Colorado Court Awards Questar Subsidiaries
Net $110 Million in TransColorado Case

SALT LAKE CITY — Questar Corp. (NYSE:STR) today announced that the Garfield County District Court in Glenwood Springs, Colo., has issued a final judgment in favor of Questar Corp. affiliates in a suit with Kinder Morgan Inc. affiliates over the TransColorado Pipeline in western Colorado.

The court declared as "valid and enforceable" a 1997 agreement and a 1998 Letter of Understanding allowing Questar TransColorado to "put" its 50% ownership of TransColorado to the Kinder Morgan entities on or before Mar. 31, 2001.

The court said KN TransColorado "breached" both agreements "by failing to honor the Put provision, and KN TransColorado is liable to Questar TransColorado and Questar Pipeline ... for damages, and must pay the same within 45 days ..." following the issuance of the order.

In its Final Judgment, the Colorado court ordered:

1) A net Put payment of $114.8 million to Questar TransColorado. The figure represents the depreciated value of Questar TransColorado's 50% interest in the TransColorado Pipeline, plus 50% of all cash investments held by the partnership.

2) Return of cash contributions and loan origination fee — totaling $2.8 million — paid by Questar Pipeline after Questar TransColorado exercised the put on Mar. 31, 2001.

3) Prejudgment interest of $10.1 million up to April 7, 2002, and $25,760 per day after April 7, 2002, until entry of the Final Judgment.

Questar TransColorado — upon full receipt of the above damages in cash — shall convey all of its 50% interest in TransColorado to KN TransColorado or its designee. The court ordered that the above amounts be reduced by $21.8 million to compensate the Kinder Morgan entities for Questar's failure to provide "head-end" compression for the pipeline.

The court dismissed all other claims brought by KN TransColorado in the case.

Questar is a $3.1 billion diversified natural gas company headquartered in Salt Lake City. Through subsidiaries, it engages in gas and oil development and production; gas gathering, processing and marketing; interstate gas transmission and storage; retail gas distribution; retail energy services; and information systems and technologies.