Questar Corp. (STR) and QEP Resources Inc. (QEP) have successfully split into two autonomous, publicly traded companies, effective June 30. The spin-off was first announced in April and was approved by the board of directors of Questar about two weeks back.
 
Each Questar shareholder was allotted one common share of QEP for every share of Questar held as of June 18, along with a pro-rata distribution of partial shares of stock.
 
Following the spin-off, QEP Resources started trading on the New York Stock Exchange (“NYSE”) under the symbol ‘QEP’. The newly formed company comprises QEP Energy Company (previously Questar Exploration and Production), QEP Field Services (formerly Questar Gas Management), and QEP Marketing Company (the former Questar Energy Trading). The company is headquartered in Denver, Colorado.
 
As an independent company, QEP will fully focus on exploration and production (“E&P”) to develop a high-quality, yet low-cost asset portfolio. With the same management and technical teams, QEP is on track to generate high shareholder value.
 
On the other hand, the Utah-based Questar Corp. will solely operate as a natural gas-focused energy company with subsidiaries Wexpro Company, Questar Pipeline Company and Questar Gas Company.
 
We remain optimistic about the post spin-off scenario considering that the two companies will now benefit from the increased exposure in their segregated market segments. With double digit production and reserves growth rate, we expect QEP to emerge as one of the best-positioned E&P companies in the industry.
 
Driven by the strong growth prospects of the Wexpro Company, Questar Pipeline, and Questar Gas Company, Questar will drive a high growth rate over the next five years. However, we remain concerned about the company over the short term, given that it will likely take some time to absorb the outcome of the spin-off and the unstable natural gas fundamentals.
 
Therefore, supporting the Zacks #3 Rank (Hold) rating, we hold on to our Neutral recommendation on the stock.  
 
Read the full analyst report on “STR”
Read the full analyst report on “QEP”
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