degree days were 3 percent colder than normal and 25 percent colder than a year earlier. Section 29 credits increased to $4.4 million during the first nine months of 1993 from $2.2 million in 1992.
 Mountain Fuel's third-quarter 1993 gas deliveries rose 2 percent. Residential and commercial gas sales were up 10 percent, while industrial deliveries dipped 2 percent during the same period. During the first nine months of 1993, total deliveries rose 13 percent, reflecting a strong local economy, increased gas consumption due to colder temperatures and environmental reasons.
 Mountain Fuel had 537,174 customers on Sept. 30, 1993, a 3.6 percent year-to-year increase -- significantly higher than the industry average.
 Questar's other continuing operations earned $469,000 in the third quarter of this year and $384,000 in the 1992 quarter. Nine-month earnings were $474,000, compared with $854,000 in the year-earlier period.
 On Oct. 15, Questar entered into an agreement with the nation's second-largest specialized mobile radio (SMR) company, Nextel Communications. Under the agreement, Nextel will acquire Questar Telecom, the corporation's SMR subsidiary, in exchange for 3.9 million shares of Nextel common stock, currently valued at approximately $200 million.
 Questar Telecom lost $1,110,000 in the third quarter of 1993, compared with $633,000 in the same 1992 period. (These losses have been reported as discontinued operations.) For the first nine months of this year, the telecommunications company lost $2,772,000 vs. $1,937,000 in the year-earlier period. The losses were primarily due to acquisition and depreciation costs.
 1993 1992
 Three Months Ended Sept. 30,
 Revenues $100,240,000 $ 87,217,000
 Income from continuing operations 6,970,000 6,857,000
 Net income 5,860,000 6,224,000
 Earnings per common share
 From continuing operations $.17 $.17
 Net income .14 .15
 Average common shares outstanding 40,052,000 39,548,000
 Nine Months Ended Sept. 30,
 Revenues $477,433,000 $416,460,000
 Income from continuing operations 59,020,000 44,332,000
 Net income 56,248,000 51,698,000
 Earnings per common share
 From continuing operations $1.46 $1.11
 Net income 1.39 1.29
 Average common shares outstanding 39,951,000 39,421,000
 Twelve Months Ended Sept. 30,
 Revenues $652,319,000 $587,054,000
 Income from continuing operations 88,459,000 65,266,000
 Net income 85,187,000 72,058,000
 Earnings per common share
 From continuing operations $2.20 $1.63
 Net income 2.12 1.81
 Average common shares outstanding 39,829,000 39,264,000
 -0- 10/26/93
 /CONTACT: R. Curtis Burnett of Questar, (business) 801-534-5541, or (home) 801-942-5171/
 (STR)


CO: Questar Corp. ST: Utah IN: OIL SU: ERN

JL-LM -- LA014 -- 6713 10/26/93 08:31 EDT
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Date:Oct 26, 1993
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