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QEP Lowers 2020 Capex; Suspend Permian Completions, Bakken Fracs

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   |    Friday,March 13,2020

QEP Resources, Inc. provided an operational and financial update in response to current market conditions.

2020 Capital Changes

  • Expect to reduce planned 2020 and 2021 combined capital expenditures by more than an aggregate $300 million, or nearly 30% - QEP did not specify on the distribution of the cuts
  • Plan to suspend completion operations in the Permian Basin from early May through at least the beginning of Q4 2020
  • Intend to release the intermediate drilling rig operating in the Permian Basin at the conclusion of its current operation in March 2020
  • Plan to suspend the refracturing program in the Williston Basin upon completion of current projects for the remainder of 2020
  • Expect to generate approximately $75 million of Free Cash Flow (a non-GAAP measure)1 in 2020 at $35/bbl WTI, which excludes the $37.5 million tax refund expected in 2020
  • The adjusted plan is expected to generate Free Cash Flow in 2021 at current commodity strip prices
  • Plan to suspend $0.02 quarterly dividend
  • The Company expects to update 2020 guidance in connection with reporting its first quarter 2020 financial results and as such, the 2020 guidance issued on February 26, 2020 should no longer be relied upon

 

Hedging Update

The following tables present QEP's volumes and average prices for its open derivative positions as of February 14, 2020:

 
Production Commodity Derivative Swaps
Year   Index   Total Volumes   Average Swap Price per Unit
        (in millions)    
Oil sales       (bbls)     ($/bbl)
2020   NYMEX WTI   13.0   $ 57.81
2020   Argus WTI Midland   1.3   $ 57.30
2020   Argus WTI Houston   0.8   $ 60.06
2021   NYMEX WTI   1.6   $ 55.04

 

Production Commodity Derivative Basis Swaps
Year   Index   Basis   Total Volumes   Weighted-Average Differential
            (in millions)    
Oil sales           (bbls)     ($/bbl)
2020   NYMEX WTI   Argus WTI Midland   6.2   $ 0.19
2020   NYMEX WTI   Argus WTI Houston   0.3   $ 3.75
2021   NYMEX WTI   Argus WTI Midland   4.4   $ 0.99
                   




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