Thursday, February 16, 2012

Ultra Petroleum on a roll

Posted By on Thu, Feb 16, 2012 at 10:37 AM

Ultra Petroleum, parent of Ultra Resources, reported stellar results for the fourth quarter of 2011 and for the year today in a press release and in a webcast with chairman, president and CEO Michael Watford.

Ultra Resources plans to drill for oil in the Banning Lewis Ranch property it purchased last year, and also on leased land southeast and east of Colorado Springs.


During the webcast, Watford said UP is scaling back drilling in Pennsylvania and Wyoming gas fields due to the decrease in natural gas prices. Here's an analysis of that.

But the company plans to drill three or four vertical wells in El Paso County in the next month or two, he said, and add horizontal wells at those drilling pads in June.

The company is on healthy footing, reporting the following for the fourth quarter:

— Operating cash flow of $251.4 million during the fourth quarter, an increase of 27 percent from same period in 2010.
— Earnings of $89.1 million, or $0.58 per diluted share - adjusted in the fourth quarter, an increase of 16 percent from the same period in 2010.
— Produced record volumes of 66.9 billion cubic feet in the fourth quarter, a 17 percent increase from fourth quarter 2010.
— Superior returns in fourth quarter of 2011 (adjusted); 74 percent cash flow margin, 26 percent net income margin, 11 percent return on capital employed, and 24 percent return on equity.

The company also reported it plans to spend $925 million this year on capital investment, compared to $1.5 billion in 2011, a decrease of 38 percent. "More significantly, the company is reducing its development drilling capital by 50 percent from $1.3 billion in 2011 to $650 million in 2012," the release said.

Specifically, Ultra will spend $650 million on development drilling: $400 million in Appalachia and $250 million in the "Rockies." It will spend another $30 million on "exploration" and $30 million on "land," but locations aren''t noted.

As we reported today, Ultra Resources was given the green light last week by El Paso County officials on three temporary-use applications. So Ultra will conduct exploratory drilling and production testing at the Brutus, Olive Oyl and Spinach well sites, east and southeast of the city.

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