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Item 7.01.
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Regulation FD Disclosure.
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As previously disclosed, on April 29, 2016,
Ultra Petroleum Corp. (the “
Company
”) and each of its subsidiaries, including Keystone Gas Gathering, LLC, Ultra
Resources, Inc., Ultra Wyoming, Inc., Ultra Wyoming LGS, LLC, UP Energy Corporation, UPL Pinedale, LLC, and UPL Three Rivers Holdings,
LLC (collectively, with the Company, the “
Ultra Entities
”), filed voluntary petitions for reorganization under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “
Bankruptcy
Court
”). The Ultra Entities’ Chapter 11 cases are being jointly administered under the caption
In re Ultra Petroleum
Corp., et al
, Case No. 16-32202 (MI).
On February 13, 2017, the Ultra Entities
filed with the Bankruptcy Court updated versions of
The Debtors’ Second Amended Joint Chapter 11 Plan of Reorganization
(as it may be amended, modified or supplemented from time to time, the “
Plan of Reorganization
”).
As previously disclosed, on February 8,
2017, the Ultra Entities obtained a commitment letter from Barclays Bank PLC (including any of its affiliates that may perform
thereunder, “
Barclays
”) pursuant to which, in connection with the Plan of Reorganization, Barclays has agreed
to provide Ultra Resources, Inc. (“
OpCo
”) with secured and unsecured financing in an aggregate amount of up
to $2.4 billion (the “
Exit Financing
”), including a proposed senior secured first lien revolving credit facility
in an aggregate amount of $400.0 million (the “
Credit Facility
”).
In connection with presentations to prospective
lenders for the Exit Financing, the Company is disclosing the following information:
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The proposed Credit Facility is expected to include a provision that will
require OpCo, within 60 days of the closing of the Credit Facility, to enter into hedging agreements with one or more approved
counterparties that have notional volumes of not less than fifty percent (50%) of the projected volume of OpCo’s and its
restricted subsidiaries total proved developed producing reserves for a period beginning on the date that is sixty (60) days following
the closing date and ending on the first anniversary of the closing date.
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Certain oil and gas reserve estimates for the Ultra
Entities that Barclays and OpCo plan to provide in connection with the Exit Financing as set forth on
Exhibit 99.1
attached
hereto.
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Please note: the Securities and Exchange
Commission (the “
SEC
”) permits oil and gas companies, in their filings with the SEC, to disclose only proved,
probable and possible oil and gas reserves that meet the SEC’s definitions for such terms. In
Exhibit 99.1
, the Company
uses estimates that are not permitted to be disclosed in SEC filings, including items designated as “Adjusted PDP Reserves”
and “Total Adjusted Proved Reserves” and “Adjusted PV-10” and/or that bear similar or related descriptions.
These estimates: (i) do not represent and are not intended to represent “proved oil and gas reserves” or any other
category of reserves based on SEC definitions; (ii) do not comply with guidelines established by the American Institute of Certified
Public Accountants regarding forecasts of oil and gas reserve estimates; and (iii) are more speculative, by their nature, than
estimates of proved, probable and possible reserves disclosed in SEC filings and, accordingly, are subject to substantially greater
uncertainty of being actually realized.
Please further note: in some instances
herein, items presenting estimated volumes of oil and gas and designated as “Adjusted PDP Reserves” or “Total
Adjusted Proved Reserves” and/or that bear similar or related descriptions include and take into account undrilled locations
that: (1) are available for development in the future and (2) in the opinion of the Company’s reservoir engineers, meet and
satisfy all of the technical requirements related to geoscience and engineering data for such locations to qualify as “undeveloped
oil and gas reserves” (based on the SEC definition in Regulation S-X)
but
(3) fail to meet other requirements
of the SEC definitions in Regulation S-X for reporting as SEC “proved reserves,” including lack of reasonable certainty
by the Company as to its financial ability to execute a future development plan and/or its ability to drill a future location within
five years due to uncertainty regarding the Company’s ability to continue as a “going concern.” In addition,
please also note that items in
Exhibit 99.1
that present an “Adjusted PV-10” value and/or that bear similar
or related descriptions attributable to the estimates regarding the Company’s oil and gas properties disclosed in
Exhibit
99.1
were calculated or determined using forward-looking, future strip prices for crude oil, natural gas liquids and natural
gas at December 30, 2016 and do not represent and are not intended to represent the “PV-10” value that would be attributable
to such items if such items were calculated based on applicable SEC requirements, which are based on backward-looking, historical
pricing.
In addition, the information disclosed
in this report and on the attached exhibit does not present and does not purport to present the estimated value of any of the Ultra
Entities or of any of the oil and gas properties owned by any of the Ultra Entities, whether in accordance with U.S. generally
accepted accounting principles or otherwise. The information in
Exhibit 99.1
should not be relied upon as presenting any
such value. None of the Ultra Entities nor any of their representatives undertakes any obligation to publicly update or correct
any of the projections, forecasts, estimates or other information included in the attached exhibits, even if any or all of the
assumptions underlying such projections, forecasts, estimates or other information prove to have been incorrect.
Forward-Looking Statements
This Current Report on Form 8-K contains
forward-looking statements within the meaning of the federal securities laws. 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, the Company can give no assurance that such expectations will prove to have
been correct, and actual results may differ materially from those projected. For example, as noted in the Company’s quarterly
and annual SEC filings beginning with its Form 10-K for fiscal year ended December 31, 2015, substantial doubt existed, and is
expected to continue to exist until the Company emerges from chapter 11, about the Company’s ability to continue as a going
concern. As a result, because the Company was thus unable to satisfy the component of the “proved oil and gas reserves”
definitions in Regulation S-X requiring reasonable certainty as to its future development plan, the Company did not report locations
it intended to drill in the future as “undeveloped oil and gas reserves” (based on the SEC definition in Regulation
S-X). However, the Company continued, in 2016, and continues, in 2017, to schedule and drill undrilled locations that could have
been reported as “undeveloped oil and gas reserves” based on the technical requirements related to geoscience and engineering
data in the SEC definitions. The information included in Exhibit 99.1 reflects the Company’s plan to continue to drill future
locations that are not reported as “undeveloped oil and gas reserves” in its year-end SEC reserve report at December
31, 2016 (or at December 31, 2015).
The information included in this Current
Report on Form 8-K, including the information presented under Items 7.01 and 9.01 and the information on
Exhibit 99.1
, is
being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended (the “
Exchange Act
”), or otherwise subject to liabilities of that Section, unless in the future the
registrant specifically states that the information is to be considered “filed” under the Exchange Act or incorporates
it by reference into a filing under the Exchange Act or the Securities Act of 1933, as amended.