QEP to divest midstream business to Tesoro for $2.5bn

Natural gas and crude oil exploration and production firm QEP Resources has agreed to sell its midstream business to Tesoro Logistics in a $2.5bn transaction.

The transaction includes QEP’s ownership interest in QEP Midstream Partners (QEPM) and about $230m to refinance debt at QEPM.

QEP will retain ownership of QEP Field Services’ Haynesville gathering system.

The transaction, which is subject to regulatory approvals, is expected to be completed by the end of 2014.

The deal will enable Tesoro to provide crude oil and natural gas services to producers in the Bakken region of the US in particular.

QEP Resources chairman, president and CEO Chuck Stanley said: "This transaction allows us to maximise shareholder value by deploying proceeds from the sale through multiple avenues, including returning capital to shareholders, reducing debt, and improving our competitive position through increased capital investment in our premier E&P assets.

"Post-closing, QEP will emerge as a more competitive and financially strong independent E&P company with assets in two of North America’s most prolific crude oil provinces, the Williston and Permian Basins, and low-cost, high quality natural gas properties in the Rocky Mountains and in north-west Louisiana."

QEP Resources is focused in two major regions which include the Northern Region, primarily the Rockies and the Williston Basin, and the Southern Region, primarily Texas and Louisiana.

The company gathers, compresses, treats, processes and stores natural gas.