NEW YORK (AP) -- Shares of QEP Resources Inc. rose Tuesday after an analyst at BMO Capital Markets wrote that the company may be about to benefit more than investors have realized from its shift away from natural gas and toward oil.
THE SPARK: QEP said last month that it would spend $1.38 billion for oil-producing land in North Dakota. Natural gas has been abundant, so prices have sagged, prompting gas-heavy companies like QEP to look for ways to get in on the oil boom. Denver-based QEP said its latest purchase in North Dakota produces the equivalent of 10,500 barrels of oil per day and holds reserves of 125 million barrels — 81 percent oil, 10 percent gas, and 9 percent natural gas liquids.
On Tuesday, analyst Dan McSpirit initiated coverage of QEP with an "Outperform" rating and a price target of $35 per share.
THE ANALYSIS: Investors may not have fully factored in QEP's new oil assets, McSpirit wrote. Its profit-and-loss statements are still gas-heavy, but "that's beginning to change, perhaps quicker than the market anticipates," he wrote.
SHARE ACTION: Up 88 cents, or 3 percent, to $30.52 in morning trading. The shares have traded between $23.56 and $38.44 over the past 52 weeks.