QUESTAR NET INCOME RISES 14% ON 92% INCREASE
IN OIL AND GAS EXPLORATION AND PRODUCTION EARNINGS

SALT LAKE CITY — Net income for Questar Corp. (NYSE:STR) increased 14% in the second quarter of 2000 on the strength of a 92% increase in earnings from oil and gas exploration and production.

The diversified natural gas company reported net income of $26.2 million, or $.33 per diluted share, in the 2000 quarter versus $23.1 million, or $.28 per diluted share, a year earlier. Excluding gains from sales of company-owned securities, Questar earned $21.6 million, $.27 per share, in the current-year quarter and $17 million, $.21 per share, in the prior-year period.

For the first six months of this year, Questar's net income was $76.4 million, $.95 per diluted share, compared with $66.4 million, $.80 per diluted share, in the prior year. Excluding security sales, the year-to-year comparison was $66.3 million, $.82 per share, for the first half of 2000 versus $54.7 million, or $.66 per share, for the 1999 period.

There was an average of 80.6 million shares outstanding in the 2000 period compared with 82.8 million a year ago.

R.D. Cash, Questar chairman, president and CEO, said: "We have positioned the company to leverage the benefit of higher energy prices with our strong gas-production growth, expanded drilling, declining full-cost amortization rates and year-to-date reserve replacement. We are increasingly optimistic about achieving our financial and operating objectives over the next couple of years, even if energy prices moderate. We are excited about the prospects for a major new drilling project in the Pinedale region of Wyoming that could significantly increase gas production and reserves and further reduce the amortization rate."

Second-Quarter Results

Questar's Market Resources group, which conducts oil and gas exploration and production, gas gathering, energy trading and gas development — earned $17.2 million in second-quarter 2000 compared with $10.4 million in the comparable year-earlier period.

Questar Exploration and Production (Questar E&P) increased net income to $9.6 million in the 2000 quarter from $5 million a year earlier. The average natural gas sales price rose 28% to $2.48 per thousand cubic feet (Mcf), while production was 15% higher at 17.7 billion cubic feet (Bcf). Canadian gas production rose 165% to 1.9 Bcf  in the second quarter of 2000, reflecting a reserve acquisition in January of this year. U.S. gas production was 8% above year-ago levels at 15.8 Bcf as increased drilling activity offset a property sale in the fourth quarter of 1999.

Oil-and-natural-gas-liquids prices were 45% higher at $19.76 per barrel in the current-year quarter, offsetting a 4% production decline to 563,000 barrels. Canadian liquids production increased more than 70% to 180,000 barrels as a result of the reserve acquisition and higher drilling activity. Second-quarter 2000 represented the highest production quarter ever recorded by Questar E&P — a per-month average of 7 billion cubic feet equivalent (6 Bcf of gas, 1 billion cubic feet equivalent of liquids).

Questar E&P's earnings also benefited from a $.03 drop in the U.S. amortization rate to $.79 in second-quarter 2000 compared with a year earlier.

Wexpro, a contract operating subsidiary, had $6 million of net income, $1.2 million higher than in the 1999 period. The company increased its investment in developing gas reserves owned by Questar Gas, a gas-distribution affiliate, and received higher prices for oil-production sharing. Market Resources' energy-trading and gas-management operations reported $1.6 million in combined earnings for the current-year quarter versus $666,000 a year ago.

Questar's Regulated Services group earned $3.9 million during second-quarter 2000 compared with last year's $4.2 million. Questar Pipeline, an interstate gas transmission and storage subsidiary, had $7.1 million in net income, about the same as the prior-year quarter. The pipeline's 1999 quarterly results reflected several one-time gains that more than offset a $1.1 million after-tax loss from the company's TransColorado Pipeline partnership. Questar Pipeline wrote down its investment in the TransColorado partnership in late 1999. The pipeline also earned $400,000 after taxes in the 2000 period from a gas-processing plant that began operation in mid1999.

Questar Gas experienced a seasonal loss of $3.3 million in the 2000 period. In the comparable year-earlier quarter, the utility recorded a $2.8 million  loss. The company continued to see the impact of costs associated with strong customer growth — an annualized 3.2% rate — and lower usage per customer. Questar Gas is seeking to address these issues in a general rate case pending before a Utah regulatory commission.

Corporate and Other Operations reported $5.1 million in net income during second-quarter 2000 versus $8.5 million a year earlier. After-tax gains from sales of company-owned securities were $2 million ($.02 per share) below year-ago levels. Questar InfoComm, which provides telecommunications and information technology, reported $944,000 in net income after earning $1.5 million in the 1999 period. Questar InfoComm's earnings included a $63,000 quarterly loss from Consonus Inc. (formerly MetroNet Services), an affiliate that markets business-to-business Internet and network hosting services.

Six-Month Performance

The corporation's six-month earnings reflected a 72% increase in Market Resources' net income and stable results for Regulated Services. Market Resources earned $32.2 million in the first six months of the year versus $18.7 million in the comparable 1999 period. Natural gas production was 14% higher and the average selling price rose 23% to $2.33 per Mcf. Wexpro's six-month earnings were $1.9 million higher because of the expanded cost-of-service gas-development drilling.

Regulated Services reported net income of $31.8 million, up $400,000 compared with the first six months of 1999. Corporate and Other Operations had net income of $12.4 million, $4 million below the previous year, primarily because of reduced securities sales.

Questar is a $2.3 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.

This news release contains some forward-looking statements about the future operations and expectations of Questar Corp. and its subsidiaries. These statements were made in good faith, and the corporation believes they are reasonable representations of the company's expected performance at this time. Actual results may vary from stated expectations due to a variety of factors.