Independent exploration and production (E&P) company QEP Resources Inc. said Monday it plans to separate its midstream business QEP Field Services Co. as well as its interest in QEP Midstream Partners LP (QEPM), which was formed earlier this year.
The move comes at the behest of activist shareholder Jana Partners LLC, which has urged QEP to break up and has claimed that "numerous partners" are interested in a transaction that would create a standalone midstream business (see Daily GPI, Nov. 14).
"...[T]he company concluded that the separation of QEP Field Services from QEP creates a number of significant advantages..." The separation, the company said:
- Allows for the separate valuation of QEP's midstream business, which the company said is not fully recognized in the QEP share price;
- Allows each business to independently deploy resources and allocate capital according to its strategy; and
- Permits each business to compete more effectively.
The company will be seeking senior managers with midstream experience to run the standalone entity, it said. Various separation alternatives are to be evaluated for their impact on shareholder value. "The company and its advisers are working diligently to determine the path that creates the most value for shareholders and the timing of the consummation of separation is dependent on the path ultimately chosen," QEP said. An update on the separation plans is expected during the first quarter.
QEP Resources is focused on E&P activities in the Rockies and Williston Basin as well as Oklahoma, the Texas Panhandle and Louisiana. It is the majority owner of QEPM and owns 100% of the partnership's general partner.
Separately, another activist shareholder has pushed for changes at DCP Midstream LLC amid multiple deals that have taken place recently in the midstream sector (see Daily GPI, Oct. 28).