Questar Signs MoU with ALT – Analyst Blog

Questar Transportation Services Company (“QTS”), a subsidiary of Questar Corporation (STR), has signed a memorandum of understanding (“MoU”) with Applied LNG Technologies LLC (“ALT”). As per the agreement, both the companies will jointly look for new market opportunities for liquefied natural gas (“LNG”) in the Rockies.

This deal will enable QTS and ALT to broaden the market exposure of LNG products and services in the transportation and manufacturing sectors in the Rockies. The business strategies have been designed to increase net-to-the-well prices of the Rockies’ producers supplying gas to the market.

The MoU paves the way for ALT and QTS to operate jointly with Rockies gas producers to develop LNG projects. These projects are expected to provide large fleet owners and industrial customers with domestically produced, eco friendly fuel at a much lesser cost than that of gasoline or diesel.

We remain optimistic about this promising collaboration that brings together two eminent natural gas providers. The deal will be beneficial in satisfying the growing demand of gas from various American intermodal transportation and rail companies and industrial consumers of propane and oil.

Questar Transportation Services is engaged in providing natural gas midstream field services, including gas gathering and processing. California based ALT is a subsidiary of Applied Natural Gas Fuels Inc. and produces and distributes industrial grade LNG to the West Coast and Southwest.

We continue to appreciate Questar Corporation’s strong upstream asset base, robust margins, attractive hedges and low cost structure. The company’s recent spin-off into two separate entities is expected to further enhance shareholder value.

However, due to the expected bearish natural gas fundamentals and uncertain macro backdrop over the next few quarters, we maintain our Neutral recommendation on Questar Corporation in the long run. This is supported by the short term Zacks # 3 Rank (Hold).