Questar Reports Second-Quarter 2012 Net Income of $39.2 Million

Questar Corporation (NYSE:STR) reported second-quarter net income of
$39.2 million, or $0.22 per diluted share compared to second-quarter
2011 net income of $40.3 million, or $0.22 per diluted share. Earnings
before interest, taxes, depreciation and amortization (EBITDA) for the
quarter were $121.2 million compared to $115.9 million in the year-ago
period. Return on average common equity (ROE) was 19.7% for the 12
months ended June 30, 2012, compared to 19.4% in the year-ago period.

^(a) Management defines EBITDA as net income (loss) before
gains and losses from asset sales, interest expense, depreciation,
depletion and amortization, abandonments and impairments, other special
items and income taxes. See computations in attached schedule.

'Questar′s businesses all performed in line with our expectations for
the second quarter,? said Ronald W. Jibson, Questar chairman, president
and CEO. 'Net income dipped slightly to $39.2 million compared to the
2011 period, but for the year-to-date, net income was 4% higher than in
2011. We generated more than $121 million of EBITDA in the second
quarter, a 5% increase over the same quarter in 2011. Individually,
Questar Gas posted a small seasonal loss, which is typical in the second
quarter. Wexpro′s net income rose by 9% while Questar Pipeline′s income
was comparable to 2011. In spite of headwinds, such as lower natural gas
and liquids prices, higher pension costs and property taxes, we remain
on track to meet our 2012 earnings guidance of $1.15 to $1.19 per
diluted share.?

Other second-quarter 2012 highlights include:

• 
  Questar Gas's investment in its feeder-line replacement program was
  $19.9 million in the quarter compared to $14.5 million in the
  prior-year quarter.
  
• 
  Wexpro grew its average investment base over the past 12 months by 9%
  to $484.4 million, up from $446.4 million last year.
  
• 
  Wexpro's production grew by 23% in the second quarter compared to the
  year-ago period, lowering cost-of-service gas costs to Questar Gas
  customers.
  
• 
  Questar's consolidated net cash flow from operating activities before
  working capital changes increased $13.5 million to $271.6 million in
  the first half of 2012 compared to the 2011 period, due to higher net
  income, depreciation and deferred taxes.
  
• 
  Questar spent $52.2 million to repurchase an additional 2.62 million
  shares of its common stock in the quarter, in accordance with the plan
  to accelerate repurchases through the remainder of 2012.
  

Questar Gas

Questar Gas reported a seasonal loss of $2.3 million, typical for the
second quarter, and generated $14.5 million of EBITDA compared to net
income of $0.4 million and EBITDA of $17.9 million for the second
quarter of 2011. On a financial basis, Questar Gas earned a 9.9% ROE for
the 12 months ended June 30, 2012. Changes in Questar Gas margin
(revenues less cost of gas sold) are summarized in the following table:

As of June 30, 2012, Questar Gas served over 924,000 customers, an
increase of over 10,000 customers, or 1.2% from the same time last year,
a slightly higher growth rate than recent years. New customers increased
margin by about $0.5 million for the quarter. Changes in margin from
demand-side-management (DSM) cost-recovery revenues are offset by
equivalent changes in the program's expenses. Bad debt costs decreased
$1.1 million in the second quarter of 2012 compared to the second
quarter of 2011. Combined operating and maintenance (O&M) and general
and administrative (G&A) expenses, excluding DSM costs, were $71 per
customer for the six months ended June 30, 2012, the same as a year
earlier.

Questar Gas continues to pursue its multi-year feeder-line and
infrastructure-replacement and upgrade program, maintaining its focus on
system-wide safety and reliability by the proactive replacement of aging
high-pressure, large-diameter steel pipe. In the first half of 2012,
Questar Gas spent $36 million to replace this pipe and expects to spend
about $55 million on the replacement program this year. An
infrastructure-cost-tracking mechanism for the replacement program,
approved by Utah regulators in 2010, insures timely inclusion of related
expenditures into rate base. Questar Gas recognized about $3 million of
increased margin due to this program in the first half of 2012.

Wexpro

Wexpro grew second-quarter 2012 net income to $25.8 million, an increase
of 9% from $23.7 million in the second quarter of 2011. Wexpro generated
$59.6 million of EBITDA in the current quarter, 14% higher than the
prior year period, driven by a growing investment base. It earned a
19.9% after-tax return on average investment base for the 12 months
ended June 30, 2012. Wexpro′s investment base was $517.7 million at
quarter-end. It produced about 55 billion cubic feet (Bcf) of
cost-of-service gas in the 12 months ended June 30, 2012, compared to
about 50 Bcf for the 12 months ended June 30, 2011. In addition, Wexpro
increased natural gas liquids (NGL) and oil revenues by 18% in the
quarter compared to the same period in 2011. These revenues are shared
with Questar Gas customers, thereby benefitting both customers and
shareholders. 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 20% on its average investment base. Wexpro′s natural gas
production currently provides over half of the utility's annual
gas-supply requirements. A summary of changes in Wexpro's investment
base is provided below:

Questar Pipeline

Questar Pipeline′s second-quarter 2012 net income was $16.1 million,
down 3% from $16.6 million in the second quarter of 2011. Questar
Pipeline generated $45.4 million of EBITDA in the 2012 quarter and
earned an 11.4% ROE for the 12 months ended June 30, 2012. The drop in
net income was primarily due to lower NGL revenues and higher
depreciation costs. NGL revenues were down 18% in the second quarter of
2012 compared to the prior-year period, reflecting lower NGL prices that
more than offset higher NGL sales volumes. Questar Pipeline's combined
O&M and G&A costs were down 1.4% for the recent quarter when compared to
the same quarter in 2011. O&M and G&A expenses for the second quarter of
2012 totaled $0.10 per decatherm transported, about $0.01 lower than the
second quarter of 2011. A summary of changes in Questar Pipeline
revenues is provided below:

At June 30, 2012, Questar Pipeline held net firm-transportation
contracts totaling 4,969 thousand decatherms (Mdth) per day, essentially
unchanged from 4,987 Mdth per day at June 30, 2011. The modest decrease
in transportation revenues was from lower interruptible transportation
and expired contracts.

Share repurchases accelerated

During the second quarter of 2012, Questar repurchased an additional
2.62 million shares of its common stock for about $52.2 million, an
average of $19.96 per share. In total, the company has repurchased about
2.98 million shares at a total cost of $59.2 million, averaging $19.91
per share under the program, which is authorized to repurchase up to
$100 million of common stock through the end of 2012. The goal of the
repurchase program is to bring the outstanding share count to about 175
million shares. The share count as of June 30, 2012, was about 175.7
million shares.

2012 earnings guidance maintained

Questar management reaffirms current guidance that earnings could range
from $1.15 to $1.19 per diluted share. 'In spite of some headwinds, we
are confident in our current guidance range,? Jibson said. 'Wexpro′s
investment base, production and earnings continue to grow. Improving
customer growth and the feeder-line replacement program will enable
Questar Gas to continue growing rate base and earnings over the coming
years. Questar Pipeline and Wexpro cash flow will continue to support
Questar's expenditure priorities of investing in our businesses,
dividend growth and the share repurchase program.?

Second-Quarter 2012 earnings teleconference

Questar management will discuss second-quarter 2012 results and the
outlook for the remainder of 2012 in a conference call with investors
Thursday, July 26, beginning at 9:30 a.m. ET. The call can be accessed
on the company website at www.questar.com.

About Questar Corporation

Questar is a Rockies-based integrated natural gas company with an
enterprise value of about $4.7 billion, operating through three
principal subsidiaries:

• Questar Gas provides retail natural gas distribution in Utah,
  Wyoming and Idaho;
  
• Wexpro develops and produces natural gas on behalf of Questar
  Gas; ?and
  
• Questar Pipeline operates interstate natural gas pipelines and
  storage facilities in the western U.S. and provides other energy
  services.
  

Forward-Looking Statements

This document may contain or incorporate by reference information that
includes or is based upon 'forward-looking statements' within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements give expectations or forecasts of future
events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. They use words such as
'anticipate,' 'estimate,' 'expect,' 'project,' 'intend,' 'plan,'
'believe,' and other words and terms of similar meaning in connection
with a discussion of future operating or financial performance. Any or
all forward-looking statements may turn out to be wrong. These
statements are based on current expectations and the current economic
environment. They involve a number of risks and uncertainties that are
difficult to predict. Actual results could differ materially from those
expressed or implied in the forward-looking statements. Factors that
could cause actual results to differ materially include, but are not
limited to the following:

• 
  general economic conditions, including the performance of financial
  markets and interest rates;
  
• 
  changes in energy commodity prices;
  
• 
  changes in industry trends;
  
• 
  changes in laws or regulations; and
  
• 
  other factors, most of which are beyond Questar's control.
  

Questar undertakes no obligation to publicly correct or update the
forward-looking statements in this document, in other documents, or on
the website to reflect future events or circumstances. All such
statements are expressly qualified by this cautionary statement.

For more information, visit Questar's website at www.questar.com