QUESTAR THIRD-QUARTER NET INCOME
INCREASES 81% WITH HIGHER ENERGY PRICES, PRODUCTION

SALT LAKE CITY — Questar Corp. (NYSE:STR) said net income increased 81% in the third quarter of 2000 compared with a year earlier, boosted by a 157% rise in profits from oil and gas exploration and production activities.

The diversified natural gas company reported net income of $27.3 million, or $.34 per share, in the 2000 period compared with $15.1 million, or $.18 per share, a year ago. Net income for both periods included gains from sales of company-owned securities. Excluding the gains, net income for the current-year quarter was $23.1 million, or $.29 a share, versus $11.2 million, or $.13 per share, in the 1999 period, a 106% increase.

For the first nine months of 2000, Questar's net income was $103.7 million, $1.29 per share — 27% above the $81.5 million, $.98 per share, in the comparable year-earlier period. Excluding securities sales, nine-month net income totaled $89.4 million, $1.11 per share, in 2000 and $65.9 million, $.79 per share, in 1999, a 36% increase.

There was an average of 80.6 million shares of common stock outstanding during the first nine months of 2000 compared with 82.8 million in the prior-year period. Questar has repurchased 3.2 million shares since mid-1999, improving earnings by $.03 per share in 2000.

R.D. Cash, Questar chairman, president and chief executive officer, said, "Questar continues to ride the crest of rising demand for natural gas combined with much-stronger energy commodity prices. We positioned ourselves over the past decade to take advantage of this positive combination by steadily expanding our production and reserves."

THIRD-QUARTER RESULTS

Questar Market Resources — which includes exploration and production, gas management and energy trading — had net income of $24 million in the third quarter of 2000 compared with $11.3 million in the year-earlier period.

Questar Exploration and Production (QEP) — which operates in the U.S. and Canada — increased net income 157% to $14.2 million in third-quarter 2000 on the strength of higher oil and natural gas prices and a 12% increase in gas production. QEP earned $5.5 million in the third quarter of 1999. The subsidiary produced 17.4 billion cubic feet (Bcf) of gas in the 2000 quarter, and the average sales price increased 47% to $2.98 per thousand cubic feet (Mcf). This included a 143% increase in Canadian gas production to 1.8 Bcf, reflecting a reserve acquisition in the first quarter of the year. The average selling price for oil and natural gas liquids rose 30% to $20.06 per barrel, more than offsetting a 2% production decline to 562,000 barrels. QEP's results also benefited from a $.02 per Mcfe year-to-year reduction in the amortization rate due to adding reserves at a lower finding cost.

Another Market Resources subsidiary, Wexpro Co., increased net income from $5.4 million in third-quarter 1999 to $6.2 million in the current-year period. Wexpro develops gas reserves owned by Questar's distribution utility and receives returns from investments in successful wells. The investment base net of deferred taxes increased to $116 million at the end of third-quarter 2000 versus $106 million a year earlier.

Market Resources' gas management and energy trading groups earned $3.6 million during the 2000 quarter compared with $393,000 in the year-earlier quarter. Primary factors were improved gas-marketing and liquids-processing margins due to higher commodity prices.

Questar Regulated Services — including interstate transmission and storage and retail gas distribution — reported a combined $1.3 million loss during the 2000 quarter, virtually the same as a year earlier. Earnings for Questar Pipeline rose 47% to $6.6 million compared with the year-earlier period. The pipeline's 1999 third-quarter earnings were reduced by an after-tax $1.6 million operating loss from its investment in the TransColorado Pipeline. The pipeline runs from northwestern Colorado to northern New Mexico. Questar Pipeline wrote down its investment in TransColorado in the fourth quarter of 1999. Questar Pipeline's transportation volumes rose 12% to 60 million decatherms.

Questar Gas — which serves approximately 692,000 distribution customers in Utah and portions of Wyoming and Idaho — recorded a seasonal $7.9 million loss in third-quarter 2000. The company posted a $5.9 million loss in the 1999 period. The 1999 quarterly results reflected several one-time positive revenue and other adjustments. While the Public Service Commission of Utah in August 2000 issued a general rate order that provided for additional revenues, the full beneficial impact of the order will not occur until the fourth quarter with an increase in heating-related deliveries.

Questar Gas's customer growth remained among the strongest in the industry with a 2.9% year-to-year increase to 691,550 customers on Sept. 30, 2000.

Questar InfoComm, a telecommunications subsidiary, had net income of $1.2 million in the 2000 quarter compared with almost $1 million a year earlier. Improvement in Questar InfoComm's primary business was offset by a $655,000 loss for a subsidiary, Consonus, Inc. Consonus is a start-up electronic-infrastructure company that is developing a network of ultra-secure data centers, networks and application-delivery systems.

Questar's gain from stock-security sales, primarily Nextel Corp. securities, was $4.2 million after taxes, or $.05 per share, about the same as for the year-earlier period.

NINE-MONTH PERFORMANCE

An 88% improvement in Questar Market Resources' net income was the primary contributor to the corporation's year-to-date performance. Market Resources earned $56.2 million in the first nine months of 2000 compared with $30 million for the same period in 1999. QEP's earnings rose 150% due to a 13% increase in gas production, a 31% improvement in gas prices to $2.55 per Mcf, and a lower full-cost accounting amortization rate. Oil and natural gas-liquids prices also rose 55% to $20.48 per barrel while production was 5% lower.

Wexpro earned $17.9 million year to date, a $2.7 million increase due to increased investment in gas-development drilling and 81% higher oil and natural gas-liquids prices.

Questar Regulated Services' earnings for the nine months were stable — $30.5 million in 2000 and $30.1 million in 1999. Questar Pipeline's earnings were $2.3 million higher than a year earlier, while Questar Gas's results declined by $2.1 million for the period.

Security sales amounted to $14.3 million, $.18 per share, in the 2000 period, and $15.6 million, $.19 per share, for the same period in 1999. 

FOURTH-QUARTER OUTLOOK

Questar management said several factors could positively affect the fourth-quarter 2000 earnings performance compared with the year-earlier period. If third-quarter 2000 trends continue, natural gas production and sales prices of natural gas and oil will be significantly higher in fourth-quarter 2000 compared with a year ago. In the 1999 quarter, the pipeline subsidiary recorded a $31.3 million, or $.38 per share, after-tax write-down of its investment in the TransColorado Pipeline partnership. Questar Gas received a positive general rate case order on Aug. 11, 2000, potentially adding another $6.5 million in revenues on an annualized basis to the $7 million granted on an interim basis effective Jan. 1, 2000. In addition, the pipeline and gas-distribution results will benefit from an early retirement program that could produce an estimated $1 million in cost savings in fourth-quarter 2000 and $6 million to $8 million annually. Questar's Pinedale Anticline drilling program could have a modest impact on production volumes and the full-cost amortization rate in fourth-quarter 2000, but a larger potential impact would occur in 2001.

Questar is a $2.3 billion diversified natural gas 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.