Oct. 30, 2009 (Canada NewsWire Group) --
HOUSTON, Oct. 30 /CNW/ --
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.
HOUSTON, Oct. 30 /CNW/ --
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:
HOUSTON, Oct. 30 /CNW/ --
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:
HOUSTON, Oct. 30 /CNW/ --
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.
