UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report – June 16, 2010
(Date of earliest event reported)
QEP RESOURCES, INC.
(Exact name of registrant as specified in its charter)
| STATE OF DELAWARE | 001-34778 | 87-0287750 | ||
| (State or other jurisdiction of incorporation) |
(Commission File No.) |
(I.R.S. Employer Identification No.) |
1050 17th Street, Suite 500, Denver, Colorado 80265
(Address of principal executive offices)
Registrant’s telephone number, including area code (303) 672-6961
Not Applicable
(Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 24
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 7.01. | Regulation FD Disclosure. |
In conjunction with the spinoff of QEP Resources, Inc. (QEP) from Questar Corporation (Questar), the management teams of Questar and QEP will be meeting with analysts and investors. The QEP presentation is furnished herewith as Exhibit 99.1 and is incorporated by reference herein. The presentations have been posted to both companies’ Web sites (www.questar.com and www.qepres.com).
The information in this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit No. |
Exhibit | |
| 99.1 |
QEP Resources, Inc. analysts and investors presentation. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| QEP Resources, Inc. | ||
| (Registrant) | ||
| June 16, 2010 | /S/ RICHARD J. DOLESHEK | |
| Richard J. Doleshek | ||
| Executive Vice President and Chief Financial Officer | ||
List of Exhibits:
| Exhibit No. |
Exhibit | |
| 99.1 |
QEP Resources, Inc. analysts and investors presentation. | |
Exhibit 99.1
The Resource Growth Company
QEP Resources, Inc.
Investor Road Show
June 2010
Spin-off creates two top-tier energy companies
Questar Corp.
Questar Gas
Retail Distribution
Questar Pipeline
Interstate Transportation
Wexpro
Production
QEP Resources
QEP Energy
Exploration & Production
QEP Field Services
Gathering & Processing
QEP Marketing
Marketing & Gas Storage
NYSE: QEP 2
Why create QEP Resources?
Offers shareholders two top-tier “pure” investment opportunities
Increases transparency of performance of both businesses
Allows each business to allocate capital to attractive projects
Creates financial flexibility for each company
NYSE: QEP 3
A portfolio of high-quality assets
2009 PROFORMA EBITDAX $1.2 B
85%
14%
1%
QEP Energy
(Exploration & Production) 2.7 Tcfe proved reserves 14% 4-yr production CAGR
QEP Field Services
(Gathering and NGL extraction) 1.0 Bcfpd processing/blending 2,875 miles of gathering lines
QEP Energy Trading
(Production marketing)
Markets equity gas, oil and NGL’s Owns Rockies gas storage
NYSE: QEP 4
QEP is active in several of North America’s most economic resource plays
2009 Reserves*
2,747 Bcfe
Rockies: 1,646 Bcfe
Midcontinent: 1,101 Bcfe
2009 Production
189.5 Bcfe
Rockies: 101.7 Bcfe
Midcontinent: 87.8 Bcfe
Pinedale
Anticline
WY
UT
CO
Uinta Basin
ND
Bakken
Woodford Shale
Granite Wash
Haynesville
OK
TX
LA
* Proved reserves prepared by independent reservoir engineering consultants as of 12/31/09
NYSE: QEP 5
QEP has a track record of strong production and reserve growth
Net Production (Bcfe/yr)
14% CAGR
15% CAGR
114
130
140
171
190
217
252
285
2005
2006
2007
2008
2009
2010E
2011F
2012F
Proved Reserves (Bcfe)
17% CAGR
1,480
1,631
1,868
2,218
2,747
2005
2006
2007
2008
2009
NYSE: QEP 6
QEP is an industry leader in per share production and reserve growth
Production growth per diluted share (2006 – 09 CAGR)
61% 28% 24% 19% 13% 12% 10% 7% 7% 6% 6% 6% 5% 4% 4% 3% 2% 1% 1%
-1% -3%
SWN UPL KWK BBG QEP RRC EOG SM NBL EQT XCO DVN CHK APC PXD COG XEC NFX HK WLL FST
Reserve growth per diluted share (2006 – 09 CAGR)
53% 30% 20% 19% 17% 17% 16% 15% 15% 11% 9% 6% 5% 4% 3% 1% -4% -4% -7% -10% -29%
SWN BBG UPL QEP NFX RRC EOG EQT KWK COG DVN CHK HK PXD XEC NBL FST SM WLL APC XCO
Source: From EnerCom, Inc. June 2010
NYSE: QEP 7
Our low-cost structure is a competitive advantage
4Q09 production cash cost structure versus 42 E&P peers (LOE + production taxes + G&A + interest)
$8.00 $6.00 $4.00 $2.00 $0.00
QEP $1.57/Mcfe
Average $3.18/Mcfe
Source: Company data and Credit-Suisse E&P Stat Sort, March 23, 2010
NYSE: QEP 8
QEP EBITDAX will fund capital investments and drive growth
2010 guidance as of 6/16/10:
• EBITDAX $1.00 B to $1.05 B
• 215 to 220 Bcfe production
• > 75% of estimated 2010 production hedged
• Assumptions for unhedged production:
• NYMEX gas price $4 to $5/MMBtu
• NYMEX oil price $70 to $80/Bbl
• Rockies basis: $0.50 to $0.30/MMBtu
• Midcontinent basis: $0.40 to $0.15/MMBtu
2011 and 2012 EBITDAX forecasts based on 6/8/10 forward curves
EBITDAX
($MM/yr)
22% CAGR
19% CAGR
532
738
891
1,311
1,165
1,025
1,225
1,450
2005
2006
2007
2008
2009
2010E
2011F
2012F
NYSE: QEP 9
QEP 2010E EBITDAX and CAPEX
CAPEX $1,342 MM
$300
$1,042
E&P Field Services
EBITDAX $1,025 MM
$165
$860
E&P Field Services
EBITDAX estimates based on assumptions detailed on slide 9
NYSE: QEP 10
Operating cash flow should be positive after completion of large NGL extraction plants
($MM)
1,025
1,342
1,225
1,150
1,450
1,330
2010E
2011F
2012F
EBITDAX CAPEX
EBITDAX estimates based on assumptions detailed on slide 9
NYSE: QEP 11
48,500 net acres in the core of the Haynesville Shale play
QEP net production (MMcfepd)
240 200 160 120 80 40 0
2005
2006
2007
2008
2009
2010
Cv/Hosston Haynesville
• Proved reserves 592 Bcf*
• 276 PUD locations*
• 1,300 additional unbooked locations on 80-acre density
• 7 operated rigs
• $8 to $9 MM completed well cost
• EUR 5 to 8 Bcf/well
* As of December 31, 2009
TX LA
6 Miles
QEP leasehold Haynesville Tier I Haynesville Tier II
Haynesville Shale IP’s (MMcfepd)
< 10 10-15 15-20 >20
6 Miles
NYSE: QEP 12
Our Haynesville drill times and well costs are coming down; we are drilling more wells per rig
Sequential spud to TD drill times QEP-operated Haynesville horizontal wells
100 90 80 70 60 50 40 30 20 10 0
66 Days Avg.
38 Days Avg.
Record 24 days
NYSE: QEP 13
Over 1,400 remaining locations at Pinedale
QEP net production (MMcfepd)
200
160
120
80
40
2004
2005
2006
2007
2008
2009
2010
• Proved reserves 1.3 Tcfe*
• 432 PUD locations on a combination of 5,10, and 20-acre density *
• 1,400 remaining locations
• 100 new completions forecast for 2010
• Completed well cost below $4.5 MM
• 6 operated rigs
* As of December 31, 2009
QEP PDP well
Other operators (No QEP interest)
QEP leasehold
Current Economic Limit
1 Mile
NYSE: QEP 14
Pinedale drill times continue to decline, maintaining our low-cost advantage
Average days spud to TD
61
64
45
42
35
28
23
16.6
Record 11.7 days
2003
2004
2005
2006
2007
2008
2009
2010
NYSE: QEP 15
QEP has 89,000 net acres in the Bakken play
• 5,000 to 10,000-ft laterals
• $5.5 to $6.5 MM completed well cost
• IP’s of 500 to 3,000+ Bopd
• EUR 350 to 750 Mboe/well
• 1 operated rig going to 2 by year-end
QEP leasehold
Lake Sakakawea
Current productive limit
WOC Waiting on completion
Bakken wells
LL Long lateral >9,000 ft
SL Short lateral <5,000 ft
Parshall/Sanish Field IP’s: 750-3,000 Bopd
Fort Berthold Res.
IP: 1779 Boepd
IP: 1948 Boepd
IP: 1405 Boepd
Drilling
IP: 949 Boepd
IP: 841 Boepd
WOC (LL) (Three Forks test)
WOC (LL)
Bailey Field Area IP’s: 500-1,000 Bopd
6 Miles
NYSE: QEP 16
QEP has two rigs drilling horizontal Granite Wash/Atoka wells in the Texas Panhandle
QEP net production (MMcfepd)
40
30
20
10
0
2004 2005 2006 2007 2008 2009 2010
• Second operated horizontal well is producing, and third is WOC
• $7.0 to $8.4 MM completed well cost
• EUR 4.0 to 12.0 Bcfe/well
• 26,540 net acres
• Two operated rigs
QEP leasehold
After processing initial production rates:
* Puryear: 7.7 MMcfd, 1,880 Bbls oil & ngl (19.0 MMcfepd)
**Edwards:5.5 MMcfd, 1,140 Bbls oil & ngl (12.3 MMcfepd)
Edwards 1056H 64% WI (Cherokee) 7.0 MMcfd 300 Bopd**
Morrison 5033H 100% WI (Atoka) WOC
Huff 34 #6H 100% WI (Atoka) rig moving
Puryear 5028H 40% WI (Caldwell) 10.6 MMcfd 608 Bopd*
Methodist Home 2#5H 100% WI (Atoka) Drilling
3 Miles
SYS
PENNSYLVANIAN
GROUP
WABAUNSEE
SHAWNEE
DOUGLAS
LANSING
KANSAS CITY
MARMATON
CALDWELL
CHEROKEE
GRANITE WASH A-F
ATOKA
MORROW
SPRINGER
High oil yield
WASH
NYSE: QEP 17
66,000 net acres in the Woodford “Cana” shale play, NW Oklahoma
QEP net production (MMcfepd)
30
20
10
0
2009 2010
• Proved reserves 104 Bcfe*
• 76 PUD locations*
• 2,700 unbooked locations on 80-acre density
• 19% average working interest in Tier I lands
• 1 operated rig
• $6.5 to $8.0 MM completed well cost
• EUR 4 to 10 Bcfe/well
• Significant NGL (25 to 80 bbls/MMcf)
* As of December 31, 2009
SYS
MISS
SIL/DEV
ORD
GROUP
SPRINGER
CHESTER
MERAMEC
OSAGE
KINDERHOOK
WOODFORD
HUNTON
SYLVAN
VIOLA
Dewey County
Blaine County
Custer County
Caddo County
Grady County
QEP leasehold (Woodford or deeper)
Woodford wells completed
Woodford wells drilling & WOC
Tier I - 42,000 net acres
Tier II - 24,000 net acres
6 Miles
NYSE: QEP 18
We are building on our 130,000-acre inventory in the liquids-rich basins of the Eastern Rockies
QEP leasehold
Permits/Drilling
Niobrara
Frontier
Sussex
Powder River: 49,800 net acres
E. Green River: 17,400 net acres
D-J: 64,500 net acres
QEP horizontal Niobrara well planned for late 2010
Vertical Niobrara well Cum: 315 MBo
Silo Field Niobrara 10 MMBo
EOG Jake 2-01H Niobrara horiz. IP: 1770 Bopd
POWDER RIVER BASIN
SD NE
E. GREEN RIVER BASIN
WY CO
D-J BASIN
50 Miles
NYSE: QEP 19
QEP is in some of the most economic resource plays in North America
Play
Haynesville
Pinedale
(with 5-acre density)
Granite Wash
Bakken/ Three Forks*
Woodford “Cana”
Gross Remaining Locations
1,357
1,423
89
492
2,700
Avg Working Interest
40%
60%
62%
74%
19%
Avg Gross EUR (Bcfe/well)
6.0
4.5
5.3
490,000
5.2
Net Finding Cost
($/Mcfe)
$1.95
$1.29
$2.04
$16.95
$1.71
NYMEX Price
10% BTAX
ROR
$3.77
$3.28
$2.44
$46.39
$2.22
* Bakken/Three Forks in Boe
NYSE: QEP 20
QEP has significant organic growth opportunities on its existing leasehold
QEP reserves and hydrocarbon resource estimates
Proved*: 2.7 Tcfe
Probable**: 3.7 Tcfe
Possible**: 5.9 Tcfe
Resource**: 18.4 Tcfe
* Prepared by independent reservoir engineering consultants as of 12/31/09
** Prepared by QEP and reviewed by independent reservoir engineering consultants as of 5/1/10 (not prepared pursuant to SEC pricing and scheduling rules)
NYSE: QEP 21
Field Services assets are concentrated in QEP producing areas
W. Green River Basin
Processing / blending: 580 MMcfpd
QGM gathering: 650 miles
Rendezvous gathering: 325 miles
Rendezvous transmission: 20 miles
QGM Operating income: 60%
Interstate pipeline connections: 6
2010 projects include a 420 MMcfpd cryogenic processing plant
WY UT CO
NW Louisiana
CO2 treating /blending: 300 MMcfpd
Gathering: 250 miles
QGM Operating income: 8%
Interstate pipeline connections: 4
2010 projects include a 1,000 GPM amine treating facility
Vermillion Basin
Processing / blending: 80 MMcfpd
Gathering: 600 miles
QGM Operating income: 9%
Interstate pipeline connections: 1
LA
Uinta Basin
Processing / blending: 380 MMcfpd
QGM gathering: 900 miles
UBFS gathering: 80 miles
Three Rivers gathering: 50 miles
QGM Operating income: 23%
Interstate pipeline connections: 4
2010 projects include a 150 MMcfpd cryogenic processing plant
NYSE: QEP 22
Ownership/control of midstream assets integral to execution and value maximization
Own and operate gathering and NGL extraction assets in core QEP producing areas
Maximizes margins on equity production
Iron Horse processing plant in service Q4 2010
Blacks Fork II processing plant in service Q4 2011
Field Services EBITDAX
($MM/yr)
250
195
170
163
165
113
86
69
24% CAGR
23% CAGR
2005
2006
2007
2008
2009
2010E
2011F
2012F
EBITDAX estimates based on assumptions detailed on slide 9
NYSE: QEP
23
New Blacks Fork II NGL extraction plant will drive liquids volume growth
Field Services Equity NGL Sales Volumes (Annual Average Bpd)
22,500
14,200
6,100
6,629
5,835
4,891
5,746
5,764
2005
2006
2007
2008
2009
2010E
2011F
2012F
NYSE: QEP
24
QEP pro forma income statement TTM 3/31/10 (unaudited)
($ Millions) Historical QMR, Inc. Historical Wexpro Parent & Eliminations Pro-forma QEP Resources
Revenues $2,299.5 $247.7 $18.8 $2,070.6
Realized (loss) on basis-only swaps (56.9) 0.0 0.0 (56.9)
Cash operating expenses 904.8 59.1 18.8 864.5
Non-controlling interest income 2.7 0.0 0.0 2.7
EBITDAX 1,340.5 188.6 0.0 1,151.9
DD&A 641.5 59.7 0.0 581.8
Exploration expense 25.5 0.0 0.0 25.5
Abandonment & impairment 24.2 0.0 0.0 24.2
Unrealized basis only swaps gain/(loss) 5.6 0.0 0.0 5.6
Interest expense 74.1 0.7 0.6 74.0
Income taxes 210.3 47.7 0.0 162.6
Other income (loss) 5.5 2.6 0.6 2.3
Net income $374.8 $83.1 0.0 $291.7
NYSE: QEP
25
QEP pro forma balance sheet at 3/31/10 after $250MM equity infusion (unaudited)
($ Millions) Historical QMR, Inc. Historical Wexpro Adjustments & $250 MM Equity Infusion Pro-forma QEP Resources
Assets
Current assets $693.0 ($43.3) $34.9 $684.6
Net PP&E 5,811.4 (589.4) 0.0 5,222.0
Other assets 299.3 (16.4) 0.0 282.9
Total assets $6,803.7 ($649.1) $34.9 $6,189.5
Liabilities and equity
Current liabilities* $588.4 ($48.0) $7.0 $547.4
Short and LT debt 1,401.7 (27.9) (222.1) 1,151.7
Other liabilities 1,718.8 (167.9) 0.0 1,550.9
Total equity 3,094.8 (405.3) 250.0 2,939.5
Total liabilities and equity 6,803.7 (649.1) 34.9 $6,189.5
* excluding short term debt
Total Debt/EBITDAX 1.05x 1.00x
NYSE: QEP
26
QEP asset quality and execution merits premium equity valuation
14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x
EV/TTM EBITDA
RRC
EQT
UPL
HK
PXD
EOG
KWK
COG
XEC
WLL
DVN
FST
NBL
CHK
NFX
APC
SM
BBG
ECA
XCO
SWN
“Valuation Zone” based on:
- Visible future growth
- Low-cost structure
- Premium asset base
- Strong balance sheet
- Track record of superior execution
-10% 0% 10% 20% 30% 40% 50% 60% 70%
2006 - 2009 Production Growth Per Share (CAGR)
Source: EnerCom, Inc. EV/TTM EBITDAX (EV as of 6/11/10)
NYSE: QEP
27
QEP asset quality and execution merits premium equity valuation
EV/TTM EBITDA
14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x
RRC
UPL
EQT
HK
PXD
KWK
XEC
COG
EOG
WLL
FST
DVN
NBL
NFX
APC
CHK
SM
ECA
XCO
BBG
SWN
“Valuation Zone” based on:
- Visible future growth
- Low-cost structure
- Premium asset base
- Strong balance sheet
- Track record of superior execution
-40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60%
Source: EnerCom, Inc. EV/TTM EBITDAX (EV as of 6/11/10)
NYSE: QEP
28
QEP implied valuation - peer leaders
P90 Range for Metric
QEP Implied Valuation ($MM)
QEP Energy
EV / 2009 Proved Reserves ($/Mcfe) $4.52 $12,416
EV / TTM EBITDAX 11.7x 11,993
EV / TTM Flowing Net Production ($/Mcfepd) $20,617 10,964
Average: 11,791
QEP Field Services
EV / 2010 EBITDAX 11.7x 1,931
QEP Resources Firm Value ($MM): 13,722
Less Outstanding Debt ($MM): (1,152)
Total Equity Value ($MM): 12,570
QEP Implied Valuation / share
(based on 175.1 MM shares) $71.79
Source: EnerCom, June 2010. E&P multiples based on APC, BBG, CHK, CLR, COG, DVN, ECA, EOG, EQT, FST, HK, KWK, NBL, NFX, PXD, RRC, SM, SWN, UPL, WLL, XCO, and XEC historical multiples at 6/11/10. Midstream multiple based on the CPNO, DEP, DPM, EPD, ETP, KGS, KMP and WPZ P/CFPS 2011E on 6/11/10.
NYSE: QEP
29
QEP implied valuation - group average
Group Average for Metric
QEP Implied Valuation ($MM)
QEP Energy
EV / 2009 Proved Reserves ($/Mcfe) $2.98 $8,186
EV / TTM EBITDAX 8.1x 8,303
EV / TTM Flowing Net Production ($/Mcfepd) $15,201 8,084
Average: 8,191
QEP Field Services
EV / 2010 EBITDAX 11.7x 1,931
QEP Resources Firm Value ($MM): 10,122
Less Outstanding Debt ($MM): (1,152)
Total Equity Value ($MM): 8,970
QEP Implied Valuation / share (based on 175.1 MM shares) $51.23
Source: EnerCom, June 2010. E&P multiples based on APC, BBG, CHK, CLR, COG, DVN, ECA, EOG, EQT, FST, HK, KWK, NBL, NFX, PXD, RRC, SM, SWN, UPL, WLL, XCO, and XEC historical multiples at 6/11/10. Midstream multiple based on the CPNO, DEP, DPM, EPD, ETP, KGS, KMP and WPZ P/CFPS 2011E on 6/11/10.
NYSE: QEP
30
Why invest in QEP?
Visible organic growth potential of 12 to 15+% per year from existing assets with excellent return metrics
• Acreage in core of high-quality, repeatable resource plays
• Concentrated, contiguous, QEP-operated land position
• Track record as low-cost leader
Top-tier per-share production and reserve growth
Highly motivated team with a relentless focus on returns on invested capital and profitable growth – we are low-cost developers and producers
Midstream assets offer control and maximize value of production stream
Growth driven by premium assets
• Pinedale and Haynesville
• Bakken, Granite Wash, Woodford “Cana”
• Large inventory of high-quality, unbooked potential
• Technical team continuously developing new ideas
NYSE: QEP
31
Notes and Caution regarding forward-looking statements and non-GAAP measures
This presentation contains forward-looking statements within the meaning of the federal securities laws. Such statements are based on management’s current expectations, estimates and projections, which are subject to a wide range of uncertainties and business risks. Factors that could cause actual results to differ from those anticipated are discussed in the company’s periodic filings with the Securities and Exchange Commission, including the Questar Market Resources annual report on Form 10-K for the year ended December 31, 2009. QEP Resources undertakes no obligation to publicly correct or update the forward-looking statements in this presentation to reflect future events or circumstances. All such statements are expressly qualified by this cautionary statement.
EBITDAX is a non-GAAP measure. Management defines EBITDAX as Net Income before unrealized gains and losses on basis-only swaps, gains and losses on asset sales, interest and other income, interest expense, DD&A, abandonments, impairments, exploration expense and income taxes.
NYSE: QEP 32
APPENDIX
NYSE: QEP
33
QEP debt maturity schedule
Total Debt = $1.15 B
$450
$300 $250
$150
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Debt maturing each year ($MM)
NYSE: QEP 34
Hedging has removed most commodity price risk for 2010
Gas and oil hedges as of 05/31/10
(Volumes and net-to-well prices)
4 Bcf gas collars $4.65-$6.51 / Mcf
3 Bcfe oil $60.66 / bbl
3 Bcfe oil collars $47.60-$96.10 / bbl
28 Bcf gas collars $4.63-$6.66 / Mcf
7 Bcfe oil collars $51.73-$102.10 / bbl
41 Bcf gas $5.91 / Mcf
47 Bcf gas $5.98 / Mcf
88 Bcf gas $5.26 / Mcf
102 Bcf gas $4.91 / Mcf
2010 Jun-Dec
2011
2012
2013
Hedged Gas
Gas Collar
Hedged Oil
Oil Collar
Unhedged
NYSE: QEP 35
QEP has a large inventory of unbooked potential
Net Probable and Possible Reserves (Bcfe)
2,688
2,262
1,597
1,481
723 721
116
GGRB Gas
Haynesville
Pinedale
Uinta Shallow Gas
Woodford “Cana”
Bakken
Granite Wash
NYSE: QEP
36
QEP estimated probable and possible reserves and resource potential
PINEDALE
Probable (Bcfe) 1,492 Possible (Bcfe): 105 Resource Potential (Bcfe): 766
GREATER GREEN RIVER BASIN
Probable (Bcfe): 681 Possible (Bcfe): 2,007 Resource Potential (Bcfe): 5,984
UINTA BASIN
Probable (Bcfe): 291 Possible (Bcfe): 1,190 Resource Potential (Bcfe): 8,920
N. PARADOX BASIN
Probable (Bcfe): - Possible (Bcfe): - Resource Potential (Bcfe): 948
WILLISTON BASIN Bakken
Probable (Bcfe): 195 Possible (Bcfe): 526 Resource Potential (Bcfe): 34
POWDER RIVER/DJ BASINS
Probable (Bcfe): - Possible (Bcfe): - Resource Potential (Bcfe): 1,077
TX PANHANDLE Granite Wash
Probable (Bcfe): 88 Possible (Bcfe): 28 Resource Potential (Bcfe): 103
W. OKLAHOMA Woodford
Probable (Bcfe): 125 Possible (Bcfe): 598 Resource Potential (Bcfe): 455
N.W. LOUISIANA Haynesville
Probable (Bcfe): 829 Possible (Bcfe): 1,433 Resource Potential (Bcfe): 159
Total 3P Estimates (as of May 1, 2010): Probable 3,701 Bcfe Possible 5,887 Bcfe Resource 18,446 Bcfe
Not prepared in accordance with SEC guidelines relative to commodity prices and timing of development
Bakken
Pinedale
Powder River
Greater Green River
Uinta Basin
N. Paradox
Granite Wash
Woodford
Haynesville
MIDCONTINENT
ROCKIES
NYSE: QEP
37
QEP is in the core of some of the most economic resource plays in North America
Required Strip Price for BTAX 10% IRR
$9.40 $8.40 $7.40 $6.40 $5.40 $4.40 $3.40 $2.40 $1.40 $0.40
Breakeven Levels $/ MMBtu
$2.22
$2.44
$3.28
$3.50
$3.70
$3.77
$3.90
$4.00
$4.20
$4.30
$4.30
$4.30
$4.50
$4.70
$4.80
$5.00
$5.00
$5.40
$5.40
$5.50
$5.50
$5.50
$5.50
$5.80
$6.10
$6.20
$6.30
$6.90
$7.00
$7.40
$8.50
Woodford “Cana”
Granite Wash (Horizontal)
Avg Pinedale
Deep Bossier (E. Texas)
Fayetteville (2.6 Bcf)
Haynesville
Marcellus
Horn River
Barnett (Tier 1)
Huron Shale
Warwick (WTO)
Montne (8 stage frac)
Piceance (Valley - Core)
Nora (CBM)
Fayetteville (2.2 Bcf)
Uinta (Shallow)
Eagleford
Jonah
Powder River (CBM)
Alberta Shallow Gas
Horseshoe Canyon (CBM)
Raton (CBM)
Woodford(Arkoma)
Montney (4 stage frac)
Wattenberg (Core)
Alberta Deep Basin
Jean Marie (Tight Gas)
Barnett (Tier 2)
Piceance (Highlands)
Mannville (CBM)
Barnett (Tier 3)
Source: Company data and Morgan Stanley, March 8, 2010
NYSE: QEP
38
Haynesville Formation, NW Louisiana
Production Type Curve
MCFEPD
12,000 10,000 8,000 6,000 4,000 2,000
0
0 24 48 72 96 120
Months on Line
Capital Return Price Sensitivity
100% 80% 60% 40% 20% 0%
$3.00 $4.00 $5.00 $6.00 $7.00
NYMEX Gas Price ($/MMBtu)
• Type curve details: IP: 10 MMcfepd, b factor: 0.90 • Terminal decline: 6.0%, well life: 40 yrs • Type curve EUR: 6.0 Bcfe (50% of EUR in 1.5 yrs)
• Well depth: 12,000’ / 16,700’ MD • Completed Well Cost: $8.65 MM
• Economic summary: $5.00/MMBtu NYMEX
• BTAX ROR: 38.1% • BTAX PV10: $3.0 MM • Net Finding Cost: $1.95/Mcfe • Net LOE: $0.32/Mcfe
NYSE: QEP
39
Lance Pool, Pinedale, WY
Production Type Curve
6,000 5,000 4,000 3,000 2,000 1,000 0
MCFEPD
0 24 48 72 96 120
Months on Line
Capital Return Price Sensitivity
BTAX ROR
100% 80% 60% 40% 20% 0%
$3.00 $4.00 $5.00 $6.00 $7.00
6.0 Bcfe
5.0 Bcfe
4.0 Bcfe
3.0 Bcfe
NYMEX Gas Price ($/MMBtu)
• Type curve details: IP: 5.25 MMcfepd, b factor: 2.0 • Terminal decline: 8.0%, Well life: 33 years • Type curve EUR: 4.5 Bcfe (50% of EUR in 6.0 yrs)
• Well depth: 14,000’/14,300’ MD • Completed Well Cost: $4.25 MM
• Economic summary: $5.00/MMBtu NYMEX
Avg of Well Type Range • BTAX ROR: 34.9% • BTAX PV10: $3.2 MM • Net Finding Cost: $1.29/Mcfe • Net LOE: $0.18/Mcfe
NYSE: QEP
40
Granite Wash /Atoka Horizontal Play, TX Panhandle
Production Type Curve
MCFEPD
20,000 15,000 10,000 5,000 0
0 24 48 72 96 120
Months on Line
Capital Return Price Sensitivity
BTAX ROR
100% 80% 60% 40% 20% 0%
$3.00 $4.00 $5.00 $6.00 $7.00
NYMEX Gas Price ($/MMBtu)
• Type Curve Details: IP: 15.0 MMcfepd, b factor: 1.0
• Terminal decline: 6.0%, Well life: 38.3 Years
• Type curve EUR: 5.25 Bcfe (50% of EUR in 2.7 yrs)
• Well Depth: 13,000’ /18,000’ MD
• Completed Well Cost: $8.5 MM
• Economic Summary: $5.00/MMBtu NYMEX, $65/Bbl WTI
• BTAX ROR: 61.0%
• BTAX PV10: $5.6 MM
• Net Finding Cost: $2.04/Mcfe
• Net LOE: $0.37/Mcfe
NYSE: QEP
41
Bakken/Three Forks Formation, North Dakota
Production Type Curve
BOEPD
1,250 1,000 750 500 250 0
0 24 48 72 96 120
Months on Line
Capital Return Price Sensitivity
BTAX ROR
60% 50% 40% 30% 20% 10% 0%
$40.00 $50.00 $60.00 $70.00 $80.00
NYMEX Oil Price ($/Bbl)
• Type curve details: IP: 1000 Boepd, b factor: 1.7
• Terminal decline: 8.0%, Well life: 26.1 years
• Type curve EUR: 490 MBoe (50% of EUR in 4.6 yrs)
• Well depth: 9,950’/19,500’ MD
• Completed Well Cost: $6.5 MM
• Economic Summary: $65/Bbl WTI
• BTAX ROR: 32.7%
• BTAX PV10: $3.4 MM
• Net Finding Cost: $16.95/Boe
• Net LOE: $8.64/Boe
NYSE: QEP
42
Woodford “Cana” Shale, Oklahoma
Production Type Curve
MCFEPD
7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
0 24 48 72 96 120
Months on Line
Capital Return Price Sensitivity
BTAX ROR
60% 50% 40% 30% 20% 10% 0%
$3.00 $4.00 $5.00 $6.00 $7.00
NYMEX Gas Price ($/MMBtu)
• Type curve details: IP: 6.0 MMcfepd, b factor: 1.5
• Terminal decline: 6.0%, Well life: 40 years
• Type curve EUR: 5.2 Bcfe (50% of EUR in 6.4 yrs)
• Well depth: 13,000’ TVD, 18,000’ MD
• Completed Well Cost: $7.1 MM
• Economic Summary: $5.00/MMBtu NYMEX, $65.00/Bbl WTI
• BTAX ROR: 30.3%
• BTAX PV10: $4.0 MM
• Net Finding Cost: $1.71/Mcfe
• Net LOE: $0.38/Mcfe
NYSE: QEP
43
New gas processing plants will drive Field Services cash flow and earnings
150 MMcfpd Iron Horse cryogenic NGL extraction plant
• Uinta Basin asset adjacent to Field Services 220 MMcfpd Stagecoach plant
• In-service Q4 2010
• Underwritten by 10-year fee-based, demand contracts
420 MMcfpd Blacks Fork II cryogenic gas processing plant
• Green River Basin asset adjacent to existing 310 MMcfpd Blacks Fork complex
• In-service Q4 2011
• Underwritten by keep-whole processing contracts, revert to fee-based if keep-whole margin negative
• Plant full at startup (significant raw gas bypassing plants today)
• ~15,000 bbl/day NGL net to Field Services
NYSE: QEP
44
Blacks Fork Hub
QEP Field Services Gobblers Knob Facility
Pinedale Field
QEP Field Services Blacks Fork Plant
QEP Field Services Emigrant Trail Plant
Pinedale
QEP Field Services Crude Petroleum Pipeline
Jonah Field
LeBarge
Rendezvous Gas Services Pipeline System
QEP Field Services Gas Pipeline
RMPL
OPAL PLANTS
NWPL
QEP Marketing Clear Creek Storage
RPC
QPC
KRPL
Evanston
WY
UT
NWPL
20 Miles
Clay Basin Storage
QPC
QPC
CIG
MGR GRANGER PLANT
OTP
Green River
Rock Springs
WIC
NYSE: QEP
45
Price Assumptions
2010 (June – Dec) 2011F 2012F
Gas NYMEX 4.93 5.55 5.81
($/MMBtu)
NWP Basis
($/MMBtu) -0.51 -0.46 -0.44
CenterPoint Basis -0.25 -0.29 -0.33
($/MMBtu)
Gulf South Basis -0.52 -0.48 -0.45
($/MMBtu)
PEPL Basis -0.27 -0.29 -0.32
($/MMBtu)
Oil NYMEX
($/Bbl) 73.37 79.00 81.73
NYSE: QEP
46