QEP to Heed Jana’s Call for Full Separation of Midstream
QEP Resources Inc. (QEP), the third-worst performer this year among peer U.S. exploration and production companies, will pursue the separation of its natural gas gathering and processing business sought by activist investor Jana Partners LLC.
QEP Field Services Co., a so-called midstream business involved in transporting and treating gas, will be separated along with the company’s interest in QEP Midstream Partners LP (QEPM), a master-limited partnership formed in August, Denver-based QEP said today in a statement. Timing of the moves are uncertain, the company said.
“This is a big win for all shareholders and we stand ready to assist QEP as they turn to reviewing which means of separation will generate the greatest value,” Barry Rosenstein, managing partner at New York-based Jana, said today in an e-mail.
Activist shareholders from Rosenstein to Carl Icahn have agitated for management or strategic changes this year at energy companies that have failed to realize the value of a U.S. oil and gas renaissance. Icahn announced Oct. 7 that he had taken a 6 percent stake in Canadian oil and gas producer Talisman Energy Inc.
QEP released the announcement after the close of trading on North American markets, where the shares rose as much as 8.5 percent to $35.07 at 4:10 p.m. Before the disclosure, QEP had rallied 4 percent since Jana’s Oct. 21 announcement that the hedge fund had boosted its stake and was seeking a breakup. QEP is the third-worst performer this year among peer energy producers on the Standard & Poor’s 500 Oil & Gas Exploration and Production Index.
Jana, which has pushed for breakups and other changes at four energy companies since 2011, last month sent a letter to QEP’s board calling for the company to completely separate the midstream business to reverse its “chronic underperformance for shareholders.”
Greg Benson, a QEP spokesman, didn’t immediately return a call and e-mail seeking comment.