Raymond James & Associates Analyst Andrew Coleman says QEP Resources Inc (QEP) is a great option for investors looking for a midcap E&P stock. QEP Resources is a 50/50 gas/oil producer that was formerly a part of Questar Corporation (STR).
“In the last few years, since spinning out of Questar, they have repositioned the company adding Bakken and Permian positions, plus divesting Mid-Continent and midstream assets,” Coleman says. “The sale of its midstream business netted the company $2.5 billion in cash, cash that came in the door December 2, 2014.”
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Coleman says the question investors have about most E&Ps right now is how much debt they are carrying on their balance sheets. In contrast, he says QEP Resources has positioned itself well, with one of the best balance sheets in the sector, behind EOG Resources Inc (EOG).
“And [QEP Resources] have over $1 billion of cash on hand,” he says. “Now the question is, do they have an opportunity to be an acquirer of assets that would be strategic fit for them in a market when most of their peers are trying to rein in spending and kind of pay down debt.”
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