QEP_Resources_QEP

Important disclosures appear on the last page of this report.
The Henry Fund
Henry B. Tippie School of Management
Ajay Kaushik Rajagopalan [ajaykaushik-rajagopalan@uiowa.edu]
QEP Resources, Inc. (QEP) November 7, 2016
Energy – Oil and Gas Exploration and Production Stock Rating Hold
Investment Thesis Target Price $16-20
QEP resources is an independent oil and gas company involved in the
exploration, production, and marketing of oil, gas, and natural gas liquids. The
DCF model suggests a 11% upside over the current stock price, but the
uncertainty surrounding the oil and gas prices is the driver for the hold
recommendation.
Drivers of Thesis
 The major assumption that drives the thesis is the futures price curve for
oil and natural gas. Futures contract for oil are ranging between $50-55 per
barrel for year 2020 while those for natural gas are ranging between $3.10
– 3.19 per million cubic feet (Mcf) of gas
 Demand for fossil fuels is expected to grow at 1.33% YoY through 2020 and
supply is expected to keep pace with the demand
 Production costs per Mcf of hydrocarbon (oil and gas) is expected to
decrease from FY 15 levels of $1.10 to $1 by FY 2020.
Risks to Thesis
 Any greater than expected increase in the oil and gas prices in the future
will change the recommendation of the stock from a hold to a buy. If oil
prices were to reach $80-90 a barrel in year 2020, then the upside potential
as compared to the intrinsic value of the stock will increase from 11% to
over 40%.
 Oil producing countries around the world have failed to arrive at any
agreement with regards to production cuts in the future. Any adverse
geopolitical development that impacts supply will drive the stock price
higher
Henry Fund DCF $17.76
Henry Fund DDM $10.35
Relative Multiple $17.84
Price Data
Current Price $16.02
52wk Range $8.54 – 20.96
Consensus 1yr Target $25.00
Key Statistics
Market Cap (B) $4.12
Shares Outstanding (M) 239.56
Institutional Ownership 93.80%
Model Beta 1.44
Dividend Yield 0.0%
Est. 5yr Growth 2.80%
Price/Sales (TTM) 3.01
Price/Sales (FY1) 2.62
EV/Sales 3.53
Price/Book (mrq) 1.20
Profitability
Operating Margin -105.90%
Profit Margin -77.11%
Return on Assets (TTM) -13.20%
Return on Equity (TTM) -30.24%
Earnings Estimates
Year 2013 2014 2015 2016E 2017E 2018E
EPS $0.89 $4.36 $-0.85 $-4.71 $0.28 $0.95
growth 390% -119% -454% 694% 239%
12 Month Performance Company Description
QEP resources is an independent oil and gas
company that is involved in the production,
exploration, and marketing of oil, gas, and
natural gas liquids in the northern and
southern regions of United States. The
principal basins are located in Wyoming,
North Dakota, Utah, Texas, and Louisiana.
The total production volumes for QEP in FY
2015 was 326.8 billion cubic feet equivalent
(Bcfe) and the remaining total proved
resources for QEP is 3620.2 Bcfe.
2.6
0.4
1.1
2.9
0.6 1.0
0
1
2
3
4
P/S EBITDA Margin Production costs
per Mcfe
QEP Industry
Source : Sentieo
-60%
-40%
-20%
0%
20%
N D J F M A M J J A S O
QEP S&P 500

EXECUTIVE SUMMARY
QEP resources is engaged in the exploration, production,
and marketing of oil, gas, and natural gas liquids (NGL). The
profitability of QEP is directly driven by the spot prices for
oil and gas. Oil prices have more than halved from its
historic high levels of $120 a barrel (FY 2012 – 2013) to $45
a barrel as of today. The net margins of QEP have also
declined drastically during this period from 5.84% to -
7.40% as of FY 2015. The futures market for oil indicate a
price range of $50-60 in years 2018 to 2020. Unlike other
E&P companies, QEP enjoyed a healthy interest coverage
ratio of 3.84 in FY 2015 and this is expected to increase to
11.38 by 2020.
The demand for oil worldwide is expected to increase at a
rate 1.33% year over year with no indication of significant
supply reductions during this horizon. This expected
equilibrium in demand and supply is the rationale behind
the assumption that the oil prices are expected to remain
relatively flat. Using the futures prices of oil in the DCF
model calculations suggest a 11% upside on QEP’s stock.
The relatively neutral outlook of the futures market on the
oil prices is the driver for the hold recommendation for the
stock. Any future geopolitical disruption or development
that restricts the supply of oil might lead to the oil prices
breaking the $100 per barrel mark again. QEP’s stock will
be very attractive with a 40% upside in case the price of oil
was to reach $80-90 per barrel. This report believes that a
hold rating would be the most prudent recommendation
for the stock as of today considering the available data and
forecasts regarding the futures prices of oil and gas.
COMPANY DESCRIPTION
QEP resources was founded as Questar market resources
in southwestern Wyoming as an independent natural gas
and oil exploration and production company, in 1922. (1)
With drilling and exploration activities in norther and
southern regions of United States, QEP had estimated
proved reserves of 3602.2 Bcfe at the end of FY 2015, of
which 2844 Bcfe were in the northern region while the rest
were in the southern region. In addition to exploration and
production, QEP also has a marketing arm that focuses on
markets in the Rocky Mountains and the Mid-continent.
While QEP has scaled down most of its marketing and
storage activities, it still is fulfilling contracts related to
natural gas storage activities and the contracts related to
the Haynesville gathering system.
Revenue Decomposition
Source: FY 2015 10K (2)
Oil and gas sales represent nearly 75% of total sales.
Marketing segment, represented by the purchased gas, oil,
and NGL sales comprises of nearly 30% of the revenue. This
is expected to decrease drastically during the forecast
horizon due to QEP scaling back its marketing operations.
This scaling back has also resulted in gathering, processing,
and other revenues to constitute 0% of the total revenues.
Since QEP’s operations are limited to United States, no
geographical distribution of revenue was deemed
necessary.
Another facet of revenue composition that was studied
was the quarterly revenue decomposition. The chart
below represents the forecasted quarterly revenue
decomposition in 2016.
23.21%
41.33%3.96%
0.75%
0.00%
30.75%
Revenue Decomposition FY 2015
Gas sales
Oil sales
Natural gas liquids ("NGL") sales
Other revenues
Gathering, processing & other revenues
Purchased gas, oil & NGL sales

Source: Q1 and Q2 16 10-Q (3)
Since the revenues of QEP are essentially tied to the
quantity (volume) of oil and gas produced, we studied the
production breakdown across the various energy sources
in FY 2015.
Source: 10-K (2)
After weighing in the proved reserves available and the
expected prices of oil and gas in the futures market, the
forecasted production levels in 2020 are:
Source: HF Estimates
The expected production levels in 2020 as compared to the
2015 levels represents a CAGR of 1.78%. This is line with
the expected increase in demand of 1-2% during the
forecast horizon.
The chart below shows the breakups by production by
region.
Source: 10- K (2)
As seen in the graph, QEP produces more from the
northern regions (nearly 78%) of the total production and
this directly impacts the top line of QEP resources as the
average hydrocarbon price for hydrocarbons produced in
the northern region is lesser than that of the hydrocarbons
produced in the southern region. This will be explored
further in the future sections of this report.
SWOT Analysis
Q1 Q2 Q3 Q4 E
Purchased gas, oil &
NGL sales
6.31% 7.34% 9.23% 10.18%
Other revenues 0.88% 0.00% 0.65% 0.35%
Natural gas liquids
("NGL") sales
5.20% 6.83% 5.18% 6.60%
Oil sales 55.03% 62.24% 52.72% 50.37%
Gas sales 32.57% 23.73% 32.22% 32.49%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Quarterly revenue decomposition -
2016
181.10
117.49
28.23
Volume Produced (Bcfe) - FY 2015
Gas Oil Natural Gas Liquids
199.46
130.30
27.10
Volume Produced (Bcfe) - FY 20 E
Gas Oil NGL
0
50
100
150
200
250
300
Northern Region Southern Region
Production Breakdown by Regions
(Bcfe) - FY 2015
Gas - Bcfe Oil - Bcfe NGL- Bcfe

Source: HF Research
A SWOT analysis was considered imperative to understand
the internal factors that would impact the top line stability
and sustainability of bottom line profitability. With so
much exposure to the oil prices and no implicit hedging
built in due to the lack of refining capacities, it becomes
imperative for QEP to have a strict control on their costs to
ensure continued profitability. One of the aspects of
controlling costs is to expand to profitable areas of drilling
(generally southern basins, as they are closer to refineries)
and this can be done through acquisitions. The expansion
of QEP resources to Permian basin (Texas) in 2014. The
basin exposure will be discussed in the following sub
sections.
Basins in the Northern Region
Source: 10-K (2)
Hydrocarbon Average Price
Gas (per Mcf) $2.58
Oil (per bbl) $41.78
NGL (per bbl) $18.06
Source: 10- K (2)
The average price of oil produced in the northern regions
is sold for a price that is 11% lesser than the price of oil in
the southern region. The closest refineries for the oil
produced in the northern region are in Wyoming. Due to
the lack of pipelines to transport the crude oil to the
refineries, significant railroad transportation costs are
incurred and these costs push the average prices
downwards.
Basins in the Southern Region
Source: 10-K (2)
Hydrocarbon Average Price
Gas (per Mcf) $2.60
Oil (per bbl) $47.16
NGL (per bbl) $12.49
Source: 10-K (2)
According to JP Morgan’s research report, there are
speculations that QEP is planning to sell its Pinedale
acreage and use to proceeds to expand their presence in
the Permian Basin. Considering that the price of oil in the
Permian basin is 11% higher than that of the oil produced
in the northern region, such an acquisition will directly
Strength:
Strong reserve
base
Weakness:
Concentrated to
United States and
exposure to North
Dakota
Opportunity:
M&A of smaller
operators and
growing demand
for natural gas
Threat :
High price
volatility of oil and
gas that severly
impacts revenue
0.00
50.00
100.00
150.00
Pinedale Williston Uinta Other
Northern
Production volumes per basin (FY
15)
Gas Volumes - Bcfe Oil Volumes - Bcfe
NGL Volumes - Bcfe
0
10
20
30
40
50
Haynesville/Cotton
Valley
Permian Basin Midcontinent
Production volumes per basin (FY
15)
Gas-Bcfe Oil-Bcfe NGL-Bcfe

impact the top line by an equal measure. This is one of the
major keys to monitor for QEP resources.
Variable Cost Decomposition
The two major variable costs associated with exploration
and production are leasehold operating expenses and
property and production taxes.
Source: 10-K (2)
The costs shown above have been assumed as the costs
that would be incurred during the forecast horizon. As the
expected production during the forecast horizon is
expected to remain flat (1.78% CAGR through 2020), we
believe that assuming a similar cost structure would be a
reasonable assumption. However, sensitivity analyses
were performed to understand the impact of increasing
variable costs on the intrinsic value of the stock. These
sensitivities have been discussed in detail in the valuation
section of this report.
RECENT DEVELOPMENTS
Recent Earnings and Future Estimate
Source: Bloomberg (4)
The management of QEP resources does not provide
guidance for either sales or for earnings. The analyst
consensus estimate has been used as a proxy for
comparing the sales and earnings number used in the
Henry Fund DCF model. The fundamental difference in the
analyst consensus estimates and the HF estimates are
driven by the difference in the expected production of
natural gas liquids. Due to the flat nature of the NGL prices,
the model assumes production levels for NGL similar to
that of FY 16 Q1 and Q2 levels. This difference in top line
flows down to the bottom line thereby creating a
discrepancy in the HF expectations for EPS as compared to
the analyst estimates.
0.66
0.35
0.97
0.35
0
0.2
0.4
0.6
0.8
1
1.2
Leasehold Operating Expense
(per Mcfe)
Property and production
taxes
Variable cost decomposition - FY
2015
Northern Region Southern Region
1.40
-5.55
1.46
-4.71
-6.00
-4.00
-2.00
0.00
2.00
Revenue (billions) EPS (GAAP)
Annual Estimates (FY 16E)
Anaysts Consensus FY 16 (Mean)
Henry Fund Forecast FY 16
-15.00%
-10.00%
-5.00%
0.00%
0
100
200
300
400
Revenues (m)
Quarterly Results in 2016 - Sales
Q1 Q2 Surprise - Q1 Surprise - Q2

The volatility in the oil and gas prices as well as the
impairment expense recognized by writing down assets
resulted in the FY 2016 being a sub-par year for QEP
resources. The -700% surprise history in GAAP EPS in Q1
16 was directly attributable to the write-down of assets.
The write down of assets will result in a decreased
depreciation expense going forward and this has been
incorporated in the DCF model. The Q4 estimates
according to the DCF model indicate revenue to be slightly
above the consensus estimate, which then trickles down
to the bottom line as well.
Northern Midland Permian Basin Acquisition
QEP resources acquired additional crude oil properties in
the northern midland basin that increased its acreage by
9400acres in the Permian basin region. The acquisition was
made for an aggregate purchase price of $24.1 million.
This additional increase in acreage in the southern United
States will help QEP generate crude oil and other
hydrocarbons that get a higher price in the oil spot market
at Cushing Oklahoma. (5)
Recapitalization - New Equity Offering
In March 2016, QEP issued 37.95 million additional shares
of common stock that infused capital worth $368.6 million.
The management of QEP stated in its Q1 earnings call that
it intends to use the cash proceeds to service its debt
obligations and for general operational purposes.
The impact of the recapitalization on the leverage ratio
during the forecast horizon has been shown in the graph
above.
INDUSTRY TRENDS
Futures Price of Natural Gas
One of the major drivers of revenue in the exploration and
production industry is the price of natural gas in the
market. The major revenue driver assumption is the
futures price of natural gas. NYMEX:NG has been used as
the proxy to assign the futures price of natural gas.
Source: NYMEX:NG Quotes (6)
-800.00%
-700.00%
-600.00%
-500.00%
-400.00%
-300.00%
-200.00%
-100.00%
0.00%
-8
-7
-6
-5
-4
-3
-2
-1
0
EPS- GAAP
Quarterly Results in 2016 - EPS
Q1 Q2 Surprise-Q1 Surprise-Q2
56.20% 56.43% 55.28%
48.56%
45.44%
39.12%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
2015 2016E 2017E 2018E 2019E 2020E
Debt/Equity Ratio
Debt/Equity Ratio
Gas Futures - per Mcf ($)
FY 16 - Q3 2.75
FY 16 -Q4 3.15
FY 17 - Q1 3.23
FY 17 - Q2 3.09
FY 17 - Q3 3.12
FY 17 - Q4 3.3
FY 18 3.09
FY 19 3.01
FY 20 3.17
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Gas Futures ($) : NYMEX:NG

As seen in the graph above, the futures price for natural
gas is expected to remain relatively flat through the
forecast horizon.
Futures Price of Oil
The futures price of oil was plotted based on the futures
contracts of Crude Oil WTI.
Source: WTI Futures (7)
As seen in the graph above, the futures price of oil is
expected to increase from current levels of $43.32 to
$56.67 in FY 2020. This represents a 31% increase in oil
price from current levels to FY 2020 levels.
Increasing Production of Natural Gas in US
Source: Statista (8)
The chart above represents the growth rate of natural gas
production by source. The shale gas revolution in the US
made US the largest natural gas producer in the world. The
production of natural gas from shale gas is expected to
grow at 19% YoY from 2000 to 2020. As of FY 2015, natural
gas accounted for 32% of total E&P revenue.
Oil Futures - per bbl ($)
FY 16 - Q3 48.72
FY 16 -Q4 48.42
FY 17 - Q1 50.21
FY 17 - Q2 51.45
FY 17 - Q3 52.01
FY 17 - Q4 52.54
FY 18 54.01
FY 19 55.00
FY 20 56.67
44.00
46.00
48.00
50.00
52.00
54.00
56.00
58.00
Oil Futures ($) : WTI Crude
-10%
-5%
0%
5%
10%
15%
20%
0.
2.
4.
6.
8.
10.
12.
Alaska Coalbed
methane
Lower
48
offshore
Lower
48
onshore
Tight gas Shale
gas
Gas Production in Trillion Cubic
Feet
2000 2020* CAGR Growth
1,000
1,184 1,252
1,379
1,519 1,582
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2015 2020 2025 2030 2035 2040
Natural Gas Electricity Generation -
US (billion KiloWattHours)
Natural Gas Electricity Generation (billion KWH)

The YoY growth rate in the chart above is 1.64% and this
indicates a steady uptick in the production of natural gas
due to the positive correlation between electricity
generation and production volumes. The 2016 US
presidential election results and the uncertainty over the
preference for coal for the production of electricity is an
important key to monitor going forward. Encouragement
to coal powered energy generation will subdue the
demand for natural gas and hence impact the production
volume.
MARKETS AND COMPETITION
The global oil and gas E&P industry is in a mature stage of
its life cycle. Within the E&P industry, there are more
technological advancements with regards to the natural
gas exploration as compared to oil exploration. Changes
tend to involve matters of scale rather than shifts in
production. The biggest source of competitive advantage
is the location of the basins where the exploration and
production activities take place. For a company with
exposure to only US based oil and gas basins, competitive
advantage is gained by increasing the operational
efficiency especially in a low oil price environment.
Competitive advantage is also gained by the geography of
the basins. Basins in the southern part of United States are
considered more profitable due to the higher prices that
they command. This is due to the relative ease of refining
the crude oil produced in the south as compared to the
crude oil produced from the norther fields.
Peer Comparisons
Revenue and Price to Sales
This comparison will help understand the revenue
prospects of the peer firms and the relative multiple that
the market is associating for the revenue that will be
generated by the E&P peers. Price to Sales is a more useful
tool to use than Price to Earnings due to the continued
losses reported by the E&P firms. The graph below
represents the peer landscape and the relative standings
of the peers both in terms of revenue and the multiple
associated.
Source: Sentieo Equity Terminal (14)
Southwestern Energy (SWN) is the largest company by
sales among comparable pure US based E&P firms
followed by Newfield Exploration (NFX) and QEP
resources. It can be seen that the forward price to sales
ratio of QEP is about the industry P/S median. NFX and OAS
have higher forward P/S as they have a higher exposure to
the basins in southern part of United States. NFX has far
greater acreage in the Permian basin as compared to the
other E&P players.
Hydrocarbon Reserves Analysis
Peer Proved Resources
(MBOE)
Useful Life
(Yrs.)
NFX 509,000 9.09
SWN 1,035,833 6.36
WPX 583,000 9.48
SM 471,300 7.34
OAS 218,233 11.84
WLL 820,567 13.77
QEP 603,367 11.08
Source: FactSet (15)
The total proved resources indicate the future production
capability of E&P companies. It can be seen in the table
above the QEP and WLL compare favorably in terms of
available resources and the useful life. SWN has the largest
proved resources, but its daily production levels indicate
that they need to be looking out for future basin
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
0
500
1,000
1,500
2,000
2,500
3,000
NFX SWN WPX SM OAS WLL QEP
P/S(17)
Sales(M)
Sales vs Fwd P/S (FY 15)
Sales (M) Industry P/S (FY 17) P/S (FY 17)

acquisitions. This is one of the major reasons for their P/S
ratio being way below to the industry median (as seen in
the chart under the Revenues and Prices to Sales section.
Cost of Production Analysis
Source: FactSet (15)
Cost of production is a very important metric that needs to
be measured for E&P firms as the entire profitability
depends on the operational efficiency. It can be seen the
QEP resources has a mean production cost that is above
the industry median. The production costs of QEP is
expected to drop below the industry median during the
forecast horizon. The current quarter (Q3 16) production
costs are $1 per Mcfe.
EBITDA Margins and Interest Coverage
Source: Sentieo Equity Terminal (14)
Due to the high levels of debt that characterizes the E&P
industry, it is important to study both the EBITDA margins
as well as the EBITDA/Interest Expense ratios. The chart
above represents the relative standing of QEP resources
among its peers. It can be seen that QEP resources falls
below the industry median in terms of the EBITDA margins,
but fares relatively better in terms of the interest coverage
ratio. The EBITDA margins of QEP is expected to settle over
62% by 2020 and this is one of the positive drivers for the
stock. The interest coverage ratio of QEP resources is
expected to settle at 11.38X by the end of FY 2020.
ECONOMIC OUTLOOK
The key economic indicators for exploration and
production industry are demand and supply curves of oil
and natural gas and GDP growth of developed and
emerging market economies. The profitability of E&P
companies is inextricably tied to the price of oil. Another
global trend that needs to be tracked is the growth of clean
energy. The E&P industry is characterized by high leverage
ratios and this makes future trends in interest rates (driven
by Fed Funds rate) another important parameter to track.
Source: eia – Short-Term Energy Outlook, (10)
The graph above shows that the consumption and
production are matching thereby driving the assumption
0.00
0.50
1.00
1.50
2.00
2.50
Production Costs per Mcfe (FY 15)
Production Costs (Mcfe) Median
0
5
10
15
20
25
0.00%
20.00%
40.00%
60.00%
80.00%
InterestCoverage(X)
EBITDAMargins
EBITDA Margins and Interest
Coverage (FY 15)
EBITDA Margins (FY 15) Median EBITDA Margins
Interest Coverage (X)

that the hydrocarbon prices will remain relatively flat to
current day prices.
Source: Global Economic Prospects 2016, World Bank (11)
The graph above shows the expected world GDP in the
near term. The global GDP is expected to grow at 4% while
US is expected to grow at 2%. The GDP forecasts reveal a
relatively flat trend as compared to 2015 and this
translates to a status quo in terms of industrial growth and
energy consumption.
The demand for OPEC oil and the supply is both expected
to grow at 1-2% CAGR through 2040 and this again implies
a steady oil price in the foreseeable future. This leads us to
believe that, barring any geopolitical event that severely
restricts the supply, the price of oil is going to remain in
the $40-60 band.
The final economic aspect considered is the fed funds rate
which eventually drives the interest rate for borrowing.
The Henry Fund team believes that there will be a 25-50
basis point interest rate hike before the end of CY 2016
followed by marginal 25 basis point hikes through 2018.
The team estimates that the fed funds rate will settle at
around 1.25% by CY 2018. This will make debt dearer for
companies. Due to the uncertainty surrounding interest
rate hikes, the impact of increasing cost of debt has been
captured by running sensitivity analysis of the DCF stock
price for varying WACC profiles.
INVESTMENT POSITIVES
• One of the major investment positives is the interest
coverage ratio of 3.84. This makes QEP resources a
relatively stable company in the near term
 QEP resources has acreage in the Permian basin and the
average price of oil in the Permian basin is 11% higher than
the average price of oil commanded by oil producers in the
northern part of United States
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
2013 2014 2015 2016F 2017F 2018F
Real GDP Growth
US China Global
9.5 10.2 10.8 11.5 12.1 12.6
0.
5.
10.
15.
2015 2020E 2025E 2030E 2035E 2040E
OPEC oil demand (in million barrels
per day)
5.7 6.3 7.1 7.9 8.5 90.4 0.4 0.5 0.5 0.5 0.5
31 30.7 32.1 34.7
37.9 40.7
0.
10.
20.
30.
40.
50.
60.
2015 2020E 2025E 2030E 2035E 2040E
OPEC liquids supply (in million
barrels per day)
NGLs* GTLs** Crude

 A $80-90 per barrel scenario for crude oil will increase
the upside of holding the QEP stock from 10% to over 40%.
QEP resources is an excellent E&P stock to own in a rising
oil price scenario
INVESTMENT NEGATIVES
• The credit rating of QEP resources is BB+ that suggests it
vulnerability in the long term. While QEP is expected to
return to profitability by FY 2017 or Q1 2018, a failure to
do so will indicate QEP’s inability to cope with the
headwinds facing the E&P sector
 Oil plummeted from its 2012-2013 historic highs of $120
per barrel to $25 per barrel in Q1 2016. With no
downstream business to provide a natural hedge for oil
price fluctuations, QEP resources stock becomes a
speculative buy
 The 10-11% upside suggested by the DCF model is driven
not only by the expected 25-30% increase in oil prices by
2020, but also a 9% decrease in production costs by 2020.
If the cost cutting measures undertaken by QEP fail to
materialize, then the upside potential will decrease from
11% to 5%
VALUATION
DCF-EP, DDM, relative P/E, and P/S analysis have been
used to value QEP resources. Due to expected negative
earnings in the exploration and production space, P/E
valuation has been disregarded. The prices from various
models has been shown in the graph below.
Source: HF Estimates and Bloomberg
Due to the nature of the DCF model that accounts for the
total residual income of the company, we believe that the
DCF model represents the true intrinsic value of QEP
resources.
The management of QEP resources has stated in the 2015
10-K filing that it will be suspending the cash dividend
payout indefinitely. This has made the DDM model
redundant. However, the DDM model helps in
understanding the theoretical P/E value of the firm leading
into perpetuity. The theoretical P/E value leading into
perpetuity is 10.07, which indicates a relatively fairly
valued firm considering the $55-60 oil price expected in
year 2020 according to the futures market. This P/E
multiple comparison with peers is skewed due to the
expectation that most firms in the E&P space will continue
to report losses through 2020, unless the oil prices
rebound to $80-90 a barrel.
Most of QEP’s peers are expected to report losses in FY
2016 and FY 2017. With the peer space reduced drastically
due to the inability to calculate a price using negative P/E,
P/S approach was used for relative valuation. The graph
below demonstrates the relative standing of QEP in
comparison to its peers in terms of P/S.
Source: HF Estimates and Bloomberg
16.02 17.76
10.35
17.84
24.94
0
10
20
30
Current
Price
DCF-EP -
Stock Price
DDM -
Stock Price
Relative P/S
- Stock Price
Median
Analysts
Estimates
Price (USD)
Price (USD)
-
1.00
2.00
3.00
4.00
5.00
6.00
P/S Trends - Relative Valuation
P/S (16) P/S (17)
Median P/S (16) Median P/S (17)

The relative valuation model suggests that QEP should
trade around $18 a share according to its expected sales
for FY 16. As of 9th
November 2016, QEP is trading at a
12.5% discount to the stock price suggested by the relative
valuation model. There is no means to construct earnings
driven relative valuation model as the earnings of QEP is
expected to be negative in FY 2016. The price suggested by
the relative valuation model is very close to the price
suggested by the DCF-EP model. This leads us to believe
that the QEP stock is trading at a 12.5% discount not only
in relative terms, but also in absolute terms. It should
however be noted that this statement only holds true if
the commodity prices discussed in the industry trends
section hold true.
Short-Term Revenue Growth Assumptions
The short term revenue growth assumptions for individual
segments of QEP resources have been determined by
studying the proved developed and undeveloped capacity
of QEP resources and the expected commodity prices as
suggested by the futures market. The commodity prices
have been discussed in detail in the industry trends section
of this report while the proved resources have been
discussed in the company description section. The major
assumption while coming up with the revenue growth
projections is that a $45-60 barrel of oil scenario would not
see major production increase and hence the proved
reserves can be linearly depleted over the useful life of the
reserves.
YoY revenue growth assumptions (%)
Segment 16E 17E 18E 19E 20E
Gas -4.98 31.89 -1.91 0.01 9.60
Oil -4.39 34.16 6.32 3.38 4.64
NGL 10.27 30.91 -5.43 -3.84 2.54
Other -60.21 16.09 2.83 1.88 6.06
Marketing -79.75 112.98 10.00 10.00 5.00
The short term revenue growth assumptions and its
impact on the total revenue has been shown above. The 5
year CAGR for revenue by factoring in the demand drivers
is estimated to be 2.80%.
Costs and Margins
The major variable costs associated with QEP’s E&P
operations are “leases operating costs” and the
“production and property taxes”. These variable costs
have been explained in detail in the company description
section. One of the major non-cash expense incurred by
E&P companies is the depreciation, depletion, and
amortization cost. These costs impact the bottom line of
companies in the E&P space the most. The chart below will
give a visual representation of the depreciation cost as a
percentage of sales during the forecast horizon.
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
0
500
1000
1500
2000
2500
2015 2016E 2017E 2018E 2019E 2020E
Forecasted Revenue
Forecasted Revenue (M) YoY Change

The chart shown above is only for representation
purposes. The actual expense has been estimated by
following a straight line depreciation of the gross property
plant and equipment. There was an impairment expense
due to the lower oil and gas futures that reduced gross
property plant and equipment by $ 1182 million in FY
2016. This is the reason for the depreciation expense
decreasing as a fraction of sales in the future years.
2016 is expected to witness a huge drop in earnings due to
the impairments of assets due to lowered oil and gas
futures. The positive earnings in future years is expected
to be driven by the top line revenue growth, which in turn
is driven by the expected future value of oil and gas.
Sensitivity analyses run by varying the lease operating
costs and the production and property taxes show that the
stock price is highly sensitive to the variable costs. For
every cent increase in lease operating expense per Mcfe,
the stock price decreases by 0.13 cents. For every cent
increase in property and production taxes per Mcfe, the
stock price decreases by 0.08 cents.
Perpetuity Growth Assumption
The clamor for clean and renewable energy sources as well
as the limited availability of oil dictates the perpetuity
growth assumption of 0.5%. We do not believe that this is
an unreasonable assumption to make considering that
perpetuity growth extends into the indefinite future. In
fact, it would not be unreasonable to assume that there
would not be any E&P companies that survive in
perpetuity.
43.65%
60.52%
29.44%
27.05%
25.16%
22.86%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
2015 2016E 2017E 2018E 2019E 2020E
Depreciation, Amortization , and
Depletion Expense/ Sales (%)
Depreciation, Amortization , and Depletion Expense/ Sales
(%)
-120.00%
-100.00%
-80.00%
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
2015 2016E 2017E 2018E 2019E 2020E
Margins
Operating Margins Net Margins

Valuation Summary
The stock price according to the DCF-EP model is $17.76
and this represents 10.86% upside over the current trading
value. The 1-year consensus median analyst estimates for
QEP is $24. The analyst estimates are driven by the
assumption that oil price would be around $80-90 a barrel
in the next 24-36 months while the DCF model is
predicated upon 24-36 month futures price of $50-60 a
barrel. There is a high level of uncertainty associated with
the future price of oil and the 10-11% upside driven by the
futures prices does not represent an adequate reward for
the risks associated with a high beta E&P stock such as QEP
resources. We believe that a hold recommendation would
be appropriate for QEP resources. In case of any upward
revision in the price of oil in the futures market, the
recommendation for QEP resources will change from a
hold to a buy.
KEYS TO MONITOR/CATALYSTS FOR
GROWTH
Price of Oil/Gas
With over 75% of a fiscal year revenue directly dependent
on oil and gas prices, the most important event to monitor
is the price of oil and gas in the future. A $80-90 price per
barrel of oil will change the recommendation from a hold
to a buy while a $25-30 price per barrel of oil will change
the recommendation to a sell.
Future Acquisitions
There have been speculations that QEP resources is
planning to sell its holdings in the Pinedale basin and
looking to acquire new acreage in the Permian basin. The
average price of oil paid for oil produced in the Permian
basin is 11% higher than the average price of oil paid for
oil produced in the Pinedale region. This again is an
important key to monitor as it one of the major catalysts
for growth.
Interest Rates
The median level of debt to equity in the E&P industry is
1.1x. QEP’s debt to equity ratio stands at 0.6x as of FY
2015. Any increase in the fed funds rate will increase the
costs of borrowing and refinancing of the E&P players and
will negatively impact the profitability. The federal funds
rate announcements need to be monitored closely.
REFERENCES
1. QEP Marketline Report 2015
2. QEP Resources, Inc. sec filings. FY 2015 10-K
3. Q1 and Q2 2016 10-Q of QEP resources
4. Bloomberg Terminal
5. Permian Basin Expansion:
http://www.qepres.com/operations/permian-basin/
6. NYMEX:NG:
http://quotes.ino.com/exchanges/contracts.html?r=N
YMEX_NG
7. WTI Crude Oil:
https://www.barchart.com/futures/quotes/CL*0/all-
futures
8. Natural Gas Production:
https://www-statista-
com.proxy.lib.uiowa.edu/statistics/241661/us-crude-
oil-production-by-source/
9. Natural Gas Electricity Production:
https://www-statista-
com.proxy.lib.uiowa.edu/statistics/192615/natural-
gas-electricity-generation-in-the-us-since-2009/
10. EIA Energy production and consumption balance:
https://www.eia.gov/forecasts/steo/report/global_oil.
cfm
11. World GDP forecasts:
http://pubdocs.worldbank.org/pubdocs/publicdoc/20
16/1/88501452035054522/Global-Economic-
Prospects-January-2016-Table1.pdf
12. OPEC oil demand:
https://www.statista.com/statistics/292593/opecs-oil-
demand-outlook/
13. OPEC oil production:
https://www.statista.com/statistics/292604/total-
opec-liquids-supply-outlook-by-type/
14. Sentieo Edge Equity Terminal
15. FactSet Terminal
IMPORTANT DISCLAIMER
Henry Fund reports are created by student enrolled in the
Applied Securities Management (Henry Fund) program at
the University of Iowa’s Tippie School of Management.
These reports are intended to provide potential employers
and other interested parties an example of the analytical
skills, investment knowledge, and communication abilities
of Henry Fund students. Henry Fund analysts are not
registered investment advisors, brokers or officially
licensed financial professionals. The investment opinion

contained in this report does not represent an offer or
solicitation to buy or sell any of the aforementioned
securities. Unless otherwise noted, facts and figures
included in this report are from publicly available sources.
This report is not a complete compilation of data, and its
accuracy is not guaranteed. From time to time, the
University of Iowa, its faculty, staff, students, or the Henry
Fund may hold a financial interest in the companies
mentioned in this report.

Ticker Symbol (Class A) QEP
Current Share Price $16.02
Current Model Date 11/9/2016
Fiscal Year End Dec. 31
Pre‐Tax Cost of Debt 5.64%
Beta 1.44
Risk‐Free Rate 2.56% (30 Yr Treasury)
Equity Risk Premium 5.00%
CV Growth of NOPLAT 0.50%
CV Growth of EPS 0.50%
Current Dividend Yield 0.00%
Operating cash assumption 2.00%
Marginal Tax Rate 36.50%
WACC 7.60%
Total Shares outstanding 239.61
Dividend growth Rate 0%
DCF Share price $17.76
Upside potential 10.86%
Credit Rating BB+
QEP Resources Inc.
Key Assumptions of Valuation Model

Beta
17.76 1.00 1.10 1.20 1.30 1.44 1.50 1.60 1.70 1.80 1.90 2.00 2.10 2.20
4.00% 26.61 25.14 23.80 22.57 21.03 20.42 19.46 18.58 17.76 16.99 16.28 15.61 14.98
4.25% 25.67 24.20 22.87 21.65 20.12 19.52 18.58 17.71 16.90 16.15 15.45 14.79 14.17
4.50% 24.79 23.32 22.00 20.80 19.28 18.69 17.76 16.90 16.11 15.37 14.68 14.03 13.43
4.75% 23.96 22.50 21.18 19.99 18.50 17.91 16.99 16.15 15.37 14.64 13.96 13.33 12.74
Equity Risk 5.00% 23.17 21.72 20.42 19.24 17.76 17.18 16.28 15.45 14.68 13.96 13.30 12.68 12.09
Premium 5.25% 22.43 20.99 19.70 18.53 17.07 16.50 15.61 14.79 14.03 13.33 12.68 12.07 11.50
5.50% 21.72 20.29 19.01 17.86 16.42 15.85 14.98 14.17 13.43 12.74 12.09 11.50 10.93
5.75% 21.05 19.64 18.37 17.23 15.80 15.25 14.39 13.59 12.86 12.18 11.55 10.96 10.41
6.00% 20.42 19.01 17.76 16.63 15.23 14.68 13.83 13.04 12.32 11.65 11.03 10.46 9.91
6.25% 19.81 18.42 17.18 16.06 14.68 14.14 13.30 12.53 11.82 11.16 10.55 9.98 9.45
6.50% 19.24 17.86 16.63 15.53 14.16 13.62 12.80 12.04 11.34 10.69 10.09 9.53 9.01
6.75% 18.69 17.32 16.11 15.02 13.66 13.14 12.32 11.57 10.89 10.25 9.66 9.11 8.59
Beta
17.76 1.00 1.10 1.20 1.30 1.44 1.50 1.60 1.70 1.80 1.90 2.00 2.10 2.20
0.00% 22.74 21.41 20.20 19.10 17.71 17.16 16.31 15.51 14.77 14.08 13.44 12.84 12.27
0.50% 23.17 21.72 20.42 19.24 17.76 17.18 16.28 15.45 14.68 13.96 13.30 12.68 12.09
1.00% 23.68 22.09 20.67 19.40 17.82 17.20 16.25 15.37 14.57 13.83 13.14 12.50 11.90
1.50% 24.30 22.53 20.97 19.58 17.88 17.22 16.21 15.29 14.45 13.68 12.96 12.30 11.69
CV NOPLAT 2.00% 25.07 23.07 21.33 19.80 17.96 17.25 16.17 15.20 14.31 13.50 12.76 12.08 11.44
Growth 2.50% 26.05 23.74 21.77 20.07 18.05 17.28 16.12 15.09 14.15 13.30 12.53 11.82 11.17
3.00% 27.33 24.61 22.33 20.41 18.16 17.32 16.07 14.95 13.96 13.07 12.26 11.53 10.86
3.50% 29.11 25.76 23.06 20.84 18.30 17.37 16.00 14.79 13.74 12.79 11.95 11.19 10.50
4.00% 31.69 27.38 24.05 21.40 18.48 17.43 15.91 14.60 13.46 12.46 11.58 10.79 10.08
4.50% 35.83 29.81 25.47 22.18 18.71 17.51 15.80 14.36 13.13 12.06 11.13 10.31 9.58
5.00% 43.52 33.88 27.66 23.31 19.04 17.62 15.65 14.04 12.70 11.56 10.59 9.74 8.99
CV NOPLAT Growth
17.76 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
6.50% 21.66 21.97 22.34 22.78 23.32 24.00 24.86 26.02 27.64 30.07 34.11
6.75% 20.65 20.88 21.16 21.49 21.88 22.37 22.99 23.81 24.91 26.51 29.03
7.00% 19.71 19.88 20.07 20.31 20.59 20.93 21.36 21.91 22.64 23.66 25.20
7.25% 18.83 18.94 19.07 19.23 19.41 19.63 19.91 20.25 20.71 21.33 22.22
7.39% 18.36 18.45 18.55 18.66 18.80 18.96 19.17 19.42 19.75 20.19 20.82
7.75% 17.24 17.27 17.29 17.32 17.36 17.41 17.46 17.52 17.61 17.72 17.87
WACC 7.81% 17.07 17.08 17.10 17.12 17.14 17.17 17.20 17.24 17.29 17.36 17.45
8.00% 16.52 16.51 16.50 16.48 16.46 16.44 16.41 16.38 16.34 16.29 16.22
8.25% 15.84 15.80 15.75 15.70 15.63 15.56 15.47 15.36 15.22 15.05 14.83
8.45% 15.33 15.27 15.19 15.11 15.01 14.90 14.77 14.61 14.41 14.17 13.85
8.75% 14.60 14.51 14.41 14.29 14.15 14.00 13.81 13.59 13.33 13.00 12.58
9.00% 14.03 13.92 13.80 13.65 13.49 13.30 13.09 12.83 12.52 12.14 11.66
9.25% 13.49 13.36 13.22 13.06 12.87 12.66 12.41 12.13 11.78 11.36 10.85
9.50% 12.98 12.84 12.68 12.50 12.29 12.06 11.79 11.48 11.11 10.67 10.12
9.75% 12.49 12.34 12.17 11.97 11.75 11.50 11.22 10.88 10.49 10.03 9.47
10.00% 12.03 11.86 11.68 11.47 11.24 10.98 10.68 10.33 9.93 9.45 8.88
Production & Property Taxes
$17.76 0.2 0.25 0.3 0.35 0.4 0.45 0.5 0.55 0.6 0.65 0.7
0.5 20.92 20.52 20.12 19.71 19.31 18.90 18.50 18.09 17.69 17.29 16.88
0.55 20.27 19.87 19.46 19.06 18.66 18.25 17.85 17.44 17.04 16.64 16.23
Lease Operating Expense 0.6 19.62 19.22 18.81 18.41 18.01 17.60 17.20 16.79 16.39 15.99 15.58
0.65 18.97 18.57 18.16 17.76 17.36 16.95 16.55 16.14 15.74 15.33 14.93
0.7 18.32 17.92 17.51 17.11 16.71 16.30 15.90 15.49 15.09 14.68 14.28
0.75 17.67 17.27 16.86 16.46 16.05 15.65 15.25 14.84 14.44 14.03 13.63
0.8 17.02 16.62 16.21 15.81 15.40 15.00 14.60 14.19 13.79 13.38 12.98
0.85 16.37 15.97 15.56 15.16 14.75 14.35 13.95 13.54 13.14 12.73 12.33
0.9 15.72 15.32 14.91 14.51 14.10 13.70 13.30 12.89 12.49 12.08 11.68
0.95 15.07 14.67 14.26 13.86 13.45 13.05 12.64 12.24 11.84 11.43 11.03
1 14.42 14.01 13.61 13.21 12.80 12.40 11.99 11.59 11.19 10.78 10.38
1.05 13.77 13.36 12.96 12.56 12.15 11.75 11.34 10.94 10.54 10.13 9.73
1.1 13.12 12.71 12.31 11.91 11.50 11.10 10.69 10.29 9.89 9.48 9.08
Purchased Oil & Gas Expense
$17.76 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%
0.7 23.79 23.17 22.55 21.93 21.30 20.68 20.06 19.44 18.82 18.20 17.57
0.75 23.14 22.52 21.90 21.28 20.65 20.03 19.41 18.79 18.17 17.54 16.92
0.8 22.49 21.87 21.25 20.63 20.00 19.38 18.76 18.14 17.52 16.89 16.27
0.85 21.84 21.22 20.60 19.98 19.35 18.73 18.11 17.49 16.87 16.24 15.62
Gathering, processing 0.92 20.93 20.31 19.69 19.06 18.44 17.82 17.20 16.58 15.96 15.33 14.71
and handling costs 0.95 20.54 19.92 19.30 18.67 18.05 17.43 16.81 16.19 15.56 14.94 14.32
1 19.89 19.27 18.65 18.02 17.40 16.78 16.16 15.54 14.91 14.29 13.67
1.05 19.24 18.62 18.00 17.37 16.75 16.13 15.51 14.89 14.26 13.64 13.02
1.1 18.59 17.97 17.34 16.72 16.10 15.48 14.86 14.24 13.61 12.99 12.37
1.15 17.94 17.32 16.69 16.07 15.45 14.83 14.21 13.59 12.96 12.34 11.72
1.2 17.29 16.67 16.04 15.42 14.80 14.18 13.56 12.93 12.31 11.69 11.07
Gas Prices ‐2020
$17.76 1 1.2 1.4 1.6 1.8 2 2.2 2.4 2.6 2.8 3 3.2 3.4 3.6 3.8 4 4.2 4.4
20 ‐18.20 ‐17.09 ‐15.97 ‐14.86 ‐13.74 ‐12.63 ‐11.51 ‐10.40 ‐9.28 ‐8.17 ‐7.05 ‐5.94 ‐4.82 ‐3.71 ‐2.59 ‐1.48 ‐0.36 0.75
25 ‐14.95 ‐13.83 ‐12.72 ‐11.60 ‐10.49 ‐9.37 ‐8.26 ‐7.14 ‐6.03 ‐4.91 ‐3.80 ‐2.68 ‐1.56 ‐0.45 0.67 1.78 2.90 4.01
30 ‐11.69 ‐10.57 ‐9.46 ‐8.34 ‐7.23 ‐6.11 ‐5.00 ‐3.88 ‐2.77 ‐1.65 ‐0.54 0.58 1.69 2.81 3.92 5.04 6.15 7.27
35 ‐8.43 ‐7.32 ‐6.20 ‐5.09 ‐3.97 ‐2.86 ‐1.74 ‐0.63 0.49 1.61 2.72 3.84 4.95 6.07 7.18 8.30 9.41 10.53
40 ‐5.17 ‐4.06 ‐2.94 ‐1.83 ‐0.71 0.40 1.52 2.63 3.75 4.86 5.98 7.09 8.21 9.32 10.44 11.55 12.67 13.78
45 ‐1.92 ‐0.80 0.31 1.43 2.54 3.66 4.78 5.89 7.01 8.12 9.24 10.35 11.47 12.58 13.70 14.81 15.93 17.04
50 1.34 2.46 3.57 4.69 5.80 6.92 8.03 9.15 10.26 11.38 12.49 13.61 14.72 15.84 16.95 18.07 19.19 20.30
55 4.60 5.71 6.83 7.95 9.06 10.18 11.29 12.41 13.52 14.64 15.75 16.87 17.98 19.10 20.21 21.33 22.44 23.56
Oil Prices ‐ 2020 60 7.86 8.97 10.09 11.20 12.32 13.43 14.55 15.66 16.78 17.89 19.01 20.12 21.24 22.35 23.47 24.59 25.70 26.82
65 11.11 12.23 13.35 14.46 15.58 16.69 17.81 18.92 20.04 21.15 22.27 23.38 24.50 25.61 26.73 27.84 28.96 30.07
70 14.37 15.49 16.60 17.72 18.83 19.95 21.06 22.18 23.29 24.41 25.52 26.64 27.76 28.87 29.99 31.10 32.22 33.33
75 17.63 18.75 19.86 20.98 22.09 23.21 24.32 25.44 26.55 27.67 28.78 29.90 31.01 32.13 33.24 34.36 35.47 36.59
80 20.89 22.00 23.12 24.23 25.35 26.46 27.58 28.69 29.81 30.93 32.04 33.16 34.27 35.39 36.50 37.62 38.73 39.85
85 24.15 25.26 26.38 27.49 28.61 29.72 30.84 31.95 33.07 34.18 35.30 36.41 37.53 38.64 39.76 40.87 41.99 43.10
90 27.40 28.52 29.63 30.75 31.86 32.98 34.10 35.21 36.33 37.44 38.56 39.67 40.79 41.90 43.02 44.13 45.25 46.36
95 30.66 31.78 32.89 34.01 35.12 36.24 37.35 38.47 39.58 40.70 41.81 42.93 44.04 45.16 46.27 47.39 48.50 49.62
100 33.92 35.03 36.15 37.26 38.38 39.50 40.61 41.73 42.84 43.96 45.07 46.19 47.30 48.42 49.53 50.65 51.76 52.88
105 37.18 38.29 39.41 40.52 41.64 42.75 43.87 44.98 46.10 47.21 48.33 49.44 50.56 51.67 52.79 53.91 55.02 56.14
110 40.43 41.55 42.67 43.78 44.90 46.01 47.13 48.24 49.36 50.47 51.59 52.70 53.82 54.93 56.05 57.16 58.28 59.39
115 43.69 44.81 45.92 47.04 48.15 49.27 50.38 51.50 52.61 53.73 54.84 55.96 57.08 58.19 59.31 60.42 61.54 62.65
120 46.95 48.07 49.18 50.30 51.41 52.53 53.64 54.76 55.87 56.99 58.10 59.22 60.33 61.45 62.56 63.68 64.79 65.91
125 50.21 51.32 52.44 53.55 54.67 55.78 56.90 58.01 59.13 60.25 61.36 62.48 63.59 64.71 65.82 66.94 68.05 69.17
130 53.47 54.58 55.70 56.81 57.93 59.04 60.16 61.27 62.39 63.50 64.62 65.73 66.85 67.96 69.08 70.19 71.31 72.42
135 56.72 57.84 58.95 60.07 61.18 62.30 63.41 64.53 65.65 66.76 67.88 68.99 70.11 71.22 72.34 73.45 74.57 75.68
140 59.98 61.10 62.21 63.33 64.44 65.56 66.67 67.79 68.90 70.02 71.13 72.25 73.36 74.48 75.59 76.71 77.82 78.94

QEP Resources Inc.
Revenue Decomposition
All figures in millions
Fiscal Years Ending Dec. 31 2013 2014 2015 2015 2015 2015 2015 2016 2016 2016E 2016E 2016E 2017E 2017E 2017E 2017E 2017E 2018E 2019E 2020E
Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3E Q4E Annual Q1E Q2E Q3E Q4E Annual
Gas sales 779.00 776.40 122.00 111.90 129.40 105.20 468.50 85.10 79.20 123.20 157.69 445.19 145.19 135.21 141.49 165.25 587.15 575.92 575.98 631.29
Oil sales 916.60 1368.50 178.80 250.40 211.70 193.30 834.20 143.80 207.70 201.60 244.47 797.57 261.08 267.23 268.82 272.87 1070.00 1137.63 1176.09 1230.70
Natural gas liquids ("NGL") sales 294.10 223.30 19.10 26.10 16.50 18.30 80.00 13.60 22.80 19.80 32.02 88.22 28.08 27.34 29.91 30.16 115.49 109.21 105.02 107.70
Other revenues 0.00 11.10 4.40 5.20 2.80 2.70 15.10 2.30 ‐0.50 2.50 1.71 6.01 1.71 1.69 1.73 1.84 6.98 7.17 7.31 7.75
Gathering, processing & other revenues 189.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Purchased gas, oil & NGL sales 757.10 1035.00 167.30 215.00 176.30 62.20 620.80 16.50 24.50 35.3 49.42 125.72 59.30 68.20 65.23 75.02 267.76 294.53 323.99 340.19
Total revenues 2935.80 3414.30 491.60 608.60 536.70 381.70 2018.60 261.30 333.70 382.40 485.31 1462.71 495.36 499.67 507.19 545.15 2047.37 2124.47 2188.38 2317.63
% of Gas sales 26.53% 22.74% 24.82% 18.39% 24.11% 27.56% 23.21% 32.57% 23.73% 32.22% 32.49% 30.44% 29.31% 27.06% 27.90% 30.31% 28.68% 27.11% 26.32% 27.24%
% of Oil sales 31.22% 40.08% 36.37% 41.14% 39.44% 50.64% 41.33% 55.03% 62.24% 52.72% 50.37% 54.53% 52.70% 53.48% 53.00% 50.05% 52.26% 53.55% 53.74% 53.10%
% of Natural gas liquids ("NGL") sales 10.02% 6.54% 3.89% 4.29% 3.07% 4.79% 3.96% 5.20% 6.83% 5.18% 6.60% 6.03% 5.67% 5.47% 5.90% 5.53% 5.64% 5.14% 4.80% 4.65%
% of Other revenues 0.00% 0.33% 0.90% 0.85% 0.52% 0.71% 0.75% 0.88% ‐0.15% 0.65% 0.35% 0.41% 0.35% 0.34% 0.34% 0.34% 0.34% 0.34% 0.33% 0.33%
% of Gathering, processing & other revenues 6.44% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
% of Purchased gas, oil & NGL sales 25.79% 30.31% 34.03% 35.33% 32.85% 16.30% 30.75% 6.31% 7.34% 9.23% 10.18% 8.60% 11.97% 13.65% 12.86% 13.76% 13.08% 13.86% 14.80% 14.68%
% of Total revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
% of Growth, Gas sales 16.72% ‐0.33% N/A ‐8.28% 15.64% ‐18.70% ‐39.66% ‐19.11% ‐6.93% 55.56% 27.99% ‐4.98% ‐7.93% ‐6.87% 4.64% 16.79% 31.89% ‐1.91% 0.01% 9.60%
% of Growth, Oil sales 72.10% 49.30% N/A 40.04% ‐15.46% ‐8.69% ‐39.04% ‐25.61% 44.44% ‐2.94% 21.27% ‐4.39% 6.79% 2.36% 0.60% 1.51% 34.16% 6.32% 3.38% 4.64%
% of Growth, Natural gas liquids ("NGL") sales ‐8.69% ‐24.07% N/A 36.65% ‐36.78% 10.91% ‐64.17% ‐25.68% 67.65% ‐13.16% 61.71% 10.27% ‐12.30% ‐2.63% 9.39% 0.85% 30.91% ‐5.43% ‐3.84% 2.54%
% of Growth, Other revenues N/A N/A N/A 18.18% ‐46.15% ‐3.57% 36.04% ‐14.81% ‐121.74% N/A ‐31.66% ‐60.21% 0.04% ‐1.05% N/A 6.38% 16.09% 2.83% 1.88% 6.06%
% of Growth, Gathering, processing & other revenues 4.07% ‐100.00% N/A N/A N/A N/A N/A N/A N/A 0.00% 0.00% N/A 0.00% 0.00% 0.00% 0.00% N/A 0.00% 0.00% 0.00%
% of Growth, Purchased gas, oil & NGL sales 17.18% 36.71% N/A 28.51% ‐18.00% ‐64.72% ‐40.02% ‐73.47% 48.48% 44.08% 40.00% ‐79.75% 20.00% 15.00% 10.00% 10.00% 112.98% 10.00% 10.00% 5.00%
% of Growth, Total revenues 24.94% 16.30% N/A 23.80% ‐11.81% ‐28.88% ‐40.88% ‐31.54% 27.71% 14.59% 26.91% ‐27.54% 2.07% 0.87% 1.50% 7.48% 39.97% 3.77% 3.01% 5.91%
Production Breakdown:
Gas (Bcf) 218.90 179.30 42.60 44.50 48.00 46.00 181.10 43.40 42.90 46.80 50.06 183.16 44.95 43.76 45.35 50.08 184.14 186.68 191.35 199.46
Oil (Mbbl) 10209.70 17146.50 4481.40 4875.90 5162.10 5062.90 19582.30 5176.40 5209.50 5025.10 5049.00 20460.00 5199.70 5193.98 5168.63 5193.59 20755.89 21063.38 21383.40 21716.98
NGL (Mbbl) 4811.30 6769.10 947.40 1198.00 1286.90 1272.00 4704.30 1365.00 1521.30 1616.50 1558.02 6060.82 1318.50 1257.93 1361.30 1355.38 5293.10 4799.92 4542.99 4516.50
Average Field Level Prices :
Net Gas Price (per Mcf) 4.25 4.24 3.22 3.15 3.17 3.20 3.16 2.46 2.51 2.75 3.15 2.72 3.23 3.09 3.12 3.30 3.19 3.09 3.01 3.17
Net Oil Price (per bbl) 89.56 80.71 61.74 64.58 59.76 61.03 60.65 35.64 43.69 48.72 48.42 44.12 50.21 51.45 52.01 52.54 51.55 54.01 55.00 56.67
NGL (per bbl) 39.95 32.95 20.98 21.68 12.85 17.93 16.98 9.97 14.97 20.51 20.55 16.50 21.30 21.73 21.97 22.25 21.81 22.75 23.12 23.84
Production by Geography for Gas :
Northern Region
Pinedale 80.00 75.00 19.00 21.50 23.00 24.00 87.50 21.70 19.90 21.10 26.30 89.00 22.85 20.53 22.15 27.61 93.13 97.46 101.99 106.72
Williston Basin 2.70 6.60 2.70 3.00 2.80 2.80 11.30 3.20 4.00 4.30 4.30 15.80 3.00 3.23 3.20 3.20 12.63 10.09 8.06 6.44
Uinta Basin 18.60 17.90 4.90 5.70 7.00 5.10 22.70 5.80 6.40 5.70 4.15 22.05 5.45 5.70 6.08 4.43 21.65 21.26 20.87 20.49
Other Northern 10.30 9.30 2.40 2.10 2.40 2.50 9.40 2.00 2.00 2.10 2.19 8.29 2.25 2.13 2.23 2.32 8.92 9.60 10.33 11.11
Southern Region
Haynesville/Cotton Valley 71.80 49.50 11.60 10.30 11.10 10.20 43.20 9.10 9.00 12.10 11.12 41.32 9.65 10.00 10.07 10.33 40.05 38.81 37.62 36.46
Permian Basin 0.00 3.20 0.70 1.20 1.30 1.20 4.40 1.40 1.60 1.30 1.90 6.20 1.55 1.63 1.43 2.09 6.71 7.27 7.86 8.51
Midcontinent 35.50 17.80 1.30 0.70 0.40 0.20 2.60 0.20 0.00 0.20 0.10 0.50 0.20 0.55 0.20 0.10 1.05 2.21 4.63 9.72
Total 218.90 179.30 42.60 44.50 48.00 46.00 181.10 43.40 42.90 46.80 50.06 183.16 44.95 43.76 45.35 50.08 184.14 186.68 191.35 199.46
Production by Geography for Oil :
Northern Region
Pinedale 657.60 632.00 145.50 176.00 190.40 204.70 716.60 176.30 149.50 161.10 233.70 720.60 190.5 162.30 180.23 261.44 794.47 875.91 965.70 1064.69
Williston Basin 7026.20 13130.90 3431.50 3769.20 3915.80 3755.30 14871.80 3718.00 3799.30 3625.50 3476.90 14619.70 3736.65 3758.65 3714.27 3562.03 14771.594 14925.07 15080.13 15236.81
Uinta Basin 924.90 893.30 221.60 202.00 242.40 182.60 848.60 208.30 198.30 190.00 143.13 739.73 195.45 207.55 207.90 156.61 767.51 796.34 826.25 857.28
Other Northern 237.70 200.90 45.10 44.30 43.50 53.60 186.50 36.40 34.10 44.10 54.34 168.94 45.00 39.975 41.90 51.63 178.50 188.61 199.29 210.57
Southern Region
Permian Basin 0.00 1582.20 571.80 628.10 742.70 848.60 2791.20 1019.40 1008.70 989.90 1131.05 4149.05 1014.05 1006.00 1006.00 1149.44 4175.49 4202.11 4228.89 4255.85
Midcontinent 1320.10 671.90 58.10 47.40 17.90 10.60 134.00 11.40 12.30 8.20 4.86 36.76 11.00 11.85 10.63 6.30 39.78 43.05 46.60 50.43
Total 10209.70 17146.50 4481.40 4875.90 5162.10 5062.90 19582.30 5176.40 5209.50 5025.10 5049.00 20460.00 5199.70 5193.98 5168.63 5193.59 20755.89 21063.38 21383.40 21716.98
Production by Geography for NGL :
Northern Region
Pinedale 1787.50 3350.20 313.00 403.80 350.70 461.10 1528.60 402.00 334.10 333.80 438.88 1508.78 431.55 363.23 386.98 508.79 1690.54 1894.21 2122.40 2378.09
Williston Basin 390.00 1010.50 358.80 482.80 588.70 523.10 1953.40 639.50 802.40 920.80 818.19 3180.89 581.3 570.88 638.43 567.28 2357.88 1747.82 1295.59 960.38
Uinta Basin 463.80 679.00 109.40 70.30 59.10 48.80 287.60 44.30 57.30 56.00 46.24 203.84 46.55 70.33 52.38 43.25 212.50 221.52 230.93 240.74
Other Nothern 36.70 14.90 2.70 6.50 4.90 5.50 19.60 3.70 6.00 7.60 8.53 25.83 4.60 4.73 5.03 5.64 19.99 15.47 11.97 9.27
Southern Region
Permian Basin 0.00 511.00 119.80 209.00 268.00 218.60 815.40 262.10 310.20 288.60 235.40 1096.30 240.35 225.28 264.73 215.93 946.28 816.78 705.01 608.53
Midcontinent 2112.00 1166.20 36.60 18.80 9.30 6.40 71.10 5.00 5.10 3.70 2.55 16.35 5.7 16.38 6.45 4.44 32.96 66.47 134.05 270.33
Total 4811.30 6769.10 947.40 1198.00 1286.90 1272.00 4704.30 1365.00 1521.30 1616.50 1558.02 6060.82 1318.5 1257.93 1361.30 1355.38 5293.10 4799.92 4542.99 4516.50

QEP Resources Inc.
Income Statement
Fiscal Years Ending Dec. 31 2013 2014 2015 2015 2015 2015 2015 2016 2016 2016E 2016E 2016E 2017E 2017E 2017E 2017E 2017E 2018E 2019E 2020E
Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3E Q4E Annual Q1E Q2E Q3E Q4E Annual
Gas sales 779.00 776.40 122.00 111.90 129.40 105.20 468.50 85.10 79.20 123.20 157.69 445.19 145.19 135.21 141.49 165.25 587.15 575.92 575.98 631.29
Oil sales 916.60 1368.50 178.80 250.40 211.70 193.30 834.20 143.80 207.70 201.60 244.47 797.57 261.08 267.23 268.82 272.87 1070.00 1137.63 1176.09 1230.70
Natural gas liquids ("NGL") sales 294.10 223.30 19.10 26.10 16.50 18.30 80.00 13.60 22.80 19.80 32.02 88.22 28.08 27.34 29.91 30.16 115.49 109.21 105.02 107.70
Other revenues 0.00 11.10 4.40 5.20 2.80 2.70 15.10 2.30 -0.50 2.50 1.71 6.01 1.71 1.69 1.73 1.84 6.98 7.17 7.31 7.75
Gathering, processing & other revenues 189.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Purchased gas, oil & NGL sales 757.10 1035.00 167.30 215.00 176.30 62.20 620.80 16.50 24.50 35.30 49.42 125.72 59.30 68.20 65.23 75.02 267.76 294.53 323.99 340.19
Total revenues 2935.80 3414.30 491.60 608.60 536.70 381.70 2018.60 261.30 333.70 382.40 485.31 1462.71 495.36 499.67 507.19 545.15 2047.37 2124.47 2188.38 2317.63
Purchased gas, oil & NGL expense 765.90 1031.20 169.40 217.20 175.10 65.10 626.80 16.90 26.80 37.10 52.13 132.93 62.56 71.94 68.82 79.14 282.46 310.71 341.78 358.87
Lease operating expense 177.80 240.10 61.80 57.10 56.70 63.20 238.80 60.00 52.60 50.70 56.67 219.97 53.02 52.00 53.32 56.46 214.81 215.79 219.06 225.45
Gas, oil & NGL transportation & other handling costs 141.40 277.60 65.10 73.00 78.10 75.10 291.30 73.60 69.50 75.80 80.20 299.10 75.04 73.60 75.47 79.92 304.04 305.42 310.05 319.09
Gathering, processing & other expenses 90.60 6.70 1.70 1.40 1.30 1.40 5.80 1.30 1.60 0.90 1.17 4.97 1.20 1.21 1.23 1.32 4.95 5.14 5.29 5.60
General & administrative 191.10 204.40 47.40 51.30 42.00 40.40 181.10 48.70 43.70 67.00 39.81 199.21 40.64 40.99 41.61 44.72 167.95 174.28 179.52 190.12
Production & property taxes 166.50 205.20 27.80 32.70 30.20 26.90 117.60 17.80 20.70 26.80 19.83 85.13 18.01 17.57 18.16 19.82 73.56 74.39 76.05 78.99
Depreciation, depletion & amortization 1016.00 994.70 195.40 215.80 238.10 231.80 881.10 240.00 209.70 217.8 217.80 885.30 150.68 150.68 150.68 150.68 602.72 574.72 550.55 529.82
Exploration expenses 11.90 9.90 1.10 0.80 0.80 0.00 2.70 0.30 0.40 0.20 0.65 1.55 0.66 0.67 0.68 0.73 2.74 2.84 2.93 3.10
Abandonment & impairment 93.00 1143.20 20.00 0.50 15.00 20.10 55.60 1182.40 0.80 0.00 0.00 1183.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total operating expenses 2654.20 4113.00 589.70 649.80 637.30 524.00 2400.80 1641.00 425.80 476.30 468.27 3011.37 401.81 408.67 409.96 432.79 1653.23 1663.28 1685.22 1711.04
Net gain (loss) from asset sales 103.00 -148.60 -30.50 24.50 12.90 -2.30 4.60 0.50 -0.80 0.00 0.00 ‐0.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Operating income (loss) 384.60 -847.30 -128.60 -16.70 -87.70 -144.60 -377.60 -1379.20 -92.90 -93.90 17.04 ‐1548.96 93.55 91.00 97.23 112.36 394.14 461.19 503.17 606.58
Realized & unrealized gains (losses) on derivative contracts 58.90 363.30 80.90 -66.00 153.60 108.70 277.20 50.90 -180.50 44.50 -8.41 ‐93.51 ‐53.99 ‐62.37 ‐27.30 ‐41.76 ‐185.43 ‐11.35 0.00 0.00
Interest & other income 5.20 12.80 -2.60 3.80 0.30 1.50 3.00 2.30 -0.30 5.10 0.94 8.04 3.16 3.16 3.16 3.16 12.64 15.21 19.40 23.68
Income from unconsolidated affiliates 5.80 0.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Loss from early extinguishment of debt 0.00 -2.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Interest expense 163.30 169.10 36.80 36.20 36.40 36.20 145.60 36.70 36.60 35.90 35.02 144.22 28.78 28.78 28.78 28.78 115.11 107.55 107.55 99.89
Income (loss) from continuing operations before income taxes 291.20 -642.00 -87.10 -115.10 29.80 -70.60 -243.00 -1362.70 -310.30 -80.20 -25.45 ‐1778.65 13.94 3.01 44.31 44.99 106.25 357.50 415.01 530.38
Income tax provision (benefit) 119.80 -232.50 -31.50 -38.80 8.70 -32.00 -93.60 -498.90 -113.30 -29.27 -9.29 ‐650.76 5.09 1.10 16.17 16.42 38.78 130.49 151.48 193.59
Net income 171.40 784.40 -55.60 -76.30 21.10 -38.60 -149.40 -863.80 -197.00 -50.93 -16.16 ‐1127.89 8.85 1.91 28.14 28.57 67.47 227.01 263.53 336.79
Weighted average shares outstanding - basic 179.20 179.80 176.20 176.70 176.70 176.60 176.60 189.70 217.70 239.6 239.6 239.6 240 240 240 240 240 240 240 240
Year end shares outstanding 178.90 175.40 176.70 176.60 177.10 176.80 176.80 216.80 239.60 239.6 239.6 239.6 240 240 240 240 240 240 240 240
Net earnings (loss) per share - basic 0.89 4.36 -0.32 -0.43 0.12 -0.22 -0.85 -4.55 -0.90 -0.21 -0.07 ‐4.71 0.04 0.01 0.12 0.12 0.28 0.95 1.10 1.40
Dividends per common share 0.08 0.08 0.02 0.02 0.02 0.02 0.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Payout Ratio 8.99% 1.83% N/A N/A 16.67% N/A N/A 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

QEP Resources Inc.
Balance Sheet
Fiscal Years Ending Dec. 31 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Assets:
Cash & cash equivalents 11.90 1160.10 376.10 1264.32 1521.29 1939.86 2368.36 2734.91
Accounts receivable, gross 413.60 446.50 282.10 200.59 280.77 291.34 300.10 317.83
Allowance for bad debt expenses 5.10 4.60 3.90 2.36 3.30 3.42 3.53 3.73
Accounts receivable, net 408.50 441.90 278.20 198.23 277.47 287.92 296.58 314.09
Income taxes receivable 0.00 0.00 87.30 22.50 0.00 0.00 0.00 0.00
Fair value of derivative contracts 0.20 339.00 146.80 0.50 0.00 0.00 0.00 0.00
Inventories 13.40 13.70 13.30 9.67 13.54 14.06 14.48 15.33
Deferred income taxes - current 30.60 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Prepaid expenses & other current assets 54.40 46.80 30.10 26.64 37.29 38.69 39.86 42.21
Total current assets 519.00 2001.50 931.80 1521.86 1849.59 2280.53 2719.28 3106.55
Total property, plant & equipment 14079.10 13452.00 14342.30 14674.90 15015.21 15363.42 15719.70 16084.24
Total accumulated depreciation, depletion & amortization 5362.70 6220.80 6957.70 9026.20 9628.92 10203.63 10754.18 11284.00
Net property, plant & equipment 8716.40 7231.20 7384.60 5648.70 5386.30 5159.78 4965.51 4800.24
Investment in unconsolidated affiliates 39.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Goodwill 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Restricted cash 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other noncurrent assets 51.40 44.20 85.90 95.6 110.47 117.87 125.77 134.20
Total assets 9376.80 9286.80 8425.50 7266.16 7346.36 7558.18 7810.56 8040.99
Liabilities and Stockholder's Equity
Liabilities:
Checks outstanding in excess of cash balances 90.90 54.70 29.80 4.3 0.00 0.00 0.00 0.00
Accounts payable & accrued expenses 434.90 575.40 351.70 250.68 350.87 364.09 375.04 397.19
Income taxes payable 0.00 532.10 0.00 0.00 0.00 0.00 0.00 0.00
Production & other taxes 51.80 61.70 46.10 33.37 28.84 29.16 29.81 30.97
Interest payable 37.20 36.40 36.40 32.8 27.48 25.67 25.67 23.84
Deferred income taxes 0.00 84.50 0.00 0.00 0.00 0.00 0.00 0.00
Current portion of long-term debt 0.00 0.00 176.80 0.00 134.00 0.00 136.00 625.00
Total current liabilities 641.50 1344.80 641.60 355.65 572.24 446.87 566.53 1077.00
Long-term debt 2997.50 2218.10 2042.00 2042.00 1908.00 1908.00 1772.00 1147.00
Deferred income taxes 1560.60 1362.70 1479.80 899.20 809.28 899.20 899.20 899.20
Asset retirement obligations 191.80 193.80 204.90 213.10 214.40 215.71 217.02 218.35
Other long-term liabilities 108.60 92.10 105.30 117.90 130.80 143.70 156.60 169.50
Total Liabilities 5500.00 5211.50 4477.60 3647.25 3652.18 3629.19 3611.35 3511.05
Equities:
Common Stock , Net of Treasury 485.30 511.70 542.00 1340.00 1347.80 1355.60 1362.29 1356.22
Retained earnings 2917.80 3587.90 3418.30 2290.41 2357.88 2584.89 2848.42 3185.21
Accumulated other comprehensive income (loss) -26.50 -24.30 -12.40 ‐11.50 ‐11.50 ‐11.50 ‐11.50 ‐11.50
Total common shareholders' equity 3376.60 4075.30 3947.90 3618.91 3694.18 3928.99 4199.21 4529.94
Noncontrolling interest 500.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total equity 3876.80 4075.30 3947.90 3618.91 3694.18 3928.99 4199.21 4529.94
Total Liabilities and Equity 9376.80 9286.80 8425.50 7266.16 7346.36 7558.18 7810.56 8040.99

QEP Resources Inc.
Forecasted Cash Flow Statement
Fiscal Years Ending Oct. 31 2016E 2017E 2018E 2019E 2020E
Cash flow from operations:
Net Income (loss) -1127.89 67.47 227.01 263.53 336.79
Add Depreciation, Amortization , Depletion , Impairment 2068.50 602.72 574.72 550.55 529.82
Changes :
Assets:
Accounts receivable, net 79.97 -79.24 -10.45 -8.66 -17.52
Income taxes receivable 64.80 22.50 0.00 0.00 0.00
Inventories 3.63 -3.87 -0.51 -0.42 -0.86
Deferred income taxes - current 0.00 0.00 0.00 0.00 0.00
Prepaid expenses & other current assets 3.46 -10.65 -1.40 -1.16 -2.35
Other noncurrent assets -9.70 -14.87 -7.40 -7.90 -8.43
Liabilities:
Checks outstanding in excess of cash balances -25.50 -4.30 0.00 0.00 0.00
Accounts payable & accrued expenses -101.02 100.20 13.21 10.95 22.15
Income taxes payable 0.00 0.00 0.00 0.00 0.00
Production & other taxes -12.73 -4.53 0.32 0.65 1.15
Interest payable -3.60 -5.32 -1.80 0.00 -1.83
Deferred income taxes -ST Liability 0.00 0.00 0.00 0.00 0.00
Deferred income taxes - LT Liability -580.60 -89.92 89.92 0.00 0.00
Other long-term liabilities 12.60 12.90 12.90 12.90 12.90
Net cash flow from operating activities 371.92 593.08 896.52 820.44 871.83
Cash flow from investing :
Assets:
Fair value of derivative contracts 169.50 0.50 0.00 0.00 0.00
Total property, plant & equipment -332.60 -340.31 -348.20 -356.28 -364.54
Investment in unconsolidated affiliates 0.00 0.00 0.00 0.00 0.00
Goodwill 0.00 0.00 0.00 0.00 0.00
Restricted cash 0.00 0.00 0.00 0.00 0.00
Liabilities:
Fair value of derivative contracts 49.10 -5.39 -4.85 -43.66 0.00
Asset retirement obligations 8.20 1.30 1.31 1.32 1.32
Net cash flow from investing activities -105.80 -343.90 -351.75 -398.62 -363.22
Cash flow from financing:
Net Debt -176.80 0.00 -134.00 0.00 -136.00
Common Stock , Net of Treasury 798.00 7.80 7.80 6.69 -6.07
Accumulated other comprehensive income (loss) 0.90 0.00 0.00 0.00 0.00
Net cash flow from financing activities 622.10 7.80 -126.20 6.69 -142.07
Net change in cash 888.22 256.97 418.57 428.50 366.55
Beginning Cash 376.10 1264.32 1521.29 1939.86 2368.36
Ending Cash 1264.32 1521.29 1939.86 2368.36 2734.91

QEP Resources Inc.
Cash Flow Statement
Fiscal Years Ending Dec. 31 2013 2014 2015
Net income (loss) 171.4 784.4 -149.4
Net income attributable to noncontroling interest - 21.6 -
Depreciation, depletion & amortization 1016 1040.6 881.1
Deferred income taxes 66.1 -84.1 25.3
Abandonment & impairment - - -
Impairment 93 1143.2 55.6
Share-based compensation 27.1 27.2 34.7
Pension curtailment - - 11.2
Amortization of debt issuance costs & discounts 6.4 6.7 6.2
Exploration expense - - -
Net loss (gain) from asset sales -103 -1644.8 -4.6
Loss (income) from unconsolidated affiliates -5.8 -5.2 -
Distributions from unconsolidated affiliates & other adjustments 7.9 9.4 -
Distributions from unconsolidated affiliates & dry exploratory well expense - - -
Non-cash loss on early extinguishment of debt - 4.4 -
Unrealized (gains) losses on marketable securities - - 0.2
Unrealized loss (gain) on basis-only swaps - - -
Unrealized losses (gains) on derivative contracts 88.7 -374.4 183.7
Accounts receivable 3.2 -160.5 165.5
Inventories 2.6 -20.2 15.5
Prepaid expenses 14 -7.3 16.7
Accounts payable & accrued expenses -179.7 320.1 -71.3
Federal income taxes -27.4 494.1 -619.4
Other operating assets & liabilities 11.2 -12.7 -69.7
Net cash flows from operating activities of continuing operations - - -
Net cash flows from operating activities 1191.7 1542.5 481.3
Property acquisitions -40.9 -960.5 -98.3
Property, plant & equipment, including dry exploratory well expense -1561.7 -1765.9 -1141.1
Proceeds from disposition of assets 211.1 3296.6 21.8
Acquisition deposit held in escrow -50 50 -
Other investing activities - -42 -
Net cash flows from investing activities of continuing operations - - -
Net cash flows from investing activities -1441.5 578.2 -1217.6
Checks outstanding in excess of cash balances 51.2 -54.4 -24.9
Long-term debt issued - 300 -
Long-term debt issuance costs paid -3.2 -9.3 -2.6
Current portion long-term debt repaid - - -
Long-term debt repaid - -600 -
Proceeds from credit facility 3085 5455 -
Repayments of credit facility -3295 -5935 -
Common stock repurchased & retired - -99.7 -
Treasury stock repurchased -9.3 -6.2 -2.7
Other capital contributions 7 6 -0.2
Dividends paid -14.3 -14.6 -14.1
Excess tax benefit on share-based compensation - -0.5 -3.2
Distribution from Questar - - -
Net proceeds from the issuance of common units 449.6 - -
Distribution to noncontrolling interest -9.3 -31.9 -
Net cash flows from financing activities of continuing operations - - -
Net cash flows from financing activities 261.7 -990.6 -47.7
Change in cash & cash equivalents 11.9 1130.1 -784
Beginning cash & cash equivalents - 30 1160.1
Ending cash & cash equivalents 11.9 1160.1 376.1
Cash paid for interest, net of capitalized interest 156.7 163.2 139.4
Cash paid (received) for income taxes 77.9 0.3 487.8

QEP Resources Inc.
Common Size Income Statement
Gas sales 26.53% 22.74% 23.21% 30.44% 28.68% 27.11% 26.32% 27.24%
Oil sales 31.22% 40.08% 41.33% 54.53% 52.26% 53.55% 53.74% 53.10%
Natural gas liquids ("NGL") sales 10.02% 6.54% 3.96% 6.03% 5.64% 5.14% 4.80% 4.65%
Other revenues 0.00% 0.33% 0.75% 0.41% 0.34% 0.34% 0.33% 0.33%
Gathering, processing & other revenues 6.44% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Purchased gas, oil & NGL sales 25.79% 30.31% 30.75% 8.60% 13.08% 13.86% 14.80% 14.68%
Total revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Purchased gas, oil & NGL expense 26.09% 30.20% 31.05% 9.09% 13.80% 14.63% 15.62% 15.48%
Lease operating expense 6.06% 7.03% 11.83% 15.04% 10.49% 10.16% 10.01% 9.73%
Gas, oil & NGL transportation & other handling costs 4.82% 8.13% 14.43% 20.45% 14.85% 14.38% 14.17% 13.77%
Gathering, processing & other expenses 3.09% 0.20% 0.29% 0.34% 0.24% 0.24% 0.24% 0.24%
General & administrative 6.51% 5.99% 8.97% 13.62% 8.20% 8.20% 8.20% 8.20%
Production & property taxes 5.67% 6.01% 5.83% 5.82% 3.59% 3.50% 3.48% 3.41%
Depreciation, depletion & amortization 34.61% 29.13% 43.65% 60.52% 29.44% 27.05% 25.16% 22.86%
Exploration expenses 0.41% 0.29% 0.13% 0.11% 0.13% 0.13% 0.13% 0.13%
Abandonment & impairment 3.17% 33.48% 2.75% 80.89% 0.00% 0.00% 0.00% 0.00%
Total operating expenses 90.41% 120.46% 118.93% 205.88% 80.75% 78.29% 77.01% 73.83%
Net gain (loss) from asset sales 3.51% ‐4.35% 0.23% ‐0.02% 0.00% 0.00% 0.00% 0.00%
Operating income (loss) 13.10% ‐24.82% ‐18.71% ‐105.90% 19.25% 21.71% 22.99% 26.17%
Realized & unrealized gains (losses) on derivative contracts 2.01% 10.64% 13.73% ‐6.39% ‐9.06% ‐0.53% 0.00% 0.00%
Interest & other income 0.18% 0.37% 0.15% 0.55% 0.62% 0.72% 0.89% 1.02%
Income from unconsolidated affiliates 0.20% 0.01% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Loss from early extinguishment of debt 0.00% ‐0.06% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Interest expense 5.56% 4.95% 7.21% 9.86% 5.62% 5.06% 4.91% 4.31%
Income (loss) from continuing operations before income taxes 9.92% ‐18.80% ‐12.04% ‐121.60% 5.19% 16.83% 18.96% 22.88%
Income tax provision (benefit) 4.08% ‐6.81% ‐4.64% ‐44.49% 1.89% 6.14% 6.92% 8.35%
Net income (loss) from continuing operations 0.00% ‐11.99% ‐7.40% 0.00% 0.00% 0.00% 0.00% 0.00%
Net income from discontinued operations, net of income tax 0.00% 34.97% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Net income 5.84% 22.97% ‐7.40% ‐77.11% 3.30% 10.69% 12.04% 14.53%

QEP Resources Inc.
Common Size Balance Sheet
Fiscal Years Ending Dec. 31 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Assets:
Cash & cash equivalents 0.00% 0.41% 33.98% 18.63% 86.44% 74.30% 91.31% 108.22% 118.00%
Accounts receivable, gross 16.61% 14.09% 13.08% 13.98% 13.71% 13.71% 13.71% 13.71% 13.71%
Allowance for bad debt expenses 0.12% 0.17% 0.13% 0.19% 0.16% 0.16% 0.16% 0.16% 0.16%
Accounts receivable, net 16.49% 13.91% 12.94% 13.78% 13.55% 13.55% 13.55% 13.55% 13.55%
Income taxes receivable 0.00% 0.00% 0.00% 4.32% 1.54% 0.00% 0.00% 0.00% 0.00%
Fair value of derivative contracts 8.03% 0.01% 9.93% 7.27% 0.03% 0.00% 0.00% 0.00% 0.00%
Inventories 0.56% 0.46% 0.40% 0.66% 0.66% 0.66% 0.66% 0.66% 0.66%
Deferred income taxes - current 0.00% 1.04% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Prepaid expenses & other current assets 2.57% 1.85% 1.37% 1.49% 1.82% 1.82% 1.82% 1.82% 1.82%
Total current assets 27.65% 17.68% 58.62% 46.16% 104.04% 90.34% 107.35% 124.26% 134.04%
Total property, plant & equipment 550.41% 479.57% 393.99% 710.51% 1003.27% 733.39% 723.16% 718.32% 694.00%
Total accumulated depreciation, depletion & amortization 197.21% 182.67% 182.20% 344.68% 617.09% 470.31% 480.29% 491.42% 486.88%
Net property, plant & equipment 353.20% 296.90% 211.79% 365.83% 386.18% 263.08% 242.87% 226.90% 207.12%
Investment in unconsolidated affiliates 1.75% 1.33% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Goodwill 2.53% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Restricted cash 0.00% 1.70% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other noncurrent assets 2.32% 1.75% 1.29% 4.26% 6.54% 5.40% 5.55% 5.75% 5.79%
Total assets 387.63% 319.40% 272.00% 417.39% 496.76% 358.82% 355.77% 356.91% 346.95%
Liabilities and Stockholder's Equity
Liabilities:
Checks outstanding in excess of cash balances 1.69% 3.10% 1.60% 1.48% 0.29% 0.00% 0.00% 0.00% 0.00%
Accounts payable & accrued expenses 27.06% 14.81% 16.85% 17.42% 17.14% 17.14% 17.14% 17.14% 17.14%
Income taxes payable 0.00% 0.00% 15.58% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Production & other taxes 1.78% 1.76% 1.81% 2.28% 2.28% 1.41% 1.37% 1.36% 1.34%
Interest payable 1.57% 1.27% 1.07% 1.80% 2.24% 1.34% 1.21% 1.17% 1.03%
Deferred income taxes 0.21% 0.00% 2.47% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Current portion of long-term debt 0.00% 0.00% 0.00% 8.76% 0.00% 6.54% 0.00% 6.21% 26.97%
Total current liabilities 32.42% 21.85% 39.39% 31.78% 24.31% 27.95% 21.03% 25.89% 46.47%
Long-term debt 136.48% 102.10% 64.97% 101.16% 139.60% 93.19% 89.81% 80.97% 49.49%
Deferred income taxes 63.56% 53.16% 39.91% 73.31% 61.48% 39.53% 42.33% 41.09% 38.80%
Asset retirement obligations 8.15% 6.53% 5.68% 10.15% 14.57% 10.47% 10.15% 9.92% 9.42%
Other long-term liabilities 5.85% 3.70% 2.70% 5.22% 8.06% 6.39% 6.76% 7.16% 7.31%
Total Liabilities 246.61% 187.34% 152.64% 221.82% 249.35% 178.38% 170.83% 165.02% 151.49%
Equities:
Common stock 0.08% 0.06% 0.05% 0.09% 0.16% 0.12% 0.11% 0.11% 0.10%
Treasury stock 0.16% 0.51% 0.74% 0.72% 1.52% 1.38% 1.62% 1.85% 2.00%
Additional paid-in capital 19.67% 16.98% 15.68% 27.48% 92.96% 67.09% 65.31% 63.99% 60.42%
Common Stock , Net of Treasury 19.58% 16.53% 14.99% 26.85% 91.61% 65.83% 63.81% 62.25% 58.52%
Retained earnings 118.01% 99.39% 105.08% 169.34% 156.59% 115.17% 121.67% 130.16% 137.43%
Accumulated other comprehensive income (loss) 1.40% ‐0.90% ‐0.71% ‐0.61% ‐0.79% ‐0.56% ‐0.54% ‐0.53% ‐0.50%
Total common shareholders' equity 138.99% 115.01% 119.36% 195.58% 247.41% 180.44% 184.94% 191.89% 195.46%
Noncontrolling interest 2.03% 17.04% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total equity 141.02% 132.05% 119.36% 195.58% 247.41% 180.44% 184.94% 191.89% 195.46%

Present Value of Operating Lease Obligations (2015) Present Value of Operating Lease Obligations (2014) Present Value of Operating Lease Obligations (2013) Present Value of Operating Lease Obligations (2012)
Operating Operating Operating Operating
Fiscal Years Ending Dec. 31 Leases Fiscal Years Ending Dec. 31 Leases Fiscal Years Ending Dec. 31 Leases Fiscal Years Ending Dec. 31 Leases
2016 9.7 2015 8.4 2014 7.2 2013 6.7
2017 9.8 2016 8.2 2015 6.5 2014 6.5
2018 8.5 2017 8.4 2016 6.6 2015 6.6
2019 7.6 2018 6.9 2017 6.8 2016 6.5
2020 7.4 2019 6.8 2018 5.3 2017 6.7
Thereafter 18.6 Thereafter 23.9 Thereafter 23.7 Thereafter 29.1
Total Minimum Payments 61.6 Total Minimum Payments 62.6 Total Minimum Payments 56.1 Total Minimum Payments 62.1
Less: Interest 12 Less: Interest 13 Less: Interest 13 Less: Interest 15
PV of Minimum Payments 50 PV of Minimum Payments 49 PV of Minimum Payments 43 PV of Minimum Payments 47
Capitalization of Operating Leases Capitalization of Operating Leases Capitalization of Operating Leases Capitalization of Operating Leases
Pre‐Tax Cost of Debt 5.64% Pre‐Tax Cost of Debt 5.64% Pre‐Tax Cost of Debt 5.64% Pre‐Tax Cost of Debt 5.64%
Number Years Implied by Year 6 Payment 2.5 Number Years Implied by Year 6 Payment 3.5 Number Years Implied by Year 6 Payment 4.5 Number Years Implied by Year 6 Payment 4.3
Lease PV Lease Lease PV Lease Lease PV Lease Lease PV Lease
Year Commitment Payment Year Commitment Payment Year Commitment Payment Year Commitment Payment
1 9.7 9.2 1 8.4 8.0 1 7.2 6.8 1 6.7 6.3
2 9.8 8.8 2 8.2 7.3 2 6.5 5.8 2 6.5 5.8
3 8.5 7.2 3 8.4 7.1 3 6.6 5.6 3 6.6 5.6
4 7.6 6.1 4 6.9 5.5 4 6.8 5.5 4 6.5 5.2
5 7.4 5.6 5 6.8 5.2 5 5.3 4.0 5 6.7 5.1
6 & beyond 7.4 12.8 6 & beyond 6.8 16.1 6 & beyond 5.3 15.5 6 & beyond 6.7 19.1
PV of Minimum Payments 49.8 PV of Minimum Payments 49.2 PV of Minimum Payments 43.3 PV of Minimum Payments 47.2

QEP Resources Inc.
Value Driver Estimation
Marginal Tax Rate Calculation:
Federal Statuatory rate 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00%
State income taxes, net of federal effect ‐5.00% ‐1.50% 4.20% 1.50% 1.50% 1.50% 1.50% 1.50%
Marginal Tax Rate 30.00% 33.50% 39.20% 36.50% 36.50% 36.50% 36.50% 36.50%
EBITA Calculations:
Total revenues 2935.8 3414.3 2018.60 1462.71 2047.37 2124.47 2188.38 2317.63
Less: Purchased gas, oil & NGL expense 765.9 1031.2 626.80 132.93 282.46 310.71 341.78 358.87
Less: Lease operating expense 177.8 240.1 238.80 219.97 214.81 215.79 219.06 225.45
Less: Gas, oil & NGL transportation & other handling costs 141.4 277.6 291.30 299.10 304.04 305.42 310.05 319.09
Less: Gathering, processing & other expenses 90.6 6.7 5.80 4.97 4.95 5.14 5.29 5.60
Less: General & administrative 191.1 204.4 181.10 199.21 167.95 174.28 179.52 190.12
Less: Production & property taxes 166.5 205.2 117.60 85.13 73.56 74.39 76.05 78.99
Less: Depreciation, depletion & amortization 1016 994.7 881.10 885.30 602.72 574.72 550.55 529.82
Less: Exploration expenses 11.9 9.9 2.70 1.55 2.74 2.84 2.93 3.10
Add: Implied Interest on Operating Leases 2.66 2.44 2.77 2.80 2.87 2.94 3.00 3.07
EBITA 377.26 446.94 ‐323.83 ‐362.66 397.01 464.12 506.17 609.66
Less Adjusted Income Taxes:
Income tax provision (benefit) 119.80 ‐232.50 ‐93.60 ‐650.76 38.78 130.49 151.48 193.59
Add: Tax Shield on, Abandonment & impairment 27.90 382.97 21.80 431.87 0.00 0.00 0.00 0.00
Less: Tax expense on, Net gain (loss) from asset sales 30.90 ‐49.78 1.80 ‐0.11 0.00 0.00 0.00 0.00
Less: Tax expense on, Realized & unrealized gains (losses) on
derivative contracts
17.67 121.71 108.66 ‐34.13 ‐67.68 ‐4.14 0.00 0.00
Less: Tax expense on, Interest & other income 1.56 4.29 1.18 2.93 4.61 5.55 7.08 8.64
Less: Tax expense on, Income from unconsolidated affiliates 1.74 0.10 0.00 0.00 0.00 0.00 0.00 0.00
Add: Tax Shield on, Loss from early extinguishment of debt 0.00 ‐0.67 0.00 0.00 0.00 0.00 0.00 0.00
Add: Tax Shield on, Interest expense 48.99 56.65 57.08 52.64 42.01 39.26 39.26 36.46
Add: Tax Shield on , Implied Interest on Operating Leases 0.80 0.82 1.01 1.02 1.05 1.07 1.10 1.12
Adjusted income Taxes 145.62 130.95 ‐125.36 ‐133.93 144.91 169.40 184.75 222.52
Add Change in Deferred Taxes:
DT Liabilities 1560.60 1362.70 1479.80 899.20 809.28 899.20 899.20 899.20
DT Assets 30.60 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Deferred Taxes 1530.00 1362.70 1479.80 899.20 809.28 899.20 899.20 899.20
Changes in DT 36.50 ‐167.30 117.10 ‐580.60 ‐89.92 89.92 0.00 0.00
NOPLAT : EBITA ‐ Adjusted Taxes + Change in DT
NOPLAT 268.14 148.68 ‐81.37 ‐809.33 162.18 384.64 321.42 387.13
Operating Current Assets:
Operating Cash Assumption (Taking minimum of the two) 58.72 68.29 40.37 29.25 40.95 42.49 43.77 46.35
Balance Sheet Cash (Taking minimum of the two) 11.90 1160.10 376.10 1264.32 1521.29 1939.86 2368.36 2734.91
Accounts receivable, net 408.50 441.90 278.20 198.23 277.47 287.92 296.58 314.09
Income taxes receivable 0.00 0.00 87.30 22.50 0.00 0.00 0.00 0.00
Inventories 13.40 13.70 13.30 9.67 13.54 14.06 14.48 15.33
Prepaid expenses & other current assets 54.40 46.80 30.10 26.64 37.29 38.69 39.86 42.21
Operating Current Assets 488.20 570.69 449.27 286.30 369.25 383.15 394.68 417.99
Operating Current Liabilities:
Checks outstanding in excess of cash balances 90.90 54.70 29.80 4.30 0.00 0.00 0.00 0.00
Accounts payable & accrued expenses 434.90 575.40 351.70 250.68 350.87 364.09 375.04 397.19
Income taxes payable 0.00 532.10 0.00 0.00 0.00 0.00 0.00 0.00
Production & other taxes 51.80 61.70 46.10 33.37 28.84 29.16 29.81 30.97
Interest payable 37.20 36.40 36.40 32.80 27.48 25.67 25.67 23.84
Operating Current Liabilities 614.80 1260.30 464.00 321.15 407.19 418.92 430.53 452.00
Other Operating Assets:
Net property, plant & equipment 8716.40 7231.20 7384.60 5648.70 5386.30 5159.78 4965.51 4800.24
Other noncurrent assets 51.40 44.20 85.90 95.60 110.47 117.87 125.77 134.20
PV of Operating Leases 43.27 49.21 49.75 50.91 52.09 53.30 54.53 55.80
Other Operating Assets 8811.07 7324.61 7520.25 5795.21 5548.85 5330.95 5145.82 4990.23
Other Operating Liabilities:
Other long‐term liabilities 191.80 193.80 204.90 213.10 214.40 215.71 217.02 218.35
Other Operating Liabilities 191.80 193.80 204.90 213.10 214.40 215.71 217.02 218.35
Invested Capital:
Invested Capital 8492.67 6441.20 7300.62 5547.25 5296.51 5079.47 4892.95 4737.87
Return on Invested Capital:
NOPLAT 268.14 148.68 ‐81.37 ‐809.33 162.18 384.64 321.42 387.13
Beginning Invested Capital 7916.53 8492.67 6441.20 7300.62 5547.25 5296.51 5079.47 4892.95
ROIC 3.39% 1.75% ‐1.26% ‐11.09% 2.92% 7.26% 6.33% 7.91%
Economic Profit: Begin IC * ( ROIC ‐WACC)
Beginning Invested Capital 7916.53 8492.67 6441.20 7300.62 5547.25 5296.51 5079.47 4892.95
ROIC 3.39% 1.75% ‐1.26% ‐11.09% 2.92% 7.26% 6.33% 7.91%
WACC 7.60% 7.60% 7.60% 7.60% 7.60% 7.60% 7.60% 7.60%
Economic Profit ‐333.15 ‐496.37 ‐570.60 ‐1363.84 ‐259.16 ‐17.65 ‐64.39 15.50
FCF: NOPLAT+Change in Invested Capital
NOPLAT 268.14 148.68 ‐81.37 ‐809.33 162.18 384.64 321.42 387.13
Add: Beg Invested Capital 7916.53 8492.67 6441.20 7300.62 5547.25 5296.51 5079.47 4892.95
Less: Current Invested Capital 8492.67 6441.20 7300.62 5547.25 5296.51 5079.47 4892.95 4737.87
FCF ‐308.00 2200.16 ‐940.79 944.04 412.92 601.68 507.94 542.21

Weighted Average Cost of Capital (WACC) Estimation
Marginal Tax Rate 36.50%
Cost of equity Calculation
Risk Free Rate 2.56% (30 Yr Treasury Note)
+
Beta* 1.44
Market Risk Premium 5.00%
= Cost of Equity 9.76%
WACC Calculation All figures in millions
Shares outstanding* 239.610
MV of share 16.02
=Total MV of Equity [E] 3838.55
ST Debt 0.00 (From Bloomberg)
LT Debt 2019.3 (From Bloomberg)
PV of Operating Leases 49.75
MV of debt [D] 2069.05
Cost of Debt 5.64% (Longest Bond Yield)
MV of equity 3838.55
+
MV of debt 2069.05
= MV of the firm [V] 5907.61
Cost of Equity * 9.76%
(E/V) 64.98%
+
Cost of Debt * 5.64%
(1‐Marginal tax Rate) 63.50%
(D/V) 35.02%
= WACC 7.60%
QEP Resources Inc.

QEP Resources Inc.
Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models
Key Inputs:
     CV Growth 0.50%
     CV ROIC 7.91%
     WACC 7.60%
     Cost of Equity 9.76%
Fiscal Years Ending Dec. 31 2016E 2017E 2018E 2019E 2020E
DCF Model
Discount period 1 2 3 4 5
NOPLAT ‐809 162 385 321 387
Continuing Value 5111
Free Cash Flow 944 413 602 508 542
Net FCF 944 413 602 5619
(Discounting Factor) ^‐1 0.9294 0.8638 0.8028 0.7461
PV of free cash flows 877 357 483 4193
Value of Operations 5910
Non Operating Assets
Excess Cash 336
Fair value of derivative contracts 170
Investment in unconsolidated affiliates 0
Restricted cash 0.00
Value of Non Operating Assets 506
Non Operating Liabilities
Asset retirement obligations 205
PV of Operating Leases 50
Total Debt 2219
PV of employee stock options 9
Value of Non Operating Liabilities 2487
Equity Value 3929
Shares outstanding 240
Intrinsic Share Price (FY 15 End) $16.40
Intrinsic Share Price (Today) $17.76
EP Model
Periods to discount 1 2 3 4 5
Economic Profit ‐1364 ‐259 ‐18 ‐64 15
Continuing Value 218
Net  EP ‐1364 ‐259 ‐18 154
(Discounting Factor) ^‐1 0.9294 0.8638 0.8028 0.7461
PV of Economic Profit ‐1268 ‐224 ‐14 115
Initial Invested Capital 7301
Value of Operations 5910
Non Operating Assets
Excess Cash 336
Investment in unconsolidated affiliates 0
Restricted cash 0.00
Value of Non Operating Assets 506
Non Operating Liabilities
Asset retirement obligations 205
PV of Operating Leases 50
Total Debt 2219
PV of employee stock options 9
Value of Non Operating Liabilities 2487
Equity Value 3929
Shares outstanding 240
Intrinsic Share Price (FY 15 End) $16.40
Intrinsic Share Price (Today) $17.76

QEP Resources Inc.
Dividend Discount Model (DDM) or Fundamental P/E Valuation Model
Fiscal Years Ending Dec. 31 2016E 2017E 2018E 2019E 2020E
EPS ‐4.71 0.28 0.95 1.10 1.40
Key Assumptions
   CV growth 0.50%
   CV ROE 7.43%
   Cost of Equity 9.76%
Future Cash Flows
     P/E Multiple (CV Year) 10.07
     EPS (CV Year) 1.40
     Future Stock Price 14.13
     Dividends Per Share 0.00 0.00 0.00 0.00 0.00
     Future Cash Flows 0.00 0.00 0.00 14.13
     Discounted Cash Flows 0.00 0.00 0.00 9.73
Intrinsic Value 9.73
Intrinsic Share Price (Today) 10.35

QEP Resources Inc.
Relative Valuation Models
EPS EPS Market Sales (M) Sales (M)
Ticker Company Price 2016E 2017E P/E 16 P/E 17 Cap 2016E 2017E P/S 16 P/S 17
NFX Newfield Exploration Co. $37.84 $0.92 $1.45 41.1          26.1          7,599.0    1454.00 1851.00 5.23          4.11
SWN Southwestern Energy Co. $9.39 $0.01 $0.77 939.0        12.2          4,999.0    2417.00 3144.00 2.07          1.59
WPX Wpx Energy Inc. $11.56 ($0.80) ($0.65) (14.5)         (17.8)         4,044.0    936.30 1178.80 4.32          3.43
SM Sm Energy Co. $31.32 ($2.19) ($1.36) (14.3)         (23.0)         2,716.0    1527.00 1545.00 1.78          1.76
WLL Whiting Petroleum Corp. $8.32 ($2.33) ($0.94) (3.6)           (8.9)           2,354.0    1389.00 1636.00 1.69          1.44
OAS Oasis Petroleum Inc. $11.35 ($0.63) ($0.34) (18.0)         (33.4)         2,555.0    702.40 1056.40 3.64          2.42
BBG Bill Barrett Corp. $6.11 ($0.68) ($0.88) (9.0)           (6.9)           342.5        198.00      253.40      1.73          1.35
Average 490.1       19.1          Average 2.92          2.30
QEP QEP Resources Inc. $16.02 ($4.71) $0.28 N/A 57.0          3,838.6    1462.71 2047.37 2.62          1.87
Implied Value:
   Relative P/E (EPS16) N/A
   Relative P/E (EPS17) $5.38
Relative P/S (Sales16) $17.84
Relative P/S (Sales17) $19.64

QEP Resources Inc.
Key Management Ratios
Liquidity Ratios
Current Ratio (Current Assets/ Current Liabilities) 80.90% 148.83% 145.23% 427.91% 323.22% 510.33% 479.99% 288.44%
Operating Cash Flow Ratio (Operating CF/ Current Liabilities) 185.77% 88.62% 240.41% 104.57% 103.64% 200.62% 144.82% 80.95%
Quick Ratio (Cash and other liquid assets) / Current Liabilities 1.86% 86.27% 58.62% 355.50% 265.85% 434.10% 418.05% 253.94%
Activity or Asset‐Management Ratios
Asset Turnover Ratio (Sales/Avg Total Assets) 31.76% 36.59% 22.79% 18.64% 28.02% 28.51% 28.48% 29.24%
Receivables Turnover Ratio (Sales/Average Accounts Receivable) 737.64% 802.99% 560.64% 614.03% 860.78% 751.51% 748.81% 759.04%
Financial Leverage Ratios
Debt‐to‐Equity Ratio (Total Debt/Total Equity) 77.32% 54.43% 56.20% 56.43% 55.28% 48.56% 45.44% 39.12%
Equity Ratio (Total Equity/ Total Assets) 41.34% 43.88% 46.86% 49.81% 50.29% 51.98% 53.76% 56.34%
Interest Coverage Ratio (EBITDA/Interest Expense) 9.15 7.63 3.84 3.60 8.66 9.63 9.80 11.38
Profitability Ratios
Return on Assets (Net Income/Total Assets) 1.83% 8.45% ‐1.77% ‐15.52% 0.92% 3.00% 3.37% 4.19%
Return on Equity (Net Income/Shareholders Equity) 5.08% 19.25% ‐3.78% ‐31.17% 1.83% 5.78% 6.28% 7.43%
EBIT Margin (EBIT/Sales) 13.10% ‐24.82% ‐18.71% ‐105.90% 19.25% 21.71% 22.99% 26.17%
Profit Margin (Net Income/Sales) 5.84% 22.97% ‐7.40% ‐77.11% 3.30% 10.69% 12.04% 14.53%
Payout Policy Ratios
Payout Ratio (Dividend Payout Ratio) 8.99% 1.83% N/A 0.00% 0.00% 0.00% 0.00% 0.00%

Effects of ESOP Exercise and Share Repurchases on Common Stock Balance Sheet Account and Number of Shares Outstanding
Number of Options Outstanding (shares): 2.15
Average Time to Maturity (years): 3.92
Expected Annual Number of Options Exercised: 0.55
Current Average Strike Price: 25.26$
Cost of Equity: 9.76%
Current Stock Price: $16.02
2016E 2017E 2018E 2019E 2020E
Increase in Shares Outstanding: 0.55 0.55 0.55 0.51 0.00
Average Strike Price: 25.26$          25.26$          25.26$          25.26$          25.26$
Increase in Common Stock Account: 14                 14                 14                 13                 ‐                (Assumes common stock and additional paid in capital are combined into one account).
Change in Treasury Stock 6 6 6 6 6
Expected Price of Repurchased Shares: 16.02$          17.58$          19.30$          21.18$          23.25$
Number of Shares Repurchased: 0.38              0.35              0.31              0.29              0.26
Shares Outstanding (beginning of the year,including new equity offerings) 239 240 240 240 240
Plus: Shares Issued Through ESOP 0.55 0.55 0.55 0.51 0.00
Less: Shares Repurchased in Treasury 0.38 0.35 0.31 0.29 0.26
Shares Outstanding (end of the year) 240 240 240 240 240

VALUATION OF OPTIONS GRANTED IN ESOP
Ticker Symbol QEP
Current Stock Price $16.02
Risk Free Rate 2.56%
Current Dividend Yield 0.00%
Annualized St. Dev. of Stock Returns 47.52%
Average Average B‐S Value
Range of Number Exercise Remaining Option of Options
Outstanding Options of Shares Price Life (yrs) Price Granted
ESOPS 2.15 25.26 3.92 4.07$ 9$
Total 2 25.26$ 3.92 4.07$ 9$

QEP_Resources_QEP

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