Questar Reports First-Quarter 2011 Income of $69.9 Million

Questar Corporation (NYSE:STR) reported first-quarter income from
continuing operations of $69.9 million or $0.39 per diluted share
compared to first-quarter 2010 results of $72.2 million or $0.41 per
diluted share. EBITDA for the quarter was $165.9 million compared to
$167.5 million in the year-ago period. Return on average common equity
(ROE) was 16.7% for the 12 months ended March 31, 2011, compared to
16.8% in the year-ago period.

'All Questar business units are off to a good start in 2011,? said
Ronald W. Jibson, Questar president and CEO. 'Wexpro and Questar Gas
reported record first quarter net income, while Questar Pipeline
completed the Overthrust Loop Expansion project on time and under
budget. Accordingly, we remain on track to deliver net income of $1.07 -
$1.11 per diluted share in 2011, unchanged from prior guidance,? Jibson
said.

Other highlights include the following:

• 
  Wexpro′s 2011 capital expenditure budget has been increased by $8
  million to $108 million, taking advantage of increased efficiencies
  and reduced finding costs that further reduce the price of
  cost-of-service gas. Questar′s overall 2011 capital expenditure budget
  has been increased to $349 million;
  
• 
  Questar Pipeline′s completion of the Overthrust Loop Expansion project
  added 325 Mdth per day of firm-transportation contracts in March 2011,
  bringing the total net firm-transportation contracts to 4,954 Mdth per
  day;
  
• 
  Questar Gas recognized $2.5 million of increased margin from customer
  growth and from the infrastructure-tracking mechanism in the first
  quarter of 2011; and
  
• 
  In April 2011, Questar executed a fixed-to-floating interest rate swap
  on $125 million of its 2.75% fixed-rate notes to take advantage of the
  current steep yield curve, which could reduce 2011 interest expense by
  up to $2 million, depending on short-term interest rate fluctuations.
  

Wexpro

Wexpro grew first-quarter 2011 net income to $22.3 million, an increase
of 5% from the first quarter of 2010 and generated $50.9 million of
EBITDA in the quarter, driven by a higher average investment base.
Wexpro earned a 20.3% after-tax return on average investment base for
the 12 months ended March 31, 2011, while growing its investment base to
$445.3 million, compared to $427.8 million in the prior-year period, a
4% increase. Wexpro continues to deliver about half of Questar Gas
Company′s annual gas-supply needs. Wexpro produced 12.7 Bcf of
cost-of-service gas during the first quarter of 2011 compared to 13.0
Bcf in the 2010 period. Under a long-standing agreement with the states
of Utah and Wyoming, Wexpro recovers its costs and earns an unlevered
after-tax return of approximately 20% on its investment base ? the
investment in commercial wells and related facilities, reduced for
deferred income taxes and accumulated depreciation. The investment base
grew in the first quarter of 2011, but the growth was partially offset
by increased deferred taxes due to 100% bonus depreciation allowed for
income tax purposes. Wexpro should continue to grow its average
investment base and net income in 2011 as bonus depreciation helps lower
the price of cost-of-service gas. A summary of changes in Wexpro′s
investment base is provided below:

Wexpro continues its efforts to reduce finding costs by pursuing
drilling efficiencies, including moving two dedicated drilling rigs to
its lowest-cost development plays in the Vermillion Basin and Powder
Wash. The benefit has been that finding costs of recently completed
wells have averaged less than $1 per Mcfe, which increases the
competitiveness of cost-of-service gas in the current low-price
environment. Resulting efficiency improvements and lower finding costs
will enable additional development drilling during 2011. Therefore,
Wexpro′s capital expenditure budget has been increased to $108 million
from $100 million for 2011.

Questar Pipeline

Questar Pipeline′s first-quarter 2011 net income was $15.3 million, down
11% from $17.2 million in the first quarter of 2010, and generated $43.3
million of EBITDA in the 2011 quarter. Questar Pipeline′s net income
decrease was largely driven by higher operating, maintenance, general
and administrative costs. Questar Pipeline earned an 11.4% return on
average equity for the 12 months ended March 31, 2011. A summary of
Questar Pipeline revenues is provided below:

At March 31, 2011, Questar Pipeline held net firm-transportation
contracts totaling 4,954 thousand decatherms (Mdth) per day, compared to
4,683 Mdth per day at March 31, 2010, a 6% increase. Transportation
revenues increased due to completion of the Overthrust Loop Expansion
that was completed on time and under budget and put into service in
March 2011. The project added long-term firm-transportation contracts of
325 Mdth per day and currently generates an ROE of about 12.9%. It has
additional unsubscribed capacity of 300 Mdth per day that may be
utilized when the Ruby Pipeline comes on line later this year, which
could result in a higher return.

NGL sales decreased 10% in the first quarter of 2011 due to a new
third-party processing plant upstream of Questar Pipeline′s Price, Utah,
processing facilities. In the first quarter of 2011, the average price
rose 11% from the prior-year quarter to $1.66 per gallon. NGL volumes
decreased 18% in the first quarter of 2011 over the same 2010 period.
However, increased transportation revenues more than offset the drop in
NGL sales. The sum of operating, maintenance, general and administrative
expense for the quarter ended March 31, 2011, totaled $0.11 per
decatherm transported, compared to $0.09 in the same 2010 period.
Questar Pipeline continues to generate strong cash flows that will
support corporate-wide capital projects as well as additional dividend
growth.

Questar Gas

Questar Gas grew first-quarter 2011 net income to $33.4 million, up 1%
from the first quarter of 2010 and generated $71.3 million of EBITDA in
the 2011 quarter. Questar Gas earned a 10.2% return on average equity
for the 12 months ended March 31, 2011. Changes in Questar Gas′s margin
(revenues less cost of gas sold) are summarized in the following table:

As of March 31, 2011, Questar Gas served 914,054 customers, an increase
of more than 10,000 customers, or 1.1%, from the same time last year.
Customer growth and an increase in rates associated with the company′s
revenue-decoupling mechanism contributed to higher margins in the 2011
period. Changes in margin from demand-side-management (DSM)
cost-recovery revenues are offset by equivalent changes in the program′s
expenses. Operating, maintenance, general and administrative expenses,
excluding DSM costs, were $141 per customer for the 12 months ended
March 31, 2011, compared to $133 per customer in the prior-year period.

On April 8, 2010, the Public Service Commission of Utah approved a
settlement in Questar Gas′s Utah general rate case that indefinitely
extended the existing revenue-decoupling mechanism and authorized an
increase in the utility′s allowed return on equity from 10% to 10.35%.
The stipulation increased customer rates by $5 million annually and
approved an infrastructure-cost-tracking mechanism that allows the
company to place into rate base and earn on capital expenditures for a
multi-year pipeline-replacement program once the new facilities are in
service.

2011 EPS guidance affirmed

Questar management estimates that 2011 net income could range between
$1.07 and $1.11 per diluted share, unchanged from prior guidance,
despite anticipated increases in interest expense, higher deferred taxes
and lower NGL revenues. Even with the impact of bonus depreciation,
Wexpro expects its average investment base and earnings to grow. Questar
Pipeline′s growing transportation capacity could offset the impact of
expected lower NGL revenues and generate strong cash flows that will
support Questar′s capital requirements and growing dividend. Questar
Gas′s multi-year pipeline-replacement program and strong customer growth
will support growing rate base and returns. Finally, higher interest
expense in 2011 will be mitigated by the recently executed $125 million
fixed-to-floating interest rate swap that allows the company to convert
a portion of its fixed rate interest payments to today′s historically
low short-term interest rates.

2011 earnings teleconference

Questar management will discuss first-quarter 2011 results from
continuing operations and the outlook for the remainder of 2011 in a
conference call with investors Wednesday, April 27, beginning at 9:30
a.m. ET. The call can be accessed at www.questar.com.

About Questar Corporation

Questar is a Rockies-based integrated natural gas company with an
enterprise value of about $4.4 billion, operating through three
principal subsidiaries:

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

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
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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 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.