July 9, 2001
(N)
NYSE:STR
01-14

Contact: R. Curtis Burnett
Business: (801) 324-5647

Questar Provides Earnings Guidance, Operations Update

SALT LAKE CITY — Questar Corp. (NYSE:STR) has provided earnings guidance in advance of its second-quarter earnings release scheduled for July 30 and prior to its participation in the INGAA Security Analysts Seminar on Thursday, July 12, in Colorado Springs.

The integrated energy company said earnings for the second quarter of 2001 should range between $.31 and $.35 per share compared with $.33 a year earlier. On a recurring-earnings basis, the projected 2001 second-quarter earnings would represent a 15% to 30% increase over the year-earlier total of $.27 per share, but would fall below the current First Call consensus estimate of $.37 per share.

R.D. Cash, Questar chairman and chief executive officer, said the current-year's second-quarter earnings, while strong on a historical basis, will not meet market expectations largely because of recent weakness in natural gas prices. He noted that many financial analysts have reduced their 12-month price targets for natural gas in response to lower-than-expected short-term demand. "Seasonal price weakness notwithstanding, natural gas fundamentals remain strong, and Questar's basic long-term strategies are on track," Cash said.

"Natural gas demand will grow significantly over the next few years, and the Rocky Mountains will be an increasingly critical supply source. Questar is well positioned with a growing exploration and production operation and strategically located pipeline and storage systems to benefit from strong fundamentals in western natural gas and electric-power markets," he said. Cash said new pipeline-expansion projects and the construction of natural gas-fired power generation plants will require development of new reserves.

The Questar chairman said recent "open seasons" identified strong market support for expansion of the company's core pipeline system, as well as development of a new salt-cavern storage project.

Cash said second-quarter natural gas production volumes would be comparable to first-quarter volumes of 15.8 billion cubic feet. The company expects natural gas production to grow in the second half, especially with continuing successes at its Pinedale, Wyo., gas play. Pinedale drilling is proceeding on schedule, and recent results have prompted company officials to raise per-well reserve estimates by about 1 billion cubic feet equivalent (Bcfe) to an average of 6 to 7 Bcfe. Cash said the company believes there are 135-150 attractive well locations, based on 80-acre spacing. He said there is "good potential" to reduce spacing to 40 acres, which could double estimated reserves. Cash reiterated previous estimates that gross daily Pinedale production could reach 70-80 million cubic feet of gas and 700-750 barrels of oil by year end.

Based on the company's earnings projections, Cash said, "Questar will continue to generate returns on equity and assets that rank among the highest in our industry peer group."

Questar's strategies are based on long-term gas-pricing assumptions of about $3 to $3.50 per thousand cubic feet (Mcf). "We recognize that gas prices will be highly volatile, and we can continue to grow and be successful at the more realistic prices we are seeing today," he said.

"We expect prices to trend upward as demand increases, especially for power generation, and with the approach of the traditional winter heating season."

Questar has hedged approximately 61% of its second-half 2001 natural gas production at a price range of $2.99 to $3.28 per Mcf, net to the wellhead. About 10% of the company's 2002 production is hedged at a price of $3.88 to $4.18, net to the wellhead.

Questar is a $2.5 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.

Forward-Looking Statements:

This release contains statements expressing expectations of future plans, objectives and performance that constitute forwardlooking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements based on future expectations rather than on historical facts are forwardlooking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. A discussion of risks and uncertainties, which could affect future results of Questar and its subsidiaries, is included in the company's periodic reports filed with the Securities and Exchange Commission.

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VISIT QUESTAR'S INTERNET SITE at: http://www.questar.com. For more information, see Company News On-Call: http://www.prnewswire.com or fax 800-758-5804, ext. 728887.