QEP Resources Says Welcomes Input Of All Shareholders, Including Jana Partners

(RTTNews) - In response to a regulatory filing by activist shareholder Jana Partners LLC, oil and natural gas company QEP Resources Inc. (QEP) said Monday that its board of directors and management team are working to develop strategies as well as take actions to create value for all its shareholders.

The company added that it welcomes the input of all shareholders, including Jana Partners, which has urged the company to form an independent committee to evaluate the separation or spin off of QEP Resources' midstream business, QEPFS.

In a statement, QEP Resources said, "As an integral part of that process, we welcome the input of all shareholders, including JANA Partners, and regularly evaluate their suggestions and proposals, including the proposals that have been put forth recently by JANA. As communicated publicly and in our ongoing conversations with JANA, the Board and management continue to work with our financial advisors to diligently analyze various alternatives to create greater value for all of our shareholders."

Last Wednesday, hedge fund Jana Partners said in a filing with the U.S. Securities and Exchange Commission that it owns 7.6 percent of the outstanding shares of QEP Resources, making it the company's largest shareholder.

In a letter dated November 13 and addressed to Myles Scoggins, lead director of the board of QEP Resources, Jana Resources said it has urged the board to add board members as well as management with proven midstream experience, separate QEP's midstream business or QEPFS to unlock its true value, and pursue the sale of non-core assets to provide significant return to shareholders.

However, Jana Partners noted that QEP Chairman and CEO Charles Stanley was "unwilling to accept that true value maximization requires the full implementation of this plan, most importantly the immediate separation of QEPFS."

Jana Partners said in its letter that it has spoken with numerous parties who were interested in exploring a strategic transaction with QEP that would result in a separation of QEPFS, but these parties were very hesitant to deal with Stanley due to his apparent reluctance to pursue a full separation.

Jana Partners said, "It is the Board's duty to prevent Mr. Stanley from standing in the way of maximum value creation, yet after our discussions with you, we believe it is failing to do so."

Jana Partners said that after conveying its concerns to the board of QEP Resources regarding Stanley's behaviour, it was "astounded" by the board's response. According to the hedge fund, the board said it will respond to it after receiving additional analysis from Stanley and his management team, the same CEO and management team "whose distortion of both numbers and logic were laid out in painstaking detail" by the hedge fund.

Jana Partners noted that a standalone QEPFS would be positioned to compete effectively for assets in the merger and acquisition market that were unavailable currently to the unit as it was not seen as a credible acquirer.

The hedge fund said that given Stanley's repeated attempts to block the optimal outcome for shareholders and the clear conflicts he faces, the board of QEP Resources must immediately announce that it will set up an independent committee with its own independent advisor to evaluate the various means of separating QEPFS, including a spin off, a sponsored spinoff, or a spin merger with a strategic partner.

Jana Partners said, "Should it fail to do so, the Board will ensure that it will be held personally responsible by shareholders for its failure to put a check on a clearly conflicted CEO and management team who appear intent on depriving shareholders of QEP's full value potential."

In Monday's regular session, QEP is trading at $33.16, down $0.32 or 0.96 percent on a volume of 167,620 shares.