Monday, March 4, 2013

Oil and gas possibilities 'disappointing,' says Ultra

Posted By on Mon, Mar 4, 2013 at 2:56 PM

The petroleum that sits underneath El Paso County does not appear to present commercial possibilities. That's what Ultra Petroleum, which holds the majority of the approved permits for oil and gas drilling in El Paso County, had to say when it announced its results for the fourth quarter of 2012.

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Michael D. Watford, chairman, CEO and president, stated in an earnings call (registration required):

In Colorado's DJ Basin, our results in the Niobrara have been disappointing. Although our core and log data indicate the presence of oil in the rocks, the petroleum system is immature, under-pressured and not commercial. This has been verified by completion of test results from both a vertical and a horizontal well. Ultra assembled 139,000 low-cost acres and deployed it over the past 2 years and has no significant lease expirations until 2014. We'll continue to monitor industry activity in the region but have no immediate plans for additional exploration in the area.

In Ultra's annual report for 2012 with the Securities and Exchange Commission, the company stated:

In eastern Colorado, at December 31, 2012, the Company owned interests in approximately 154,000 gross (139,000 net) acres. The Company has no immediate plans for further exploration in this area.

...

In Colorado, our oil and gas leases are from private individuals and companies, as well as from the State of Colorado, and typically have primary lease terms of five years. All of our acreage in Colorado is undeveloped at this time, and the Company has no immediate plans for further exploration in this area.

...

The Company does not believe the remaining terms of its leases is material. At December 31, 2012, the Company had 12,245 net acres of leases in Pennsylvania, 2,000 net acres of leases in Colorado and no leases in Wyoming that expire in 2013 and it expects to maintain over 20% of those leases by production, operations, extensions or renewals. The Company does not expect to lose material lease acreage because of failure to drill due to inadequate capital, equipment or personnel. The Company has, based on its evaluation of prospective economics, allowed acreage to expire and it may allow additional acreage to expire in the future.

Hilcorp Energy Company also has active permits in the county.

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