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QEP Resources Rallies 40% Post Elliott's Acquisition Proposal

Zacks Equity Research

QEP Resources, Inc. QEP rallied 40.3% post an acquisition proposal from shareholder Elliott Management Corp.

Elliott has expressed plans of taking over all outstanding shares of the upstream energy player for a consideration of $8.75 a share, which is at 44% premium to the stock’s closing price on Jan 4.

Elliott added that it agrees to acquire QEP Resources provided the company will complete the divestment of its Haynesville assets. On Nov 19, the company signed an agreement to divest Haynesville shale play-based natural gas and oil producing acres and supportive gathering properties for $735 million. The sale of its Haynesville operations reflects QEP Resources’ aim to become a Permian pure-play operator.

Since, QEP Resources is boosting its proportions of oil in total production, exclusive Permian operations will be rewarding given the prolific basin’s low breakeven oil price.

Elliott supports QEP Resources’ move to become a pure-play Permian firm but believes that those constructive efforts are yet to get reflected in the company’s stock price. This is the reason QEP Resources is significantly undervalued and hence the acquisition of the firm will boost shareholders’ value, added Elliott.

QEP Resources, Inc. Price


QEP Resources, Inc. Price | QEP Resources, Inc. Quote

Headquartered in Denver, CO, QEP Resources is a leading oil and natural gas explorator and producer with presence in prolific U.S. basins.  

Currently, the stock carries a Zacks Rank #3 (Hold). Meanwhile, prospective players in the energy space that are worth considering are Unit Corporation UNT, Bonanza Creek Energy, Inc. BCEI and TC PipeLines, LP TCP. While TC PipeLines carries a Zacks Rank #2 (Buy), Bonanza and Unit sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.    

TC PipeLines beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 15.6%.

Bonanza will likely post earnings growth of 57.3% through 2019.

Unit Corp surpassed the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 21.3%.

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