Has QEP Resources Inc (QEP) Become the Perfect Stock?

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Since we looked at QEP Resources last year, the company has dropped a point, with revenue plunging during 2012. The stock has also been stuck in the doldrums, losing about 10% over the past year.

Despite its small size, QEP Resources Inc (NYSE:QEP) has become a recognized player in the red-hot Bakken shale play. Last summer, the company spent a whopping $1.38 billion to acquire 27,600 net acres in the Bakken. The $50,000-per-acre price raised concerns that QEP Resources Inc (NYSE:QEP) may have overpaid, especially since Bakken leader Continental Resources, Inc. (NYSE:CLR) was able to make a similarly sized acquisition for less than $10,000 per acre. But with the land giving QEP 125 million barrels in proved and probable reserves, the economics actually work out reasonably well for QEP, even though fellow Bakken player Kodiak Oil & Gas Corp (USA) (NYSE:KOG) has been trading at a lower valuation based on production and reserves.

More recently, though, QEP has decided to take some of its midstream assets, including gas-gathering facilities in Wyoming and North Dakota, and package them into an initial public offering of units in a newly formed master limited partnership. The move follows a trend that Phillips 66 (NYSE: PSX) helped bring about, with its own midstream MLP expected later this year that will cover pipeline, terminal, rail, and gas-liquids facilities. For QEP, the company hopes to raise $300 million to $400 million to fund operations and reduce debt.

For QEP to improve, it needs to keep up with its trend of emphasizing oil and liquids production over dry gas, at least as long as natural gas prices remain low. If a rebound in nat-gas finally comes, then QEP stands to be one of the biggest beneficiaries.

The article Has QEP Resources Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned.

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