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SALT LAKE CITY–(BUSINESS WIRE)–Questar Corp. (NYSE:STR) reported net income of $393.3 million in 2009,
or $2.23 per diluted share, compared to $683.8 million, or $3.88 per
diluted share, in 2008. In the fourth quarter of 2009, Questar net
income was $150.0 million, or $0.85 per diluted share, up 24% from
$121.2 million, or $0.69 per diluted share, for the 2008 period.
Excluding unrealized mark-to-market losses on natural gas basis-only
swaps and gains on non-core asset sales, 2009 net income was $495.2
million or $2.81 per diluted share and $143.9 million or $0.81 per
diluted share in the fourth quarter, compared to $692.9 million or $3.93
per diluted share and $174.1 million or $0.99 per diluted share in the
full year and fourth quarter of 2008, respectively. Fourth-quarter 2009
EBITDA was $465.9 million, flat with the fourth quarter of 2008, while
full-year 2009 EBITDA was $1,644.4 million compared to $1,761.2 million
for 2008. Questar E&P 2009 production totaled 189.5 Bcfe, up 11% from
171.4 Bcfe in 2008. Fourth-quarter 2009 production was 55.4 Bcfe, an
increase of 20% compared to 46.0 Bcfe in the prior-year period.

“All Questar business units executed well in 2009”

“All Questar business units executed well in 2009,” said Keith O.
Rattie, Questar Chairman, President and CEO. “Questar E&P grew
production 11%, and grew year-end proved reserves 24% in 2009 – despite
capital expenditures for drilling and completions that were about $290
million lower than 2008. What’s more, we exited 2009 with good momentum
heading into 2010 – Questar E&P production was just over 600 MMcfe per
day at year-end 2009, driven by strong growth from our Haynesville
Shale, Woodford Shale, and Pinedale Anticline plays. Questar E&P
generated EBITDA of nearly $1 billion in 2009, while the ‘rest of
Questar’s businesses’ added over $650 million EBITDA for the year,”
Rattie added.

2009 Highlights

• Questar E&P full-year 2009 EBITDA declined 11% compared to 2008, due
  primarily to a 13% decrease in realized natural gas prices and a 37%
  decrease in realized oil and natural gas liquids (NGL) prices.
  Fourth-quarter 2009 Questar E&P EBITDA declined 7% compared to the
  2008 quarter, also as a result of lower prices.
• Questar E&P natural gas, oil and NGL production was 189.5 billion
  cubic feet of natural gas equivalent (Bcfe), up 11% from 171.4 Bcfe in
  2008. Fourth-quarter 2009 production was 55.4 Bcfe, up 20% from 46.0
  Bcfe in 2008. Natural gas comprised 89% of reported 2009 production
  volumes. Fourth-quarter 2009 volumes benefited from flush production
  of wells returned to sales after price-related shut-ins and
  curtailments in the second and third quarters, and the completion of
  an inventory of standing drilled and cased wells during the quarter.
  Questar E&P replaced 379% of 2009 production and grew proved gas and
  oil reserves 24% to 2.75 Tcfe at year-end 2009.
• On February 16, the company issued an update on Questar E&P
  operations, including details on 2009 proved reserves, recent well
  results, and planned drilling activity in each of its core operating
  areas. Please refer to the operations update for further information.
• Realized natural gas prices at Questar E&P averaged $6.54 per thousand
  cubic feet (Mcf), down 13% compared to 2008, and average realized
  crude oil and NGL prices averaged $45.91 per barrel (bbl), down 37%.
  Natural gas hedges mitigated the impact of lower natural gas prices,
  increasing reported 2009 revenues by $599.3 million, while oil hedges
  increased revenues by $1.6 million. Hedging increased fourth-quarter
  2009 revenues by $120.7 million compared to an increase of $143.5
  million in the fourth quarter of 2008.
• Production volume-weighted per-unit depreciation, depletion and
  amortization (DD&A) expense at Questar E&P increased to $2.71 per
  Mcfe, compared to $1.93 per Mcfe in 2008. The increase was primarily
  due to price-related negative reserve revisions in certain fields, and
  the growing proportion of total production from fields in the
  Midcontinent that have higher DD&A rates.
• Unrealized mark-to-market losses on natural gas basis-only hedges
  decreased net income $103.0 million in 2009 compared to a loss of
  $49.7 million a year earlier.
• Sales of non-core assets at Questar E&P increased net income $1.0
  million, compared to a gain of $37.9 million in 2008.
• Wexpro net income increased 9% to $80.7 million, and its investment
  base grew 5% to $431.9 million at December 31, 2009. Wexpro produced
  48.2 Bcf of cost-of-service gas for delivery to affiliate Questar Gas,
  up 5% from 46.1 Bcf in 2008.
• Gas Management net income declined 15% due to lower processing margins
  and higher depreciation expense. Gathering margin was up 5% to $123.5
  million, while processing margin declined 15% to $66.1 million due to
  a 24% decrease in keep-whole processing margin (frac spread).
• Questar Pipeline’s 2009 net income remained essentially unchanged at
  $58.2 million, reflecting a reduction in expansion activity and lower
  processing revenues and natural gas liquid sales.
• Questar Gas earned $41.6 million, up 3% over the prior year, driven by
  customer growth and a general rate increase.

2010 EBITDA Guidance Updated; Production Guidance Remains Unchanged

Questar has revised its 2010 EBITDA guidance to $1.45 to $1.55 billion
from $1.48 to $1.58 billion, reflecting revised assumptions for natural
gas and oil prices, summarized in the table below. The company affirmed
prior production guidance of 210-215 Bcfe. Questar’s 2010 guidance
assumes capital expenditures of $1.58 billion, compared to $1.56 billion
in prior guidance.

The company’s guidance further assumes hedges in place on the date of
this release; these and other assumptions are summarized in the table
below:

Questar E&P has hedged about 73% of forecast natural gas and
oil-equivalent production for 2010 with fixed-price swaps, and an
additional 5% with collars. Current hedges are summarized in the table
at the end of this release.

Questar E&P Production Up 11%; EBITDA Down 11% in 2009

Questar E&P – a Market Resources subsidiary that acquires, explores for,
develops and produces natural gas and oil – reported production of 189.5
Bcfe in 2009, up 11% from 171.4 Bcfe in 2008. Full-year Questar E&P 2009
EBITDA was $988.0 million compared to $1,106.9 million in 2008.
Fourth-quarter 2009 EBITDA was $273.7 million compared to $295.8 million
in the 2008 quarter.

Lower realized natural gas, crude oil and NGL prices for the year offset
the benefit from growing production volumes. An 11% overall increase in
average per Mcfe production costs was driven by higher DD&A expense
partially offset by lower production taxes. Unrealized mark-to-market
losses on natural gas basis-only swaps decreased net income $103.0
million in 2009 compared to a $49.7 million loss in 2008. Sales of
non-core assets increased net income $1.0 million compared to a gain of
$37.9 million in 2008.

Fourth-quarter 2009 abandonment expense was $7.7 million compared to
abandonment and impairment expenses that totaled $34.3 million in the
2008 quarter. The current-year expense was the result of ongoing
leasehold expiration plus costs for plugging depleted wells. 2008
abandonment costs included $28 million of impairment expense.

Questar E&P production costs per Mcfe increased 11% compared to 2008,
due primarily to a 40% increase in DD&A expense that was partially
offset by a 49% decrease in production taxes.

• All 2009 unit-cost metrics, except production taxes, were negatively
  impacted by price-related voluntary production curtailments.
• Production volume-weighted per unit DD&A expense increased due to 2009
  price-related negative reserve revisions, ongoing depletion of older,
  lower-cost reserves and the increasing proportion of Questar E&P total
  production from properties in the Midcontinent region.
• Lease operating expense per Mcfe decreased as the result of increased
  production in both the fourth quarter and full-year 2009 and as the
  result of reduced well-workover and water-disposal expense.
• Production taxes per Mcfe decreased in the fourth quarter and full
  year 2009 as the result of lower realized prices for natural gas and
  oil.

Wexpro Net Income Up 9% in 2009

Wexpro – a Market Resources subsidiary that develops and produces
cost-of-service reserves for affiliate Questar Gas – reported 2009 net
income of $80.7 million compared to $73.9 million in 2008, a 9%
increase. Wexpro investment base at December 31, 2009, was $431.9
million compared to $410.6 million a year ago, a 5% increase. In the
fourth quarter of 2009, Wexpro net income was $21.5 million, up 16% from
$18.5 million in the 2008 quarter. Under a long-standing agreement with
the states of Utah and Wyoming, Wexpro recovers its costs and earns an
unlevered after-tax return of about 19 to 20% on its investment base –
the investment in commercial wells and related facilities, adjusted for
working capital and reduced for deferred income taxes and accumulated
depreciation.

Gas Management Net Income Down 15% in 2009

Questar Gas Management (Gas Management) – Market Resources gas-gathering
and processing-services business – reported 2009 net income of $69.4
million, 15% lower than 2008 as a result of narrower processing margins,
which were at record levels in the prior year, and higher depreciation
expense. Gathering margin increased $6.4 million or 5%, and processing
margin decreased $12.0 million or 15%. Net processing revenues declined
13% to $76.4 million in 2009. Fee-based gas-processing revenues
increased $3.4 million, or 12%, compared to the prior year, while
keep-whole processing margin decreased 24%, or $13.5 million. Gas
Management fee-based processing volumes increased 4% in 2009 to 210.0
million MMBtu. Depreciation expense increased $15.6 million, or 54%, as
the result of investment additions in 2008. Gas Management net income
for the fourth quarter of 2009 increased 31% to $22.0 million compared
to $16.8 million in the fourth quarter of 2008, primarily due to
increased gathering and processing margins. Processing margins increased
in the fourth quarter of 2009 as the result of improved frac spreads
driven by higher NGL prices.

Questar Pipeline Net Income Unchanged in 2009

Questar Pipeline – which provides interstate natural gas transportation
and storage services – reported 2009 net income of $58.2 million,
compared to $58.0 million in 2008. Revenues decreased $3.2 million, or
1%, reflecting reduced processing revenues and lower NGL prices, which
reached record levels in 2008. Operating, maintenance, general and
administrative expenses totaled $0.10 per decatherm transported, the
same as the prior year. Questar Pipeline net income increased 3% to
$14.4 million in the fourth quarter of 2009 compared to $14.0 million in
the year-ago period.

Questar Gas Net Income Up 3% in 2009

Questar Gas – which provides retail natural gas distribution services in
Utah, Wyoming and Idaho – reported net income of $41.6 million in 2009
compared to $40.2 million in 2008, reflecting modest customer growth and
an increase in Utah general rates effective August 2008. Operating,
maintenance, general and administrative expenses totaled $166 per
customer in 2009, compared to $142 per customer in 2008. The increase
was due to recoverable demand-side management costs of $30 per customer
in 2009 compared to $7 per customer in 2008. At December 31, 2009,
Questar Gas served 898,558 customers, up 9,956, or 1%, from December 31,
2008. Questar Gas net income was $19.9 million in the fourth quarter of
2009, 2% lower than the year-earlier period.

2009 Earnings Teleconference

Questar management will discuss 2009 results and the outlook for 2010 in
a conference call with investors Thursday, February 18, beginning at
9:30 a.m. EST. The call can be accessed on the company Internet site at www.questar.com.

About Questar

Questar Corp. (NYSE:STR) is a natural gas-focused energy company with an
enterprise value of about $9.2 billion. Questar finds, develops,
produces, gathers, processes, transports, stores and distributes natural
gas.

Forward-Looking Statements

This release includes forward-looking statements within the meaning of
Section 27(a) of the Securities Act of 1933, as amended, and Section
21(e) of the Securities Exchange Act of 1934, as amended. Such
statements are based on management’s current expectations, estimates and
projections, which are subject to a wide range of uncertainties and
business risks. Factors that could cause actual results to differ from
those anticipated are discussed in the company’s periodic filings with
the Securities and Exchange Commission, including its annual report on
Form 10-K for the year ended December 31, 2008. Questar undertakes no
obligation to publicly correct or update the forward-looking statements
in this news release, in other documents, or on the Web site to reflect
future events or circumstances. All such statements are expressly
qualified by this cautionary statement.

For more information, visit Questar’s Internet site at: www.questar.com.