Independent oil and gas company QEP Resources Inc. (NYSE: QEP) said after markets closed on Tuesday that it had completed the $2.5 billion sale of all its ownership interests in QEP Midstream Partners L.P. (NYSE: QEPM) to Tesoro Logistics L.P. (NYSE: TLLP). QEP’s CEO said:

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.

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