QEP Resources Reports Second Quarter 2013 Financial and Operating Results

  QEP Resources Reports Second Quarter 2013 Financial and Operating Results

Business Wire

DENVER -- July 31, 2013

QEP Resources, Inc. (NYSE: QEP) ("QEP" or the "Company") today reported second
quarter 2013 financial and operating results. The Company reported net income
during the second quarter 2013 of $178.4 million, or $0.99 per diluted share,
compared to a net loss of $0.7 million, or no earnings per diluted share, in
the second quarter 2012. Net income or loss includes non-cash gains and losses
associated with the change in the fair value of derivative instruments, gains
and losses from asset sales, non-cash price-related impairment charges, a loss
from early extinguishment of debt, certain significant accrued litigation loss
contingencies, and the income tax effect of each of these items. Excluding
these items, the Company’s Adjusted Net Income (a non-GAAP measure) was $62.8
million, or $0.34 per diluted share, for the second quarter 2013, compared to
$54.6 million, or $0.31 per diluted share, for the comparable 2012 period. The
higher Adjusted Net Income was due primarily to higher oil production and
improved natural gas prices offset by lower midstream NGL revenue and higher
depreciation, depletion and amortization and other expenses in the second
quarter 2013 compared to 2012.

Adjusted EBITDA (a non-GAAP measure) for the second quarter 2013 was $389.5
million, compared to $336.9 million in the second quarter 2012, a 16%
increase. The definition of Adjusted EBITDA and reconciliations of Adjusted
EBITDA and Adjusted Net Income to net income are provided within the financial
tables of this release.

Second Quarter 2013 Highlights

  *QEP Energy's crude oil production increased 82% over the second quarter
    2012 to a record 2.4 million barrels.
  *Crude oil and NGL comprised 27% of QEP Energy's production compared to 20%
    in the second quarter 2012.
  *QEP Field Services' fee-based processing revenue increased 10% compared to
    the second quarter 2012.
  *On May 9, 2013, QEP filed a registration statement with the U.S.
    Securities and Exchange Commission (SEC) in anticipation of a proposed
    initial public offering of limited partner interests in QEP Midstream
    Partners, LP ("QEPM"), a wholly owned subsidiary of QEP Resources, Inc.
    See the discussion below^* regarding QEPM and the registration statement.

“The second quarter was one of steady progress at QEP,” commented Chuck
Stanley, Chairman, President and CEO of QEP Resources. “We continued to
increase activity in the Williston Basin and brought on 15 new operated wells
in the quarter. Individual well performance has been in line with or ahead of
expectations, and we continue to make progress on lowering well costs. Crude
oil volumes increased 82% from the second quarter 2012 and 12% from the prior
quarter to a new record level. Crude oil and NGL volumes represented 27% of
total production in the quarter, up 2% from the first quarter of 2013 and 7%
from the prior year quarter, and crude oil comprised over 18% of production
compared to less than 10% in the second quarter of 2012. Through steady
execution we remain on track to deliver crude oil volume growth of at least
70% in 2013.

“We continue to make progress on the rationalization of our upstream portfolio
with two asset sales now closed and a purchase and sale agreement signed for a
third group of assets," continued Stanley. "Combined gross proceeds from these
three sales are expected to be over $200 million. Despite these asset sales,
our production guidance for 2013 remains unchanged from last quarter.

“QEP Field Services delivered improved financial results compared to the first
quarter. Gathering margin improved 10% from the prior quarter on increased
revenue and lower costs. Fee-based processing revenue increased 18% from the
prior quarter due primarily to the startup of the Iron Horse II cryogenic
processing plant in the first quarter and a seasonal increase in volumes in
Pinedale. We have commissioned the 10,000 barrel-per-day expansion of our NGL
fractionator at Blacks Fork and are finishing construction of the related rail
loading facility expansion,” concluded Stanley.

QEP Financial Results Summary


Adjusted EBITDA by Subsidiary^(1)
             Three Months Ended                    Six Months Ended
                June 30,                               June 30,                        
                2013        2012        Change      2013        2012        Change
                (in millions)
QEP             $ 332.1       $ 266.2       25   %      $ 655.8       $ 534.0       23  %
Energy
QEP Field       58.3          70.1          (17  )%     111.5         153.0         (27 )%
Services
QEP
Marketing       (0.9    )     0.6          (250 )%     (2.8    )     0.6          —   %
and
Resources
Adjusted        $ 389.5      $ 336.9      16   %      $ 764.5      $ 687.6      11  %
EBITDA
                                                                                    
^(1) See attached schedule for reconciliations of Adjusted EBITDA to net income by
subsidiary.
                                                                                        

QEP Energy

  *Total net equivalent natural gas, crude oil and NGL production decreased
    2% to 77.9 Bcfe in the second quarter 2013 compared to 79.6 Bcfe in 2012.
    Compared to the second quarter 2012, crude oil production increased 82%
    due primarily to growth in the Williston Basin while natural gas
    production decreased 11% due entirely to declining Haynesville production.
    NGL volumes decreased 14% from the second quarter 2012 as a result of
    ethane rejection (where ethane is not recovered from the production stream
    as an NGL but is instead sold as natural gas).
  *Adjusted EBITDA increased 25% compared to the second quarter 2012, driven
    by increases in oil production volumes and 9%, 8% and 11% increases in the
    net realized price for natural gas, oil and NGL, respectively.
  *Crude oil and NGL revenues increased 66% compared to the second quarter
    2012 and represented approximately 54% of field-level production revenues.
  *QEP Energy's capital investment (on an accrual basis) for the first six
    months of 2013 was $697.1 million including $22.0 million of reserve and
    leasehold acquisitions.
  *As announced previously, in June 2013 QEP Energy sold its interest in
    several non-core oil and gas properties located in the Northern Region for
    total cash proceeds of $139.7 million and a pre-tax gain on sale of $102.5
    million in the second quarter 2013, subject to post-closing adjustments.
  *Slides with maps and other supporting materials for the second quarter
    2013 results referred to in this release are posted on the Company’s
    website at www.qepres.com.

QEP Field Services

  *QEP Field Services’ Adjusted EBITDA decreased 17% in the second quarter
    2013 compared to the prior-year period, due primarily to lower processing
    margins driven by weaker NGL component prices, higher natural gas prices,
    a 28% decrease in NGL sales volumes as a result of ethane rejection and a
    16% decrease in natural gas gathering volumes as a result of declining dry
    gas production volumes on its Haynesville gathering system.
  *QEP Field Services' capital investment (on an accrual basis) for the first
    half of 2013 totaled $30.1 million.

QEP 2013 Guidance

QEP Resources has revised its full-year 2013 guidance due to changes in
commodity prices. The guidance incorporates commodity price derivative
positions in place on the date of this release, assumes ethane rejection for
all of 2013, and includes other assumptions summarized in the table below:


Guidance and Assumptions
                                     2013
                                        Current Forecast    Previous
                                                              Forecast
                                        (Adjusted EBITDA and capital
                                        investments
                                        shown in millions)
QEP Resources Adjusted EBITDA^(1)       $1,600 - $1,675       $1,575 - $1,675
QEP Energy capital investment           $1,480 - $1,580       $1,480 - $1,580
QEP Field Services capital              $90                   $120
investment
QEP Marketing capital investment        $1                    $1
QEP Resources corporate capital         $24                   $24
investment
Total QEP Resources capital             $1,595 - $1,695       $1,625 - $1,725
investment
QEP Energy production - Bcfe            315 - 320             315 - 320
NYMEX gas price per MMBtu^(2)           $3.50 - $4.00         $3.75 - $4.50
NYMEX crude oil price per bbl^(2)       $95.00 - $105.00      $85.00 - $95.00
NYMEX/Rockies basis differential        $0.25 - $0.20         $0.25 - $0.20
per MMBtu^(2)
NYMEX/Midcontinent basis                $0.20 - $0.15         $0.20 - $0.15
differential per MMBtu^(2)
                                        

           Due to the forward-looking nature of this non-GAAP financial
           measure for future periods, information to reconcile it to the most
^(1)    directly comparable GAAP financial measure is not available at this
           time, as management is unable to project special items or
           mark-to-market adjustments for future periods.
           
           Prices for remaining 2013 forecast volumes that are not protected
^(2)       by commodity price derivative contracts. See attached schedule at
           the end of this release for a summary of Commodity Derivative
           Positions in place on the date of this release.
           

Operations Summary

QEP Energy

Williston Basin: Continued growth in crude oil production on 116,000 net acre
Bakken/Three Forks leasehold

QEP Energy's Bakken/Three Forks net production averaged 20.4 MBoed during the
second quarter 2013. The Company completed and turned to sales15 operated
wells, including six wells in South Antelope and nine wells within the Fort
Berthold Reservation during the second quarter. The Fort Berthold Reservation
completions included the second pod of five wells on the Independence Point
ten-well pad (two Three Forks and three Bakken, average working interest 76%)
and an additional four-well pad (two Three Forks and two Bakken, average
working interest 90%). The South Antelope completions included the first long
lateral Bakken wells completed on the Company's South Antelope
operated-acreage (two Three Forks and four Bakken, average working interest
95%). The cost and performance of these wells are consistent with or better
than our expectations.

The Company also participated in 18 outside-operated Bakken or Three Forks
wells that were completed and turned to sales during the second quarter
(average working interest 6%).

At the end of the second quarter, QEP Energy was conducting drilling
operations on eight separate drilling pads (six in the South Antelope and two
within the Fort Berthold Reservation). In addition, QEP had eleven operated
wells waiting on completion (average working interest 90%). The Company also
had interests in 10 outside-operated wells being drilled (average working
interest 3%) and 28 outside-operated wells waiting on completion (average
working interest 4%) at the end of the second quarter.

Slides 6-8 depict QEP Energy's acreage and activity in the Bakken/Three Forks
play.

Pinedale Anticline: 110 new well completions expected in 2013

During the second quarter 2013, QEP Energy's Pinedale net production averaged
254 MMcfed, of which 13% was oil and NGL. In response to the decline in ethane
prices, QEP Energy began rejecting ethane from Pinedale production on December
1, 2012. While ethane rejection results in 7 - 8% less natural gas equivalent
sales volumes, it has a negligible impact on gross revenues at current ethane
prices. The processing margins for Pinedale propane and heavier NGL components
remain positive.

QEP Energy has completed and turned to sales 57 new Pinedale wells (average
working interest 74%) through the end of the second quarter. QEP Energy
suspends Pinedale completion operations during the coldest months of the
winter, generally from December to mid-March. At the end of the second
quarter, the Company had 55 Pinedale wells with QEP working interests drilled,
cased and awaiting completion.

Drilling and completion efficiencies have allowed QEP Energy to maintain
industry-leading average gross completed well costs of approximately $4.2
million per well at Pinedale. Year to date 2013, drill times from spud to
total depth averaged 11.8 days compared to an average of 12.8 days in 2012.

At the end of the second quarter, QEP Energy had four rigs operating at
Pinedale (including one rig working in an area where QEP Energy is the
operator but owns only a small overriding royalty interest). The Company
currently expects to complete a total of approximately 110 wells during 2013,
including 29 wells in the area in which QEP Energy is the designated operator
but owns only a small overriding royalty interest.

Please refer to slides 9-10 for additional details on the Company's Pinedale
operations.

Uinta Basin: Continued development drilling in the liquids-rich Lower
Mesaverde Play

During the second quarter 2013, Uinta Basin net production averaged 76 MMcfed
of which 33 MMcfed was from the Lower Mesaverde play. In response to the
decline in ethane prices, QEP Energy commenced rejecting ethane from Uinta
Basin gas production in the fourth quarter 2012. Ethane rejection results in 7
- 8% less natural gas equivalent sales volumes but has only a negligible
impact on gross revenues at current ethane prices. Processing margins for
propane and heavier NGL components remain positive.

QEP Energy commenced development drilling on “Pinedale-style” multi-well pads
in the Lower Mesaverde play during the fourth quarter 2012 and initially plans
to drill 20-acre density development wells. The pads and wellbore geometries
are designed to allow for possible future 10-acre density development wells.
Data from the first two pods of eight wells each will be analyzed to ascertain
the reserve potential of tighter, 10-acre density development. Average
measured depth for a typical Lower Mesaverde well is approximately 11,000
feet.

The Company had one operated drilling rig working in the Lower Mesaverde play
and had 70 producing wells in the play, nine of which were completed and
turned to sales during the second quarter (100% working interest). QEP Energy
has over 3,200 potential remaining locations in this significant liquids-rich
gas resource play.

In addition to Lower Mesaverde activity, at the end of the second quarter the
Company had one rig drilling horizontal and vertical wells targeting multiple
crude oil-bearing limestone and sandstone reservoirs in the Lower Green River
Formation, at an average true vertical depth of 5,500 feet. During the second
quarter, QEP Energy completed four Company-operated horizontal oil wells in
the Uinta Basin (average working interest 50%).

Slides 11-12 depict QEP Energy's acreage and additional details of the Lower
Mesaverde play.

Woodford “Cana”: Currently drilling 80-acre density development wells in the
liquids-rich core of the play

QEP Energy's net production from the Woodford “Cana” play averaged 77 MMcfed
during the second quarter 2013. During the second quarter, QEP Energy
completed eight operated wells in the play (average working interest 75%).

QEP has a working interest in 37 outside-operated wells that were drilling or
awaiting completion at the end of the second quarter (working interests
ranging from less than 1% to 37%).

Slide 13 depicts QEP Energy's acreage and additional details of the Cana play.

Granite Wash: Horizontal development in the Texas Panhandle

QEP Energy's net production from the Texas Panhandle Granite Wash play
averaged 37 MMcfed during the second quarter 2013. During the quarter, QEP
Energy completed two operated wells in the play (one Granite Wash “A”
Formation and one Kansas City “B” Formation, average working interest 86%).
QEP Energy also participated in four outside-operated horizontal well
completions in the Lansing, Kansas City and Caldwell Formations, average
working interest 4%). At the end of the second quarter the Company had one
operated Kansas City “B” Formation horizontal well waiting on completion
(working interest 100%). The company has one operated drilling rig in the play
that was moving between locations at the end of second quarter.

See slide 14 for details on the Granite Wash play.

Haynesville: No operated drilling activity in the Haynesville Shale play of NW
Louisiana

The Company's Haynesville/Cotton Valley net production averaged 206 MMcfed
during the second quarter 2013.

In response to low natural gas prices, QEP Energy released its last operated
drilling rig in the Haynesville play in July 2012 and deferred completion of
the last five wells drilled until the first quarter 2013 (average working
interest 48%). No horizontal Haynesville wells were completed in the second
quarter 2013. QEP has a working interest in seven outside-operated Haynesville
wells that were drilling over the end of the second quarter (average working
interest 12%).

Refer to slide 15 for additional information on QEP Energy's Haynesville play.

QEP Field Services

QEP Field Services' Adjusted EBITDA declined 17% from the second quarter 2012
due primarily to lower keep-whole processing margin as a result of lower NGL
prices and higher natural gas prices. Compared to the prior quarter, Adjusted
EBITDA increased 7% in the second quarter as a result of higher processing
margin due primarily to the startup of the Iron Horse II cryogenic gas
processing plant and higher gathering margin due primarily to an increase in
volumes at Pinedale. Approximately 80% of QEP Field Services' second quarter
2013 net operating revenue was derived from fee-based gathering and processing
activities compared to 78% in the second quarter 2012.

Processing margin (total processing plant revenues less plant shrink,
transportation, fractionation, and operating expenses) was $29.8 million in
the second quarter 2013 compared to $33.1 million in the second quarter 2012,
a 10% decrease. Revenue from fee-based processing activity increased by 10%,
or $1.8 million, in the second quarter 2013 compared to the second quarter
2012 due primarily to the startup of the Iron Horse II cryogenic gas
processing plant. Second quarter 2013 results were negatively impacted by a
24% decrease in keep-whole processing margin (NGL sales revenues less shrink,
transportation and fractionation expenses), due primarily to weaker NGL
component prices, higher natural gas prices and lower NGL sales volumes as a
result of ethane rejection.

Gathering margin (total gathering revenues less gathering related operating
expenses) was $41.3 million in the second quarter 2013 compared to $46.8
million in the second quarter 2012, a 12% decrease, due primarily to a 16%
decline in gathering volumes resulting from a 48% reduction in northwest
Louisiana Haynesville gathering volumes between the two periods.

Commissioning and startup of QEP Field Services' 10,000 barrel per day NGL
fractionation facility expansion at QEP's Blacks Fork facility in southwest
Wyoming commenced during the last week of June 2013. With the new facility
fully operational, NGL fractionation capacity at Blacks Fork is now 15,000
barrels per day. To support this expansion, QEP is also doubling existing
railcar loading capacity at Blacks Fork to facilitate access to what are often
higher-value local, regional, and national NGL markets. The new railcar
loading capacity is expected to be complete during the third quarter 2013.

^* The registration statement for the initial public offering of QEPM has not
yet become effective. The limited partnership interests of QEPM may not be
sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. The registration statement is available on the
SEC's website at http://www.sec.gov under the registrant's name, “QEP
Midstream Partners, LP.” This press release shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
limited partner interests in QEPM in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state or jurisdiction.

Second Quarter 2013 Results Conference Call

QEP Resources’ management will discuss second quarter 2013 results in a
conference call on Thursday, August 1, 2013, beginning at 9:00 a.m. EST. The
conference call can be accessed at www.qepres.com. You may also participate in
the conference call by dialing (877) 869-3847 in the U.S. or Canada and (201)
689-8261 for international calls. A replay of the teleconference will be
available on the website immediately after the call through August 31, 2013,
or by dialing (877) 660-6853 in the U.S. or Canada and (201) 612-7415 for
international calls, and then entering the conference ID # 417349. In
addition, QEP’s slides for the second quarter 2013, with updated maps showing
QEP’s leasehold and current activity for key operating areas discussed in this
release, can be found on the Company’s website.

About QEP Resources, Inc.

QEP Resources, Inc. (NYSE: QEP) is a leading independent natural gas and crude
oil exploration and production company focused in two major regions: the
Northern Region (primarily in the Rockies and the Williston Basin) and the
Southern Region (primarily Oklahoma, the Texas Panhandle, and Louisiana) of
the United States. QEP Resources also gathers, compresses, treats, processes
and stores natural gas. For more information, visit QEP Resources’ website at:
www.qepres.com.

Forward-Looking Statements

This release includes forward-looking statements within the meaning of Section
27(a) of the Securities Act of 1933, as amended, and Section 21(e) of the
Securities Exchange Act of 1934, as amended. Forward-looking statements can be
identified by words such as “anticipates,” “believes,” “forecasts,” “plans,”
“estimates,” “expects,” “should,” “will” or other similar expressions. Such
statements are based on management’s current expectations, estimates and
projections, which are subject to a wide range of uncertainties and business
risks. These forward-looking statements include statements regarding:
forecasted Adjusted EBITDA, production and capital investment for 2013 and
related assumptions for such guidance; ability to deliver oil volume growth;
plans to drill and complete wells; estimated average gross completed well
costs and ability to reduce well costs; estimated reserves; average estimated
ultimate recoveries per well and strong well performance; completion dates and
capacity for new projects of QEP Field Services; remaining locations to drill
wells; ethane rejection and its impact; successful completion of asset sales
and proceeds from such sales; successful completion of the initial public
offering of QEPM; and plans to double railcar loading capacity. Actual results
may differ materially from those included in the forward-looking statements
due to a number of factors, including, but not limited to: the availability of
capital; global geopolitical and macroeconomic factors; general economic
conditions, including interest rates; changes in local, regional, national and
global demand for natural gas, oil and NGL; natural gas, NGL and oil prices;
impact of new laws and regulations, including regulations regarding the use of
hydraulic fracture stimulation and the implementation of the Dodd-Frank Act;
elimination of federal income tax deductions for oil and gas exploration and
development; drilling results; shortages of oilfield equipment, services and
personnel; operating risks such as unexpected drilling conditions; weather
conditions; changes in maintenance and construction costs and possible
inflationary pressures; permitting delays; the availability and cost of
credit; outcome of contingencies such as legal proceedings; inability to
successfully integrate acquired assets; purchase price adjustments relating to
asset sales; risks relating to the securities markets generally; the impact of
adverse market conditions affecting QEP's business; fluctuations in processing
margins; unexpected changes in costs for constructing, modifying or operating
midstream facilities; lack of, or disruptions in, adequate and reliable
transportation for QEP's products; limited access to capital or significantly
higher cost of capital related to illiquidity or uncertainty in the domestic
or international financial markets; inadequate supplies of water and/or lack
of water disposal sources; and the other risks discussed in the Company’s
periodic filings with the Securities and Exchange Commission, including the
Risk Factors section of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2012. QEP Resources undertakes no obligation to publicly
correct or update the forward-looking statements in this news release, in
other documents, or on the website to reflect future events or circumstances.
All such statements are expressly qualified by this cautionary statement.

Disclosures regarding Estimated Ultimate Recovery (EUR)

The Securities and Exchange Commission requires oil and gas companies, in
their filings with the SEC, to disclose proved reserves that a company has
demonstrated by actual production or through reliable technology to be
economically and legally producible at specific prices and existing economic
and operating conditions. The SEC permits optional disclosure of probable and
possible reserves, however QEP has made no such disclosures in its filings
with the SEC. QEP uses certain terms in its periodic news releases and other
presentation materials such as “estimated ultimate recovery” or “EUR”,
“resource potential”, and “net resource potential”. These estimates are by
their nature more speculative than estimates of proved, probable or possible
reserves and accordingly are subject to substantially more risks of actually
being realized. The SEC guidelines strictly prohibit QEP from including such
estimates in filings with the SEC. Investors are urged to closely consider the
disclosures about the Company’s reserves in its Annual Report on Form 10-K for
the year ended December 31, 2012, and in other reports on file with the SEC.


QEP RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                        Three Months Ended        Six Months Ended
                           June 30,                    June 30,
                           2013        2012        2013        2012
REVENUES                   (in millions except per share data)
Natural gas sales          $ 218.1     $ 138.9       $ 415.7     $ 300.1
Oil sales                  208.3         107.2         402.5         218.0
NGL sales                  75.3          82.1          143.7         179.5
Gathering,                 42.6          45.8          88.2          95.6
processing and other
Purchased gas, oil         206.7        125.3        397.4        309.3   
and NGL sales
Total Revenues             751.0        499.3        1,447.5      1,102.5 
OPERATING EXPENSES
Purchased gas, oil         207.0         124.9         403.8         313.3
and NGL expense
Lease operating            43.5          40.5          82.4          80.6
expense
Natural gas, oil and
NGL transportation         37.3          40.7          71.3          75.2
and other handling
costs
Gathering,                 23.5          20.6          44.1          44.3
processing and other
General and                40.9          36.8          86.9          72.8
administrative
Production and             39.3          19.4          75.2          44.1
property taxes
Depreciation,
depletion and              249.8         214.4         504.0         413.7
amortization
Exploration expenses       2.6           2.1           7.7           4.1
Impairment                 0.2          55.4         0.2          61.9    
Total Operating            644.1         554.8         1,275.6       1,110.0
Expenses
Net gain from asset        100.4        —            100.2        1.5     
sales
OPERATING INCOME           207.3         (55.5   )     272.1         (6.0    )
(LOSS)
Realized and
unrealized gains on        114.0         82.3          79.4          298.6
derivative contracts
Interest and other         3.1           0.9           5.1           2.6
income
Income from
unconsolidated             1.6           1.4           2.9           3.3
affiliates
Loss from early
extinguishment of          —             (0.6    )     —             (0.6    )
debt
Interest expense           (41.4   )     (28.2   )     (80.8   )     (52.9   )
INCOME BEFORE INCOME       284.6         0.3           278.7         245.0
TAXES
Income tax provision       (104.8  )     (0.1    )     (102.6  )     (88.8   )
NET INCOME                 179.8         0.2           176.1         156.2
Net income
attributable to            (1.4    )     (0.9    )     (2.0    )     (1.7    )
noncontrolling
interest
NET INCOME (LOSS)          $ 178.4      $ (0.7  )     $ 174.1      $ 154.5 
ATTRIBUTABLE TO QEP
                                                                     
Earnings Per Common
Share Attributable
to QEP
Basic total                $ 0.99        $ —           $ 0.97        $ 0.87
Diluted total              $ 0.99        $ —           $ 0.97        $ 0.87
                                                                     
Weighted-average
common shares
outstanding
Used in basic              179.3         177.7         179.1         177.6
calculation
Used in diluted            179.5         177.7         179.4         178.5
calculation
Dividends per common       $ 0.02        $ 0.02        $ 0.04        $ 0.04
share
                                                                             


QEP RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                               June 30,      December 31,
                                                  2013            2012
ASSETS                                            (in millions)
Current Assets
Cash and cash equivalents                         $ 139.7         $  —
Accounts receivable, net                          489.8           387.5
Fair value of derivative contracts                104.1           188.7
Gas, oil and NGL inventories, at lower of         3.8             13.1
average cost or market
Prepaid expenses and other                        49.3            68.0
Deferred income taxes                             6.4            —          
Total Current Assets                              793.1          657.3      
Property, Plant and Equipment (successful
efforts method for gas and oil properties)
Proved properties                                 10,802.2        10,234.3
Unproved properties                               919.8           937.9
Midstream field services                          1,650.5         1,634.9
Marketing and resources                           77.0            64.6
Material and supplies                             62.3           61.9       
Total Property, Plant and Equipment               13,511.8       12,933.6   
Less Accumulated Depreciation, Depletion
and Amortization
Exploration and production                        4,624.8         4,258.1
Midstream field services                          382.1           357.9
Marketing and resources                           21.0           18.1       
Total Accumulated Depreciation, Depletion         5,027.9        4,634.1    
and Amortization
Net Property, Plant and Equipment                 8,483.9        8,299.5    
Investment in unconsolidated affiliates           40.0            41.2
Goodwill                                          59.5            59.5
Fair value of derivative contracts                18.9            4.1
Other noncurrent assets                           51.7           46.9       
TOTAL ASSETS                                      $ 9,447.1      $  9,108.5 
                                                                  
LIABILITIES AND EQUITY
Current Liabilities
Checks outstanding in excess of cash              $ 95.5          $  39.7
balances
Accounts payable and accrued expenses             496.7           643.4
Production and property taxes                     50.7            41.8
Interest payable                                  38.0            36.9
Fair value of derivative contracts                2.5             2.6
Deferred income taxes                             —              5.0        
Total Current Liabilities                         683.4          769.4      
Long-term debt                                    3,405.7         3,206.9
Deferred income taxes                             1,603.3         1,493.5
Asset retirement obligations                      179.9           191.4
Fair value of derivative contracts                —               3.6
Other long-term liabilities                       123.7           130.0
Commitments and contingencies
EQUITY
Common stock - par value $0.01 per share;
500.0 million shares authorized; 179.6            1.8             1.8
million and 178.5 million shares issued,
respectively
Treasury stock - 0.3 million and 0.1              (12.6     )     (3.7       )
million shares, respectively
Additional paid-in capital                        480.8           462.1
Retained earnings                                 2,940.0         2,773.0
Accumulated other comprehensive (loss)            (5.4      )     32.8       
income
Total Common Shareholders' Equity                 3,404.6         3,266.0
Noncontrolling interest                           46.5           47.7       
Total Equity                                      3,451.1        3,313.7    
TOTAL LIABILITIES AND EQUITY                      $ 9,447.1      $  9,108.5 
                                                                             


QEP RESOURCES, INC.
CONSOLIDATED CASH FLOWS
(Unaudited)
                                                    Six Months Ended
                                                       June 30,
                                                       2013        2012
                                                       (in millions)
OPERATING ACTIVITIES
Net income                                             $ 176.1       $ 156.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization               504.0         413.7
Deferred income taxes                                  121.0         77.1
Impairment                                             0.2           61.9
Share-based compensation                               13.2          12.3
Amortization of debt issuance costs and                3.1           2.4
discounts
Dry exploratory well expense                           —             0.1
Net gain from asset sales                              (100.2  )     (1.5    )
Income from unconsolidated affiliates                  (2.9    )     (3.3    )
Distributions from unconsolidated affiliates and       4.1           3.5
other
Non-cash loss on early extinguishment of debt          —             0.1
Unrealized loss (gain) on derivative contracts         1.4           (89.9   )
Changes in operating assets and liabilities            (222.1  )     61.7    
Net Cash Provided by Operating Activities              497.9        694.3   
INVESTING ACTIVITIES
Property acquisitions                                  (22.0   )     (4.0    )
Property, plant and equipment, including dry           (719.9  )     (681.5  )
exploratory well expense
Proceeds from disposition of assets                    143.0         3.6
Other expenditures                                     —            —       
Net Cash Used in Investing Activities                  (598.9  )     (681.9  )
FINANCING ACTIVITIES
Checks outstanding in excess of cash balances          55.8          (29.4   )
Long-term debt issued                                  —             800.0
Long-term debt issuance costs paid                     —             (8.8    )
Long-term debt repaid                                  —             (6.7    )
Proceeds from credit facility                          898.5         194.5
Repayments of credit facility                          (700.0  )     (801.0  )
Treasury stock repurchases                             (7.5    )     (9.8    )
Other capital contributions                            2.9           3.4
Dividends paid                                         (7.2    )     (7.1    )
Excess tax benefit on share-based compensation         1.3           2.0
Distribution to noncontrolling interest                (3.1    )     (3.1    )
Net Cash Provided by Financing Activities              240.7        134.0   
Change in cash and cash equivalents                    139.7         146.4
Beginning cash and cash equivalents                    —            —       
Ending cash and cash equivalents                       139.7        146.4   
                                                                             


QEP RESOURCES, INC.
OPERATIONS BY LINE OF BUSINESS
(Unaudited)
QEP Energy - Production by Region

                      Three Months Ended June 30,    Six Months Ended June 30,
                                                      (in Bcfe)
                         2013       2012       Change     2013      2012      Change
Northern Region
Pinedale                 23.2       23.7       (2  )%     44.9        45.9        (2  )%
Williston Basin          11.1       3.4        226 %      20.1        6.5         209 %
Uinta Basin              7.0        5.9        19  %      12.8        10.5        22  %
Legacy                   3.5       3.1       13  %      7.0        6.8        3   %
Total Northern           44.8      36.1      24  %      84.8       69.7       22  %
Region
Southern Region
Haynesville/Cotton       18.8       30.9       (39 )%     41.1        58.9        (30 )%
Valley
Midcontinent             14.3      12.6      13  %      30.0       25.2       19  %
Total Southern           33.1      43.5      (24 )%     71.1       84.1       (15 )%
Region
Total production         77.9      79.6      (2  )%     155.9      153.8      1   %
                                                                                      


QEP Energy - Total Production

              Three Months Ended June 30,          Six Months Ended June 30,
                 2013        2012        Change     2013        2012        Change
QEP Energy
Production
Volumes
Natural          56.9          64.0          (11 )%     115.4         123.5         (7  )%
gas (Bcf)
Oil (Mbbl)       2,385.2       1,308.0       82  %      4,524.1       2,530.5       79  %
NGL (Mbbl)       1,115.0      1,297.8      (14 )%     2,223.5      2,519.5      (12 )%
Total
production       77.9          79.6          (2  )%     155.9         153.8         1   %
(Bcfe)
Average
daily            855.8         875.1         (2  )%     861.1         845.1         2   %
production
(MMcfe)
                                                                                        


QEP Energy - Prices
               Three Months Ended June 30,          Six Months Ended June 30,
                  2013        2012        Change     2013        2012        Change
Natural gas
(per Mcf)
Average
field-level       $ 3.83        $ 2.17                   $ 3.60        $ 2.43
price
Commodity
derivative        0.44         1.75                    0.61         1.60    
impact
Net
realized          $ 4.27       $ 3.92       9   %      $ 4.21       $ 4.03       4   %
price
Oil (per
bbl)
Average
field-level       $ 87.31       $ 81.90                  $ 88.97       $ 86.14
price
Commodity
derivative        2.68         1.70                    2.55         (0.19   )
impact
Net
realized          $ 89.99      $ 83.60      8   %      $ 91.52      $ 85.95      6   %
price
NGL (per
bbl)
Average
field-level       $ 41.32       $ 35.27                  $ 43.48       $ 37.98
price
Commodity
derivative        —            2.04                    —            1.23    
impact
Net
realized          $ 41.32      $ 37.31      11  %      $ 43.48      $ 39.21      11  %
price
Average net
equivalent
price (per
Mcfe)
Average
field-level       $ 6.07        $ 3.66                   $ 5.87        $ 3.99
price
Commodity
derivative        0.40         1.47                    0.52         1.30    
impact
Net
realized          $ 6.47       $ 5.13       26  %      $ 6.39       $ 5.29       21  %
price
                                                                                         


QEP Energy - Operating Expenses
                 Three Months Ended June 30,        Six Months Ended June 30,
                    2013       2012       Change     2013       2012       Change
                    (per Mcfe)
Depreciation,
depletion and       $ 3.06       $ 2.49       23   %     $ 3.06       $ 2.48       23  %
amortization
Lease
operating           0.59         0.52         13   %     0.56         0.53         6   %
expense
Natural gas,
oil and NGL
transport &         0.76         0.72         6    %     0.74         0.70         6   %
other
handling
costs
Production          0.48        0.23        109  %     0.46        0.27        70  %
taxes
Total
Operating           $ 4.89      $ 3.96      23   %     $ 4.82      $ 3.98      21  %
Expenses
                                                                                       

                                                   
                  Three Months Ended June 30,            Six Months Ended June 30,
                  2013        2012        Change     2013        2012        Change
QEP Field Services Gathering Operating Statistics
Natural gas
gathering
volumes           112.0         133.9         (16 )%     223.3         257.6         (13 )%
(millions
of MMBtu)
Gathering
revenue           $ 0.34        $ 0.34        —   %      $ 0.34        $ 0.34        —   %
(per MMBtu)
                                                                                     
QEP Field Services Gathering Margin (in millions)
Gathering         $ 37.8        $ 45.8        (17 )%     $ 75.4        $ 87.7        (14 )%
Other             13.1          9.3           41  %      23.3          20.6          13  %
Gathering
Gathering         (9.6    )     (8.3    )     16  %      (19.9   )     (17.9   )     11  %
expense
Gathering         $ 41.3       $ 46.8       (12 )%     $ 78.8       $ 90.4       (13 )%
margin
                                                                                     
QEP Field Services Processing Margin (in millions)
NGL sales         $ 29.2        $ 36.3        (20 )%     $ 47.0        $ 83.8        (44 )%
Realized
gains from
commodity         —             3.3           —   %      —             4.4           —   %
derivative
contract
settlements
Processing
(fee-based)       19.4          17.6          10  %      35.8          33.6          7   %
revenues
Other
processing        —             —             —   %      4.9           3.0           63  %
revenues
Processing        (4.1    )     (3.7    )     11  %      (8.2    )     (7.4    )     11  %
expense
Processing
plant fuel        (9.3    )     (8.4    )     11  %      (15.2   )     (18.5   )     (18 )%
and shrink
expense
Natural
gas, oil
and NGL
transport &       (5.4    )     (12.0   )     (55 )%     (8.2    )     (20.8   )     (61 )%
other
handling
costs
Processing        $ 29.8       $ 33.1       (10 )%     $ 56.1       $ 78.1       (28 )%
margin
Keep-whole
processing        $ 14.5        $ 19.2        (24 )%     $ 23.6        $ 48.9        (52 )%
margin^(1)
                                                                                     
QEP Field Services Processing Operating Statistics
Natural gas
processing
volumes
NGL sales         708.8         985.3         (28 )%     1,049.9       2,062.0       (49 )%
(MBbls)
Average net
realized
NGL sales         $ 41.21       $ 40.22       2   %      $ 44.82       $ 42.76       5   %
price (per
Bbl)^(2)
Total
fee-based
processing        65.5          64.5          2   %      119.2         124.2         (4  )%
volumes (in
millions of
MMBtu)
Average
fee-based
processing        $ 0.30        $ 0.27        11  %      $ 0.30        $ 0.27        11  %
revenue
(per MMBtu)
                                                                                     

           Keep-whole processing margin is calculated as NGL sales less
^(1)    processing plant fuel and shrink, natural gas, oil and NGL
           transportation & other handling costs.
           Average net realized NGL sales price per barrel is calculated as
^(2)       NGL sales including realized gains from commodity derivative
           contracts settlements divided by NGL sales volumes.
           

QEP RESOURCES, INC.
NON-GAAP MEASURES
(Unaudited)

This release contains references to the non-GAAP measure of Adjusted EBITDA.
Management defines Adjusted EBITDA as net income before the following items:
unrealized gains and losses on derivative contracts, gains and losses from
asset sales, interest and other income, income taxes or benefit, interest
expense, depreciation, depletion, and amortization, impairment, exploration
expense, loss on early extinguishment of debt and certain significant accrued
litigation loss contingencies. Management uses Adjusted EBITDA to assess the
Company's operating results. Management believes Adjusted EBITDA is an
important measure of the Company's cash flow and liquidity and its ability to
incur and service debt, fund capital expenditures and make distributions to
shareholders and is an important measure for comparing the Company's financial
performance to other gas and oil producing companies.

The following tables reconcile QEP Resources’ and its subsidiaries’ net income
to Adjusted EBITDA:

                                                           
                                       QEP Field     QEP
                                                     Marketing &
                        QEP Energy     Services      Resources       QEP
                                                                     Resources
Three Months
Ended June 30,          (in millions)
2013
Net income
attributable to         $  142.1       $ 26.4        $   9.9         $ 178.4
QEP
Unrealized gains
on derivative           (78.1    )     —             (5.8      )     (83.9   )
contracts
Net (gain) loss         (100.5   )     0.1           —               (100.4  )
from asset sales
Interest and            (3.2     )     —             0.1             (3.1    )
other income
Income tax              82.1           15.1          7.6             104.8
provision
Interest expense        48.9           5.3           (12.8     )     41.4
Depreciation,
depletion and           238.0          11.4          0.1             249.5
amortization^(1)
Impairment              0.2            —             —               0.2
Exploration             2.6           —            —              2.6     
expenses
Adjusted EBITDA         $  332.1      $ 58.3       $   (0.9  )     $ 389.5 
                                                                     
Three Months
Ended June 30,
2012
Net (loss) income
attributable to         $  (30.3 )     $ 33.3        $   (3.7  )     $ (0.7  )
QEP
Unrealized losses
(gains) on              34.9           (1.5    )     5.0             38.4
derivative
contracts
Interest and            (0.7     )     (0.1    )     (0.1      )     (0.9    )
other income
Income tax
(benefit)               (16.6    )     19.2          (2.5      )     0.1
provision
Interest expense        23.4           3.6           1.2             28.2
Loss on early
extinguishment of       —              —             0.6             0.6
debt
Depreciation,
depletion and           198.0          15.6          0.1             213.7
amortization^(1)
Impairment              55.4           —             —               55.4
Exploration             2.1           —            —              2.1     
expenses
Adjusted EBITDA         $  266.2      $ 70.1       $   0.6        $ 336.9 
                                                                     
Six Months Ended
June 30, 2013
Net income
attributable to         $  112.3       $ 48.0        $   13.8        $ 174.1
QEP
Unrealized losses
(gains) on              5.9            —             (4.5      )     1.4
derivative
contracts
Net (gain) loss         (100.6   )     0.4           —               (100.2  )
from asset sales
Interest and            (4.9     )     (0.3    )     0.1             (5.1    )
other income
Income tax              64.9           27.6          10.1            102.6
provision
Interest expense        94.2           9.3           (22.7     )     80.8
Depreciation,
depletion and           476.1          26.5          0.4             503.0
amortization^(1)
Impairment              0.2            —             —               0.2
Exploration             7.7           —            —              7.7     
expenses
Adjusted EBITDA         $  655.8      $ 111.5      $   (2.8  )     $ 764.5 
                                                                     
Six Months Ended
June 30, 2012
Net income (loss)
attributable to         $  77.8        $ 78.7        $   (2.0  )     $ 154.5
QEP
Unrealized
(gains) losses on       (88.8    )     (4.5    )     3.4             (89.9   )
derivative
contracts
Net gain from           (1.5     )     —             —               (1.5    )
asset sales
Interest and            (2.4     )     (0.1    )     (0.1      )     (2.6    )
other income
Income tax
provision               47.7           42.7          (1.6      )     88.8
(benefit)
Interest expense        47.0           5.9           —               52.9
Accrued
litigation loss         6.5            —             —               6.5
contingency^(2)
Loss on early
extinguishment of       —              —             0.6             0.6
debt
Depreciation,
depletion and           381.7          30.3          0.3             412.3
amortization^(1)
Impairment              61.9           —             —               61.9
Exploration             4.1           —            —              4.1     
expenses
Adjusted EBITDA         $  534.0      $ 153.0      $   0.6        $ 687.6 
                                                                     

           Excludes the noncontrolling interest's 22% share, or $0.3 million
           and $0.7 million during the three months ended June 30, 2013 and
^(1)    2012, respectively, and $1.0 million and $1.4 million during the
           six months ended June 30, 2013 and 2012, respectively, of
           depreciation, depletion and amortization attributable to Rendezvous
           Gas Services, L.L.C.
^(2)       Includes certain significant litigation contingency items for the
           six months ended June 30, 2012.
           

This release also contains references to the non-GAAP measure of Adjusted Net
Income. Management defines Adjusted Net Income as earnings excluding gains and
losses from asset sales, unrealized gains and losses on derivative contracts,
certain significant accrued litigation loss contingencies, and non-cash
price-related asset impairments. Management believes Adjusted Net Income is an
important measure of the Company’s operational performance relative to other
gas and oil producing companies.

The following table reconciles net income attributable to QEP Resources’ to
Adjusted Net Income:

                                                 
                        Three Months Ended June        Six Months Ended June
                        30,                            30,
                        2013            2012       2013        2012
                        (in millions, except per earnings per share)
Net (loss) income
attributable to         $  178.4        $ (0.7 )     $ 174.1     $ 154.5
QEP
Adjustments to
net income
Net gain from           (100.4    )       —            (100.2  )     (1.5    )
asset sales
Income taxes on
net gain on asset       37.4              —            37.3          0.6
sales
Unrealized loss
(gain) on               (83.9     )       38.4         1.4           (89.9   )
derivative
contracts
Income taxes on
unrealized loss
(gain) on               31.3              (14.2  )     (0.4    )     33.5
derivative
contracts
Accrued
litigation loss         —                 —            —             6.5
contingency^(1)
Income taxes on
accrued                 —                 —            —             (2.4    )
litigation loss
contingency
Loss on early
extinguishment of       —                 0.6          —             0.6
debt
Income taxes on
loss from early         —                 (0.2   )     —             (0.2    )
extinguishment of
debt
Non-cash
price-related           —                 48.9         —             49.3
impairment charge
Income taxes on
non-cash                —                (18.2  )     —            (18.3   )
price-related
impairment charge
Total after-tax
adjustments to          (115.6    )       55.3        (61.9   )     (21.8   )
net income
Adjusted net
income                  $  62.8          $ 54.6      $ 112.2      $ 132.7 
attributable to
QEP Resources
                                                                     
Earnings per
Common Share
attributable to
QEP
Diluted earnings        $  0.99           $ —          $ 0.97        $ 0.87
per share
Diluted after-tax
adjustments to          (0.65     )       0.31        (0.35   )     (0.13   )
net income per
share
Diluted Adjusted
Net Income per          $  0.34          $ 0.31      $ 0.62       $ 0.74  
share
                                                                     
Weighted-average
common shares
outstanding
Diluted^(2)             179.5             178.6        179.4         178.5
                                                                     
Weighted-average common shares outstanding diluted Non-GAAP reconciliation^(2)
Weighted-average
common shares
outstanding used                          177.7
in GAAP diluted
calculation
Potential number
of shares
issuable upon
exercise of
in-the-money                              0.9    
stock options
under the
long-term stock
incentive plan
Weighted-average
common shares
outstanding used                          178.6  
in Non- GAAP
diluted
calculation
                                                                     

^(1)    Includes certain significant litigation contingency items for the
           six months ended June 30, 2012.
           The three months ended June 30, 2012, diluted common shares
           outstanding for purposes of calculating Diluted Adjusted Net Income
           per share include potential increases in shares that could result
^(2)       from the exercise of in-the-money stock options. These potential
           shares are excluded for the three months ended June 30, 2012, in
           calculating earnings-per-share for GAAP purposes, because the
           effect is antidilutive due to the Company's net loss for GAAP
           purposes.
           

The following table presents open 2013 derivative positions as of July 26,
2013:


QEP Energy Commodity Derivative Positions

                                         Total        Weighted-Average
                                                              Price
Year          Type of           Index          Volumes        per Unit
              Contract
                                               (in
                                               millions)
Natural                                        (MMBtu)
gas
2013          Swap              IFNPCR^(1)     31.8           $     5.49
2013          Swap              NYMEX          25.4           $     3.81
2014          Swap              IFNPCR^(1)     32.9           $     4.00
2014          Swap              NYMEX          25.6           $     4.19
Crude oil                                      (Bbls)
2013          Swap              NYMEX WTI      3.6            $     98.28
2013          Swap              BRENT ICE      0.2            $     107.80
2014          Swap              NYMEX WTI      8.0            $     93.29


^(1)    IFNPCR - Inside FERC monthly settlement index for the Northwest
           Pipeline Corp. Rocky Mountains.
           


QEP Marketing Commodity Derivative Positions

                                         Total        Weighted-Average
                                                              Price
Year                  Type of       Index      Volumes        per MMBtu
                      Contract
                                               (in
                                               millions)
Natural gas sales                              (MMBtu)
2013                  Swap          IFNPCR     2.0            $      3.81
2014                  Swap          IFNPCR     1.1           $      3.84
Natural gas                                    (MMBtu)
purchases
2013                  Swap          IFNPCR     1.7            $      3.56
2014                  Swap          GDKERN     0.2            $      3.53
2014                  Swap          IFNPCR     0.2            $      3.82
                                                                     

Contact:

QEP Resources, Inc.
Greg Bensen, 303-405-6665
Director, Investor Relations