The announcement follows from an early December decision forced by activist investor firm Jana Partners, which had urged the separation in a November letter to QEP.
Although QEP Resources does not say how it will affect the separation of QEP Midstream Partners L.P. (NYSE: QEPM), it seems pretty likely that an initial public offering of QEP Midstream is on its way. In December, analysts at Sterne Agee noted that there is a lot of room for growth in the midstream limited partnership, where incentive distribution rights kick in after a distribution of $0.2875 to limited partners. In the third quarter, the partnership distributed just $0.13, leaving a lot of room for growth. At that time, Sterne Agee put a price target of $39 on QEP Resources’ shares.
QEP Resources expects to begin marketing its assets in the Granite Wash and Cana Woodford plays next month and to complete the sales by July. The $500 million share buyback is subject to a number of factors, including market conditions. QEP Resources currently has about 179 million shares of common stock outstanding.
Shares of QEP were up more than 3.5% in early trading Tuesday, at $32.12 in a 52-week range of $26.24 to $34.24.
QEPM shares were inactive, after closing Wednesday night at $23.26 in a 52-week range of $21.51 to $24.07.
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