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If Questar Corp. is right, Utah consumers may want to brace themselves to pay more next year for the natural gas they use to heat their homes.
The company, the parent of Questar Gas, over the past year curtailed some of its natural-gas production due to low prices. But, based on its belief that prices will increase next year, the corporation is turning that production back up.
"We are gearing up to deliver strong production growth in 2010 and beyond," Questar Corp. top executive Keith Rattie said Thursday in a conference call with investors and securities analysts.
For the time being, last year's decline in the price of natural gas means that Utah consumers who are Questar Gas customers will be paying about $12 less per month for their natural gas this winter compared with last year.
But that all may change in 2010 if Questar Corp. is right.
Securities analyst Rebecca Followill, at Tudor, Pickering, Holt & Co. Securities Inc. in Houston, said in a research note that Questar's projection that it will increase natural-gas production 12 percent to 15 percent annually for the next five years is "impressive."
For its third quarter, Questar reported net income of $98.2 million, or 56 cents per share, down 52 percent from the same quarter a year ago. For the first nine months of 2009, Questar reported net income of $243.3 million, down 57 percent from $562.6 million in the same period a year earlier.
Questar, though,
"We got through the first nine months [of 2009] in pretty good shape," he said. "We throttled back on capital spending, and our balance sheet remains strong with plenty of liquidity to execute our capital [growth] plan in 2010."
Included in those plans for 2010 is a major investment in Questar Gas, the company subsidiary that provides most Utahns with the natural gas used to heat their homes.
That help for the state-regulated utility subsidiary includes an infusion of approximately $130 million next year to help it replace aging natural-gas feeder lines to many of the neighborhoods it serves.
"We always have some of that kind of work going on," said Darren Shepherd, spokesman for Questar Gas. "But this coming year will represent a major effort as we replace some of the older parts of our system."
Shepherd said some of the company's feeder lines are 70 years old.
"They were refurbished in the '60s and '70s, but now it is time to begin replacing them to ensure that we can continue to safely deliver natural gas to our customers," he said, indicating that effort is expected to continue well past 2010.
The gas company serves approximately 888,000 customers in Utah, Wyoming and parts of Idaho. It reported a loss of $8.1 million for the third quarter ended Sept. 30, but net income of $21.7 million in the first nine months of the year.
The board of directors of Questar Corp. this week approved an increase in the company's quarterly dividend from 12.5 cents to 13 cents per share. The dividend will be paid on Dec. 14 to owners of the company's stock whose names are listed on Questar's list of shareholders on Nov. 20.
The payment is the company's 260th consecutive dividend without a reduction. Questar has increased its dividend 36 times in the past 37 years.
