HOUSTON, Oct. 30 /PRNewswire-FirstCall/ -- Ultra Petroleum Corp.
(NYSE: UPL) continued to deliver strong financial and operating
performance for the third quarter of 2009. Highlights for the
quarter include: -- Record natural gas and crude oil production of
45.9 Bcfe, an increase of 27 percent from third quarter 2008 --
Operating cash flow(1) of $172.6 million -- Earnings of $85.8
million, or $0.57 per diluted share - adjusted -- Per unit all-in
costs of $2.48 per Mcfe, down 22 percent from the same period in
2008 -- Superior returns in third quarter (adjusted): 71 percent
cash flow margin, 35 percent net income margin, 59 percent return
on equity, and 26 percent return on capital For the third quarter
of 2009, production of natural gas and crude oil increased 27
percent to a record 45.9 billion cubic feet equivalent (Bcfe) as
compared to 36.3 Bcfe during the third quarter of 2008. Ultra
Petroleum's third quarter 2009 production levels were the highest
quarterly levels ever achieved by the company. The company's
production for the third quarter was comprised of 43.9 billion
cubic feet (Bcf) of natural gas and 341.5 thousand barrels of
condensate (MBbls). Ultra Petroleum reported operating cash flow(1)
for the third quarter of $172.6 million. Adjusted net income was
$85.8 million, or $0.57 per diluted share for the quarter. Due to a
non-cash unrealized mark-to-market charge of $145.0 million ($94.1
million after tax) on the company's financial commodity contracts,
the company reported a loss of $8.3 million, or ($0.06) per diluted
share. The unrealized loss on commodity derivative contracts is
typically excluded by the investment community in published
estimates. "Once again, Ultra Petroleum's profitable growth
strategy delivers. The company organically grew production by 27
percent while simultaneously decreasing all-in costs 22 percent to
$2.48 per Mcfe from the same quarter in 2008. While the industry
continued to experience low natural gas prices during the quarter,
our returns and margins remain similar to ones achieved last year
in a more robust commodity price environment. This is a true
testament to our world-class legacy asset coupled with our
industry-leading low-cost structure," stated Michael D. Watford,
Chairman, President and Chief Executive Officer. During the third
quarter of 2009, Ultra Petroleum's average realized natural gas
price was $5.13 per thousand cubic feet (Mcf), including realized
gains and losses on commodity derivatives. The company's average
price for natural gas was $3.09 per Mcf, excluding realized gains
and losses on commodity derivatives. The realized condensate price
in the third quarter of 2009 was $57.47 per barrel (Bbl). Natural
gas and crude oil production for the nine month period ended
September 30, 2009 increased to 132.5 Bcfe compared to 104.6 Bcfe
for the nine month period ended September 30, 2008, a 27 percent
increase. Production for the first nine months of 2009 was
comprised of 126.5 Bcf of natural gas and 990.7 MBbls of
condensate. Operating cash flow(1) for the nine month period was
$465.3 million. Adjusted earnings for the nine month period ended
September 30, 2009 were $203.7 million or $1.35 per diluted share.
The realized natural gas price during the nine month period was
$4.89 per Mcf, including realized gains and losses on commodity
derivatives. The company's average price for natural gas was $3.24
per Mcf, excluding realized gains and losses on commodity
derivatives. The realized condensate price was $44.42 per Bbl.
Wyoming - Operational Highlights In the third quarter of 2009, 67
Pinedale-Lance wells were placed on production, including 31
operated by Ultra. The average initial production rate (IP) for the
31 Ultra-operated Pinedale wells was 10,356 Mcf per day. The
average of all Ultra-interest wells was 8,508 Mcf per day, while
the average of the Ultra non-operated wells was 6,917 Mcf per day.
The table below details the IP rates for Ultra's operated wells
during the third quarter of 2009. Pinedale Well Performance - Ultra
Operated ------------------------------------------ Area Well Name
IP (Mcf per day) ---- --------- ---------------- Mesa MS 5D1-34D
13,654 Mesa MS 6B1-34D 10,765 Mesa MS 16D1-33D 10,261 Mesa MS
13D1-27D 7,902 Mesa MS 14C1-27D 11,336 Mesa MS 16D1-34D 12,135 Mesa
MS 8C1-35D 2,339 Mesa MS 16A1-34D 11,028 Mesa MS 15A1-34D 13,377
Mesa MS 9D1-34D 8,214 Mesa MS 16C1-34D 14,074 Mesa MS 16A1-27D
10,524 Mesa MS 16D1-27D 11,532 Riverside RS 15D1-3D 14,614
Riverside RS 2B2-2D 7,703 Riverside RS 1C1-10D 10,620 Riverside RS
16D1-3D 10,678 Riverside RS 8D1-4D 4,134 Riverside RS 1A1-10D
14,053 Riverside RS 1A1-4D 12,489 Riverside RS 2A1-10D 13,646
Riverside RS 7C2-2D 7,400 Riverside RS 16C1-3D 14,622 Riverside RS
7A2-2D 9,757 Riverside RS 1B1-10D 8,426 Riverside RS 8D1-10D 11,120
Riverside RS 1A1-2D 10,338 Riverside RS 1B1-2D 7,948 Riverside RS
2B2-10D 12,014 Riverside RS 8B1-4D 4,136 Riverside RS 8A1-10D
10,187 ------ Average Q3 2009 IP 10,356 The increase in IP rates
during 2009, as compared to 2008, corresponds to an increase in the
average reserve size of Pinedale wells drilled in the year. The
larger IPs are a direct benefit of the company gaining year-round
access to development areas in better parts of the Pinedale field
where the wells are more productive, leading to higher average
per-well reserve estimates. The table below details the increase in
average estimated ultimate recovery (EUR) of Ultra-operated wells
completed, by quarter, since 2008. Ultra-Operated Average EUR
(Bcfe) --------------------------------------- Q1 Q2 Q3 Q4 --- ---
--- --- 2008 4.1 3.2 4.4 6.7 2009 6.2 6.9 6.4 - The third quarter
2009 average drilling days for Ultra-operated wells as measured by
spud to total depth (TD) was 18 days. Well costs also decreased to
$5.0 million, as compared to $5.6 million in the third quarter of
2008. This 11 percent reduction in well costs is a direct result of
fewer drilling days, fewer rig moves associated with pad drilling,
and lower cost of services. Improving Efficiencies
--------------------------------------------- 2006 2007 2008 Q1
2009 Q2 2009 Q3 2009 ---- ---- ---- ------- ------- ------- Spud to
TD (days) 61 35 24 23 21 18 Rig release to rig release (days) 79 48
32 31 24 23 % wells drilled in < 30 days 0% 36% 84% 78% 84% 92%
% wells drilled < 20 days 0% 2% 27% 33% 74% 84% Well cost - pad
($MM) $7.0 $6.2 $5.5 $5.5 $5.25 $5.0 "Our well costs continued to
decrease during the third quarter. We achieved our year-end goal of
$5.0 million per well earlier than targeted. These cost reductions
were accomplished while simultaneously drilling deeper wells and
completing more frac stages per well," stated Watford. Pennsylvania
- Operational Highlights During the third quarter, Ultra drilled 12
horizontal Marcellus wells, with an average lateral length of just
over 4,000 feet. Another 15 to 20 horizontal Marcellus Shale wells
are planned to be drilled during the fourth quarter. This brings
the range of the total number of horizontal Marcellus Shale wells
that Ultra plans to drill in 2009 to between 34 to 39. The
company's first production in the Marcellus horizontal program
began in late July 2009. During the quarter, seven wells were
brought on-line with IPs averaging 6,420 Mcf per day. The company's
four pipeline interconnects to major interstate pipelines remain on
schedule and well ahead of the drilling campaign, with a total
capacity of over 300 MMcf per day expected by year-end 2009. "We
continue to be very pleased with the early results from our
Marcellus program. The handful of horizontal wells that we have
completed so far have recorded IP rates ranging from 10,500 Mcf per
day to 3,400 Mcf per day, including one of our early wells
producing a 30-day average over 7,800 Mcf per day. Our drilling,
completion and production activities are ramping up and we are
preparing for a 2010 program that will exceed 100 horizontal
Marcellus wells. In addition, we expect that our Marcellus
production will access the traditionally higher value natural gas
markets in the Northeast," stated Watford. Hedges - Derivative
Contracts The total volume of commodity derivative contracts for
the remainder of 2009 is 18.8 Bcf at an average price of $5.73 per
Mcf. In 2010, the total volume is 98.3 Bcf at an average price of
$5.49 per Mcf and in 2011 the total volume is 73.0 Bcf at an
average price of $5.61 per Mcf. "Our large hedge position for 2010
and 2011 underpins our excellent economics in Wyoming. Our hedged
volumes along with our 73 Bcf of annual firm transportation on
Rockies Express, that will access Northeast markets by the end of
this year, create a solid foundation for financial success," stated
Watford. As of today, Ultra Petroleum has the following positions
in place to mitigate its commodity price exposure: Total Volume
Average Price per Mcf (Bcf) at Point of Sale -----
--------------------- Q4 2009 18.8 $5.73 Mcf ------- ---- Total
2009 18.8 $5.73 Mcf Q1 2010 21.6 $5.51 Mcf Q2 2010 26.4 $5.48 Mcf
Q3 2010 26.7 $5.48 Mcf Q4 2010 23.6 $5.50 Mcf ------- ---- Total
2010 98.3 $5.49 Mcf Q1 2011 18.0 $5.61 Mcf Q2 2011 18.2 $5.61 Mcf
Q3 2011 18.4 $5.61 Mcf Q4 2011 18.4 $5.61 Mcf ------- ---- Total
2011 73.0 $5.61 Mcf Rockies Express Pipeline (REX) Update The final
phase of REX from Lebanon, Ohio to Clarington, Ohio is expected to
be in service during November 2009. Natural gas delivered to the
final phase in Clarington, Ohio is expected to generally receive
prices which are referenced to Dominion South pricing. The capacity
on the pipeline is 1.8 Bcf per day. The table below provides a
historical and future perspective on average annual basis
differentials for Wyoming gas (NW Rockies) and premium markets in
the Northeast (Dominion South). The basis differential is expressed
as a percentage of Henry Hub. Basis Differential as a Percentage
(%) of Henry Hub
--------------------------------------------------------- 2009 2009
2006 2007 2008 YTD Balance 2010 2011 ---- ---- ---- -------
--------- ---- ---- NW Rockies 78 57 68 74 94 90 90 Dominion South
104 106 106 107 107 104 103 "The basis table above highlights the
significant improvement in Rockies prices. NW Rockies basis had
historically been wide since 2005 and has decreased significantly
for the balance of 2009 and more so in 2010 and 2011. Dominion
South basis is forecasted to moderate slightly. With our 2010 and
2011 natural gas sales targeted at 50 percent sold into each
market, Ultra's effective basis to Henry Hub pricing is expected to
be 96 to 97 percent," stated Watford. Production Guidance Ultra
Petroleum's previous annual production guidance for 2009 was 172 to
177 Bcfe. At our current production rate, we expect to exceed the
upper end of this range. As a result, production is expected to
increase at least 22 percent over 2008's record annual production
of 145.3 Bcfe. The company's preliminary production guidance for
2010 and 2011 is 15 to 20 percent per annum growth. "We continue to
pursue a conservative and disciplined capital program that is
consistent with our long-term strategy of balancing growth and
profitability," stated Watford. "Ultra's legacy Wyoming field
warrants growth and profitable re-investment throughout the energy
cycle. Further, we are excited with early results from our first
horizontal Marcellus wells that we have recently brought on
production. We own long-term assets and believe that long-term
commodity price assumptions drive value, not near-term commodity
prices," Watford added. Price Realizations and Differentials
Guidance In the fourth quarter of 2009, the company's realized
natural gas price is expected to average 4 to 6 percent below the
NYMEX price, before consideration of any hedging activity, due to
regional differentials. Realized pricing for condensate is expected
to be about $10.00 less than the average NYMEX crude oil price.
Expense Guidance The following table presents the company's
expected expenses per Mcfe assuming a $4.92 per Mcf Henry Hub
natural gas price and a $75.40 per Bbl NYMEX crude oil price: Costs
Per Mcfe Q4 2009 -------------- ------- Lease operating expenses
$0.23 - 0.26 Production taxes $0.55 - 0.57 Gathering fees $0.25 -
0.27 Transportation charges $0.34 - 0.36 Depletion and depreciation
$1.07 - 1.09 General and administrative - total $0.12 - 0.13
Interest and debt expense $0.21 - 0.22 ------------ Total costs per
Mcfe $2.77 - 2.90 Income Tax Guidance For the year, Ultra projects
a 35.1 percent effective tax rate (based on adjusted net income)
with approximately 11 to 13 percent of that amount expected to be
currently payable. Conference Call Webcast Scheduled for October
30, 2009 Ultra Petroleum's third quarter 2009 conference call will
be available via live audio webcast at 11:00 a.m. Eastern Daylight
Time (10:00 a.m. Central Daylight Time) Friday, October 30, 2009.
To listen to this webcast, log on to
http://www.ultrapetroleum.com/. The webcast replay and podcast will
be archived on Ultra Petroleum's website through February 19, 2010.
About Ultra Petroleum Ultra Petroleum Corp. is an independent
exploration and production company focused on developing its
long-life natural gas reserves in the Green River Basin of Wyoming
- the Pinedale and Jonah Fields; and is in the early stages of
exploration in the Appalachian Basin in Pennsylvania. Ultra is
listed on the New York Stock Exchange and trades under the ticker
symbol "UPL". The company had 151,442,194 shares outstanding on
September 30, 2009. Ultra Petroleum Corp. Consolidated Statement of
Operations (unaudited) All amounts expressed in US$000's
------------------------- --------------------- For the Nine Months
Ended For the Quarter Ended September 30, September 30,
------------------------- --------------------- 2009 2008 2009 2008
----------- --------- ---------- -------- Volumes Oil liquids
(Bbls) 990,728 817,272 341,485 287,115 Natural gas (Mcf)
126,533,349 99,739,892 43,851,036 34,558,450 ----------- ----------
---------- ---------- MCFE - Total 132,477,717 104,643,524
45,899,946 36,281,140 ----------- ----------- ---------- ----------
Revenues Oil sales $44,012 $83,863 $19,626 $31,054 Natural gas
sales 409,446 793,140 135,538 266,573 ------- ------- -------
------- Total operating revenues 453,458 877,003 155,164 297,627
------- ------- ------- ------- Expenses Lease operating expenses
30,128 27,800 9,741 8,501 Production taxes 45,309 98,336 15,220
31,625 Gathering fees 33,753 27,621 11,389 8,857 ------ ------
------ ----- Total lease operating costs 109,190 153,757 36,350
48,983 ------- ------- ------ ------ Transportation charges 42,824
33,101 16,284 11,431 Depletion and depreciation 152,002 130,681
46,367 45,652 Write-down of proved oil and gas properties 1,037,000
- - - General and administrative 7,731 8,176 2,325 2,138 Stock
compensation 7,623 4,860 2,805 2,104 ----- ----- ----- ----- Total
operating expenses 1,356,370 330,575 104,131 110,308 ---------
------- ------- ------- Other (expense) income, net (2,925) 783 193
92 Interest and debt expense (26,938) (14,997) (9,744) (5,183)
Realized gain on commodity derivatives 209,180 3,083 89,620 17,202
Unrealized (loss) gain on commodity derivatives (118,879) 15,765
(145,048) 40,915 -------- ------ -------- ------ (Loss) income
before income taxes (842,474) 551,062 (13,946) 240,345 Income tax
provision (benefit) - current 7,695 4,530 7,672 4,723 Income tax
(benefit) provision - deferred (303,724) 197,350 (13,288) 86,647
-------- ------- -------- ------ Net (loss) income $(546,445)
$349,182 $(8,330) $148,975 --------- -------- -------- --------
Impairment of proved oil and gas properties, net of tax $673,013 $
- $ - $ - Unrealized loss (gain) on commodity derivatives, net of
tax 77,152 (10,231) 94,136 (26,554) ------ -------- ------ -------
Adjusted net income $203,720 $338,951 $85,806 $122,421 --------
-------- ------- -------- Operating cash flows (1) $465,335
$665,893 $172,600 $242,462 -------- -------- -------- -------- (1)
(see non-GAAP reconciliation) Weighted average shares - basic
151,337 152,592 151,441 152,217 Weighted average shares - diluted
151,337 157,326 151,441 156,072 Earnings per share Net income -
basic ($3.61) $2.29 ($0.06) $0.98 Net income - fully diluted
($3.61) $2.22 ($0.06) $0.95 Adjusted earnings per share Adjusted
net income - basic $1.35 $2.22 $0.57 $0.80 Adjusted net income -
fully diluted (4) $1.35 $2.15 $0.57 $0.78 Realized Prices Oil
liquids (Bbls) $44.42 $102.61 $57.47 $108.16 Natural gas (Mcf),
including realized gain (loss) on commodity derivatives $4.89 $7.98
$5.13 $8.21 Natural gas (Mcf), excluding realized gain (loss) on
commodity derivatives $3.24 $7.95 $3.09 $7.71 Costs Per MCFE Lease
operating expenses $0.23 $0.27 $0.21 $0.23 Production taxes $0.34
$0.94 $0.33 $0.87 Gathering fees $0.25 $0.26 $0.25 $0.24
Transportation charges $0.32 $0.32 $0.35 $0.32 Depletion and
depreciation $1.15 $1.25 $1.01 $1.26 General and administrative -
total $0.12 $0.12 $0.11 $0.12 Interest and debt expense $0.20 $0.14
$0.21 $0.14 ----- ----- ----- ----- $2.61 $3.30 $2.48 $3.18 -----
----- ----- ----- Note: Amounts on a per MCFE basis may not total
due to rounding. Adjusted Margins Adjusted Net Income (2) 31% 39%
35% 39% Adjusted Operating Cash Flow Margin (3) 70% 76% 71% 77%
Ultra Petroleum Corp. Supplemental Balance Sheet Data All amounts
expressed in US$000's As of --------------------------- September
30, December 31, ------------- ------------ 2009 2008 ---- ----
(unaudited) Cash and cash equivalents $12,994 $14,157 Long-term
debt Bank indebtedness 195,000 270,000 Senior notes 535,000 300,000
------- ------- $730,000 $570,000 -------- -------- Ultra Petroleum
Corp. Reconciliation of Cash Flow and Cash Provided by Operating
Activities (unaudited) All amounts expressed in US$000's The
following table reconciles net cash provided by operating
activities with operating cash flow as derived from the company's
financial information. These statements are unaudited and subject
to adjustment. For the Nine Months Ended For the Quarter Ended
September 30, September 30, ----------------- ---------------------
2009 2008 2009 2008 ---- ---- ---- ---- Net cash provided by
operating activities $420,769 $708,186 $180,369 $304,846 Net
changes in operating assets and liabilities and other non-cash
items* 44,566 (42,293) (7,769) (62,384) -------- -------- --------
-------- Cash flow from operations before changes in operating
assets and liabilities $465,335 $665,893 $172,600 $242,462 --------
-------- -------- -------- (1) Operating cash flow is defined as
net cash provided by operating activities before changes in
operating assets and liabilities. Management believes that the
non-GAAP measure of operating cash flow is useful as an indicator
of an oil and gas exploration and production company's ability to
internally fund exploration and development activities and to
service or incur additional debt. The company also has included
this information because changes in operating assets and
liabilities relate to the timing of cash receipts and disbursements
which the company may not control and may not relate to the period
in which the operating activities occurred. Operating cash flow
should not be considered in isolation or as a substitute for net
cash provided by operating activities prepared in accordance with
GAAP. (2) Adjusted Net Income Margin is defined as Adjusted Net
Income divided by the sum of Oil and Natural Gas Sales plus
Realized Gain (Loss) on Commodity Derivatives. (3) Operating Cash
Flow Margin is defined as Operating Cash Flow divided by the sum of
Oil and Natural Gas Sales plus Realized Gain (Loss) on Commodity
Derivatives. (4) Fully diluted shares includes 2.8 million and 2.9
million potentially dilutive instruments that were anti-dilutive
due to the net loss for the year-to-date and quarter periods ended
September 30, 2009, respectively. *Other non-cash items include
excess tax benefit from stock based compensation and other. This
release can be found at http://www.ultrapetroleum.com/ This news
release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The
opinions, forecasts, projections or other statements, other than
statements of historical fact, are forward-looking statements.
Although the company believes that the expectations reflected in
such forward-looking statements are reasonable, we can give no
assurance that such expectations will prove to have been correct.
Certain risks and uncertainties inherent in the company's
businesses are set forth in our filings with the SEC, particularly
in the section entitled "Risk Factors" included in our Annual
Report on Form 10-K for our most recent fiscal year and from time
to time in other filings made by us with the SEC. These risks and
uncertainties include increased competition, the timing and extent
of changes in prices for oil and gas, particularly in Wyoming, the
timing and extent of the company's success in discovering,
developing, producing and estimating reserves, the effects of
weather and government regulation, availability of oil field
personnel, services, drilling rigs and other equipment, and other
factors listed in the reports filed by the company with the SEC.
Full details regarding the selected financial information provided
above will be available in the company's report on Form 10-Q for
the quarter ended September 30, 2009.
http://www.newscom.com/cgi-bin/prnh/20020226/DATU029LOGO
http://photoarchive.ap.org/ DATASOURCE: Ultra Petroleum Corp.
CONTACT: Kelly L. Whitley, Manager Investor Relations of Ultra
Petroleum Corp., +1-281-876-0120, Extension 302, Web Site:
http://www.ultrapetroleum.com/
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