QEP Resources exploration and production unit QEP Energy continues to turn away from its traditional area of activity in the Rocky Mountain region and focus more on the Midcontinent and a handful of shale plays.
QEP Energy reported first quarter net production of 65.9 Bcfe compared to 51.5 Bcfe in the 2010 period and 62.1 Bcfe in the fourth quarter of 2010. The Midcontinent contributed 59% of current-year production compared to 51% in the 2010 period. Crude oil and natural gas liquids (NGL) comprised 10% of reported production volumes.
"QEP Energy production was up 28% from the 2010 period and 6% from the fourth quarter of 2010," said CEO Chuck Stanley. "The production growth was driven by strong results from ongoing Haynesville Shale development activities, combined with significant contributions from new wells in our Woodford Shale, Granite Wash and Bakken plays.
In the Haynesville the company said it is the lowest-cost operator in its portion of the play. During the first quarter QEP completed and turned to sales 10 more company-operated Haynesville wells, each with strong production rates and pressures. "QEP's 50,750 net acres (an increase of 1,150 net acres) are in a concentrated area located in the core of the Haynesville development," the company said.
In the Woodford QEP completed and turned to sales two new QEP-operated Cana Shale wells in western Oklahoma. The company has three operated wells currently being drilled and three operated wells awaiting completion. It operates 13 producing wells and has a nonoperated working interest in 128 producing wells across the play. The company also has interests in seven wells currently being drilled and 21 wells awaiting completion that are operated by others.
"QEP Field Services also had a good quarter," Stanley said. "Field Services gathering and processing businesses benefited from growing QEP Energy and third-party producer volumes and from strong gas-processing margins."
QEP Energy net realized natural gas prices averaged $4.06/Mcf compared to $4.97/Mcf in the 2010 period. Field-level natural gas prices in 2011 were $3.35/Mcf compared to $4.73/Mcf in 2010, a 29% decrease. Natural gas-related derivative settlements increased net revenues $41.9 million in 2011 (71 cents/Mcf) compared to $10.9 million in 2010 (24 cents/Mcf).
Net realized crude oil prices averaged $81.64/bbl, up 23% compared to the 2010 period. Oil-related derivative settlements had no impact on current-year revenues but reduced first quarter 2010 revenues by $2 million. Net crude oil and NGL revenues (including the settlement of crude oil-related derivatives) increased 47% in the first quarter of 2011 to $79.5 million and represented 25% of net realized production revenues.
Net income for the first quarter was $73.2 million (41 cents/share) compared to $78.1 million (44 cents/share) in the 2010 period. Adjusted net income was $53.6 million (30 cents/share) compared to $56.9 million (32 cents/share) in the 2010 period.