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Wexpro Increases Record Investment In Gas-Development Projects

SALT LAKE CITY — Wexpro Co., a subsidiary of Questar Corp. (NYSE:STR), plans to expand its record investment in Rocky Mountain region gas-development projects with capital expenditures of $22 million in year 2000.

Wexpro manages and develops properties on behalf of Questar Gas, a retail gas-distribution affiliate that serves 680,000 customers in Utah, southwestern Wyoming and southeastern Idaho. Wexpro operates under a stipulation agreement with the states of Utah and Wyoming that provides competitive returns on the company's investment in successful gas and oil wells.

The company's investment in producing wells and related facilities increased to $109 million at year-end 1999, an all-time high, compared with $97.6 million a year earlier. The increase reflected increased development opportunities and successful drilling projects. Under the Wexpro agreement, the company earns competitive rates of return on investments in successful gas and oil wells and bears the costs of dry holes. Currently, the average allowed return is 18.9% after taxes.

Wexpro-produced gas represented about 45% of Questar Gas' total 1999 gas sales. The  supplies were delivered to the utility at a cost  below the market price of other sources. "This long-term, stable-cost gas supply allows Questar Gas to better manage gas-price volatility and maintain competitive rates," said Gary L. Nordloh, president and CEO of Wexpro. The utility's gas reserves currently exceed 300 billion cubic feet equivalent.

Wexpro's planned drilling expenditures in 2000, which are similar to 1999 levels, will center principally in the Island field in southeastern Utah and the Birch Creek and Pinedale/Mesa areas of southwestern Wyoming. Wexpro is the operator of both the Island and Pinedale/Mesa areas and a partner in the Birch Creek field.

 Wexpro and Questar Exploration and Production Co. (QEP) recently completed a gas well in the Pinedale area that produced 11.4 million cubic feet (MMcf) of natural gas into a pipeline during the initial 24-hour period. A second Wexpro/QEP well in the area was flowing gas at a combined rate of 6.7 MMcf per day from three formation zones that were fracture stimulated. Wexpro/QEP have combined working interests of 93% and 92.5% in the two wells. Another partner, Double Eagle Petroleum and Mining Co. (NASD:DBLE) owns working interests of 6.9% and 7.55% in the wells.

Questar officials said the successful wells confirm the significance that continued development of the Pinedale tight-sands gas play should have on Questar's reserve base and production.

Questar is a $2.2 billion integrated energy resources and services company headquartered in Salt Lake City. Through subsidiaries, it engages in energy development and production; gas gathering and processing; wholesale gas, electricity and liquids trading; retail energy services; interstate gas transmission and storage; retail gas distribution; and information systems and technologies.