U.S. markets open in 5 hours 32 minutes
  • S&P Futures

    3,436.75
    +4.50 (+0.13%)
     
  • Dow Futures

    28,218.00
    +36.00 (+0.13%)
     
  • Nasdaq Futures

    11,650.00
    -10.75 (-0.09%)
     
  • Russell 2000 Futures

    1,617.40
    +2.60 (+0.16%)
     
  • Crude Oil

    41.12
    -0.58 (-1.39%)
     
  • Gold

    1,921.80
    +6.40 (+0.33%)
     
  • Silver

    25.09
    +0.11 (+0.44%)
     
  • EUR/USD

    1.1864
    +0.0035 (+0.30%)
     
  • 10-Yr Bond

    0.7970
    0.0000 (0.00%)
     
  • Vix

    29.37
    +0.19 (+0.65%)
     
  • GBP/USD

    1.3048
    +0.0101 (+0.78%)
     
  • USD/JPY

    105.0270
    -0.4430 (-0.42%)
     
  • BTC-USD

    12,191.08
    +1,134.07 (+10.26%)
     
  • CMC Crypto 200

    245.02
    +6.10 (+2.55%)
     
  • FTSE 100

    5,853.91
    -35.31 (-0.60%)
     
  • Nikkei 225

    23,639.46
    +72.42 (+0.31%)
     

QEP Resources (QEP) to Bring Down CapEx Amid Soft Pricing

Zacks Equity Research
·3 mins read

The recent weakness in commodity prices prompted energy players to rethink strategies as well as reconsider capex cuts. Notably, after abiding by the capital discipline during the crude downturn (from mid-2014 to 2016), energy companies resorted to escalating their capital expenditure since 2017. However, a pullback in commodity prices convinced explorers and producers to take a relatively conservative approach to capex programs again this year. Instead of raising capital outlays, the energy companies are now focusing on optimizing shareholder value.

West Texas Intermediate started the year with a little above $60 per barrel of oil. However, the rally was pretty temporary, with the commodity price plunging to multi-year lows to settle at $31.13 on Mar 9.

Reacting to the sudden oil price slump, QEP Resources, Inc. QEP istaking steps to "rationalize" its planned capital spending for the current year and the next.

Inside the Headlines

Amid the growing crisis, Denver, CO-based QEP Resources reduced its 2020 and 2021 collective capital spending by around $300 million (or 30%).

Notably, the company expects to suspend completion activities in the Permian Basin, beginning early May through no less than the start of the fourth quarter. It also plans to halt its Williston Basin’s refracturing program, effective on the completion of the current projects. The company further plans to discharge drilling rig functioning in the Permian Basin on the completion of its March 2020 activities.

QEP Resources, Inc. Price

 

QEP Resources, Inc. Price
QEP Resources, Inc. Price

QEP Resources, Inc. price | QEP Resources, Inc. Quote

 

Apart from disciplined capital allocation, QEP Resources intends to suspend quarterly dividend worth 2 cents per share. The move will be effective after the payment of the dividend for fourth-quarter 2019 on Mar 20. While this does not come as pleasant news for steady income-oriented investors, it will certainly help the company to boost its financials amid volatile commodity prices.

Moreover, the independent energy player anticipates generating free cash flow of $75 million at $35 per barrel in 2020. Notably, QEP Resources previously expected $100 million of free cash flow at an oil price of $50 a barrel.

Importantly, QEP Resources will not only be aided by the key measures but will also continue to keep tabs on the commodity price movement, further aligning itself with the capex adjustment plans in response to a volatile price scenario.

Zacks Rank & Key Picks

QEP Resources has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Oasis Petroleum Inc. OAS, Apache Corporation APA and FTS International, Inc. FTSI, each currently carrying a Zacks Rank of 2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Apache Corporation (APA) : Free Stock Analysis Report
 
QEP Resources, Inc. (QEP) : Free Stock Analysis Report
 
Oasis Petroleum Inc. (OAS) : Free Stock Analysis Report
 
FTS International, Inc. (FTSI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research