Energy
Why MLP Sale Signals Better Energy Market Than Price Indicates
Published:
Last Updated:
Emerging from this transaction, we believe QEP is well positioned to compete throughout all commodity market cycles as a result of our strong balance sheet, our focused portfolio of both crude oil and natural gas assets and our relentless commitment to creating value for our shareholders.
In other words, in these troubled times for oil prices, QEP has shed an asset it created just 18 months ago in order to pump up its balance sheet and, perhaps, beef up its paltry $0.02 per quarter dividend. QEP Midstream pays a distribution of $0.30 per common unit per quarter (dividend yield of 7.5%).
Low crude oil prices will hit many small independent exploration and production companies like QEP hard. Investors, a notoriously impatient bunch, may not be willing to take losses until crude prices rise again, so the oil companies need to do something to make themselves attractive to investors. Dividends are an easy way to do that.
QEP had 180.1 million shares outstanding at the end of the third quarter, which will cost them about $3.6 million in quarterly dividends at $0.02 per share. In the third quarter, the company identified income from discontinued operations, including QEP Midstream, of $34.1 million, as well as net income from discontinued operations of $17.4 million and earnings of $0.10 per diluted share from discontinued operations.
Adding $2.5 billion to QEP’s balance sheet could allow the company to boost dividends by a factor of five and still maintain enough cash to make both acquisitions and capital expenditures as needed to maintain market share. It is like OPEC on a smaller scale.
QEP stock closed at $21.25 on Tuesday and jumped to $21.61 in early Wednesday trading. The stock’s 52-week range is $19.80 to $35.91.
ALSO READ: Analysts Pick MLPs Insulated From Low Oil Prices
The #1 Thing to Do Before You Claim Social Security (Sponsor)
Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.
A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
