HOUSTON, Feb. 12 /PRNewswire-FirstCall/ -- Ultra Petroleum Corp.
(NYSE: UPL) continued to deliver strong financial and operating
performance for both the fourth quarter and full-year 2009.
Highlights for 2009 include: -- Record natural gas and crude oil
production of 180.1 Bcfe, an increase of 24 percent, or 26 percent
on a per share basis, over 2008 -- Operating cash flow(1) of $637.6
million -- Earnings of $282.2 million, or $1.86 per diluted share -
adjusted -- Superior returns in 2009 (adjusted): 70 percent cash
flow margin(3), 31 percent net income margin(2),18 percent return
on capital employed, and 32 percent return on equity Total natural
gas and crude oil production for the year-ended December 31, 2009
increased 24 percent, or 26 percent on a per share basis, to a
record high of 180.1 billion cubic feet equivalent (Bcfe) compared
to production of 145.3 Bcfe for 2008. This is the largest annual
production level ever achieved by Ultra Petroleum. For 2009,
production is comprised of 172.2 billion cubic feet (Bcf) of
natural gas and 1.3 million barrels of condensate. Ultra Petroleum
reported operating cash flow(1) of $637.6 million for the
year-ended December 31, 2009. Adjusted net income was $282.2
million, or $1.86 per diluted share for 2009. The reported net loss
of $451.1 million included a non-cash ceiling test write-down
($673.0 million net of taxes) of the company's carrying value of
natural gas and oil properties stemming from significantly lower
natural gas and condensate prices at the end of the first quarter
of 2009 as well as unrealized mark-to-market losses on the
company's commodity derivative contracts ($60.3 million net of
taxes). These unrealized losses are typically excluded by the
investment community in published estimates. "Margins do matter in
the oil and gas industry. Over the past four years, Ultra has
sustained healthy operating cash flow margins averaging 72 percent
and net income margins averaging 37 percent. These outstanding
margins were achieved in a widely fluctuating commodity price
environment," commented Michael D. Watford, Chairman, President and
Chief Executive Officer. "We have the dominant position in a
world-class asset that we operate at a very low cost, which
provides us with a competitive advantage in the consistency and
sustainability of our growth and returns. We intend to replicate
these superior returns as we continue to grow our position in the
Marcellus," Watford added. For the year-ended December 31, 2009,
Ultra Petroleum's average realized natural gas price was $4.88 per
thousand cubic feet (Mcf), including realized gains and losses on
commodity derivatives. Excluding those realized gains and losses on
commodity derivatives, the company's average price realized for
natural gas was $3.49 per Mcf. The average condensate price
realized by the company in 2009 was $49.80 per barrel (Bbl).
Natural gas and crude oil production for the fourth quarter ended
December 31, 2009 increased 17 percent to 47.6 Bcfe compared to
40.6 Bcfe in the fourth quarter 2008. This is the largest quarterly
production level ever achieved by Ultra Petroleum. For the fourth
quarter of 2009, production is comprised of 45.7 Bcf of natural gas
and 329.3 thousand barrels of condensate. Operating cash flow(1)
for the fourth quarter 2009 was $172.2 million. Adjusted earnings
for the period ended December 31, 2009 were $78.5 million or $0.51
per diluted share. In the fourth quarter of 2009, Ultra Petroleum's
average realized natural gas price was $4.86 per Mcf, including
realized gains and losses on commodity derivatives. Excluding those
realized gains and losses on commodity derivatives, the company's
average price realized for natural gas was $4.20 per Mcf. The
average condensate price realized by the company in the fourth
quarter of 2009 was $65.97 per Bbl. Wyoming - Operational
Highlights For the year-ended December 31, 2009, Ultra Petroleum
drilled 222 gross (113.9 net) wells. The company continues to make
significant progress in improving drilling efficiencies. In
Pinedale, the company averaged 20 days per well spud to total depth
(TD) as compared to its average of 24 days in 2008. This is a 17
percent improvement over 2008. Ultra's new measure of success is
the number of wells drilled in less than 20 days from spud to TD.
In 2009, 73 percent of the wells were drilled in under 20 days as
compared to 27 percent of the wells in 2008. During the fourth
quarter of 2009, Ultra set a new Pinedale record in drilling time
from spud to TD of 13,500 feet in 11 days. Largely as a result of
improved drilling times, pad well costs continue to decrease
year-over-year. For the full-year 2009, pad well costs decreased to
$5.0 million, as compared to $5.5 million for full-year 2008.
Improving Efficiencies
-----------------------------------------------------------------------
2006 2007 2008 2009 ---- ---- ---- ---- Spud to TD (days) 61 35 24
20 Rig release to rig release (days) 79 48 32 24 % wells drilled
< 20 days 0% 2% 27% 73% Well cost - pad ($MM) $7.0 $6.2 $5.5
$5.0 The average estimated ultimate recovery (EUR) of the
Ultra-operated wells completed in 2009 significantly exceeded those
completed in 2008. All of Ultra's-operated rigs remain in the
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 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 6.4
The company continues to expand its resource assessment in the
Pinedale Anticline. In 2009, Ultra brought on-line 16 delineation
wells. The EUR of these delineation wells averaged 26 percent
higher than the pre-drill reserve estimates determined by the
company's independent third-party reserve engineering firm. The
company brought on-line nine five-acre wells in 2009. Results from
the company's five-acre pilot program continue to demonstrate that
significant incremental reserves will be recovered from 5-acre
wells. Ultra plans to continue conducting 5-acre pilots in 2010 in
order to gain more data to support increased density drilling in
Pinedale. "We have a great team of folks executing daily on our
legacy Wyoming assets with consistently improving results," stated
Watford. Pennsylvania - Operational Highlights During 2009, Ultra
drilled 37 gross (22.5 net) wells in Pennsylvania. The company's
first production in the Marcellus program began in July 2009, and
by year-end 13 wells were producing. Initial production (IP) rates
for the producing wells average 7,500 Mcf per day with an average
lateral length of just over 3,800 feet. Preliminary estimated
ultimate recoveries affirm Ultra's 3.75 Bcfe type-curve, with some
preliminary EURs exceeding 6.0 Bcfe. The cost to drill and complete
a horizontal Marcellus well during 2009 was $3.5 million. The
company's four pipeline interconnects to major interstate pipelines
remain well ahead of the drilling campaign. By mid-year, this
interconnect capacity is expected to exceed 560 MMcf per day. The
company began 2009 with 288,000 gross (152,000 net) acres in the
Marcellus. Through a combination of land acquisitions, trades and
swaps, Ultra increased its holdings to 326,000 gross (169,000 net)
acres by year-end. On December 21, 2009, Ultra announced that it
had signed a purchase and sale agreement to acquire approximately
160,000 gross (80,000 net) acres in the Marcellus Shale. Upon
closing of the acquisition in late February 2010, the company will
hold approximately 486,000 gross (249,000 net) acres. With the
acquisition, the company's core position in Tioga, Bradford,
Lycoming, and Potter counties in north-central Pennsylvania will
expand to include the adjacent counties of Clinton and Centre. "In
2009, we initiated our horizontal Marcellus activity with above
expectation results. Accordingly, we believe that we have
substantially de-risked our Marcellus acreage due to these results.
Well performance is improving along with our returns. Of the
horizontal wells that we have completed so far, IP rates have
ranged from over 3,400 Mcf per day to 10,400 Mcf per day, including
two wells that are producing over 7,500 Mcf per day after 30 days.
Examining our early wells, the first six have 30-day production
averaging over 3,000 Mcf per day with the next seven wells
averaging over 5,700 Mcf per day. In 2010, our Marcellus
development program will expand with a drilling program exceeding
110 wells. In addition, 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 2010 is 98.3 Bcf at an average
price of $5.49 per Mcf. In 2011, the total volume is 73.0 Bcf at an
average price of $5.61 per Mcf. "Our hedge position for 2010 and
2011 underpins our excellent economics in Wyoming. These hedged
volumes along with our 73 Bcf of annual firm transportation on
Rockies Express, accessing Northeast markets, 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 ----------------- ---------------- 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
Natural Gas Marketing Update The table below provides a historical
and future perspective on average annual basis differentials for
Wyoming natural gas (NW Rockies) and premium markets in the
Northeast (Dominion South). It illustrates the permanent tightening
in the basis differential that occurred in 2009 and is expected to
continue as reflected in the future natural gas strip. One of the
primary reasons the basis differential significantly tightened in
2009 is due to the Rockies Express Pipeline (REX) being placed
in-service during the year. REX delivers 1.8 Bcf per day of natural
gas from the Rockies into the Northeast. The basis differential is
expressed as a percentage of Henry Hub. Basis Differential as a
Percentage (%) of Henry Hub
-------------------------------------------------------------------
2010 2010 2006 2007 2008 2009 YTD Balance 2011 2012 ---- ---- ----
---- --- ------- ---- ---- NW Rockies 78 58 69 77 98 94 94 93
Dominion South 104 105 105 107 106 103 103 102 "Ultra's total
revenue mix will dramatically shift in 2010, with half being priced
outside the Rockies. In previous years, 100 percent of our revenues
were based upon Opal natural gas prices. Simply stated, we were a
Rockies price taker. Now with REX being fully operational into the
Northeast, married with our increasing Marcellus production, we
estimate that in 2010 almost half of Ultra's natural gas will
receive premium gas prices in the Northeast. Over the next few
years, as Ultra's production continues to increase in the
Northeast, a larger and larger percentage of revenues will be
derived from the premium priced markets. Higher price realizations
coupled with a consistent low cost structure, translates into the
company earning wider margins," commented Watford. "An additional
item of importance is the increase in spot prices year-over-year
for Opal natural gas versus Henry Hub. Opal is approximately 50
percent higher today than it was a year ago as compared to Henry
Hub which is up approximately 10 percent." Senior Notes Offering On
December 23, 2009, Ultra Petroleum's wholly-owned subsidiary Ultra
Resources, Inc. entered into an agreement with a group of thirteen
institutional investors providing for the private placement of
$500.0 million in Senior Unsecured Notes. The Notes are to be
issued in a series of tranches as described in the table below.
Amount Term Coupon Rate ------ ---- ----------- $116.0 million 7
year term due in 2017 4.98% $207.0 million 10 year term due in 2020
5.50% $87.0 million 12 year term due in 2022 5.60% $90.0 million 15
year term due in 2025 5.85% The Notes are expected to close in two
tranches; $270.0 million that were issued on January 28, 2010, and
$230.0 million that are scheduled to be issued on February 16,
2010. Net proceeds from the offering will be used to repay existing
bank debt and for general corporate purposes, including funding of
the company's Pennsylvania Marcellus Shale acquisition. Other
Highlights During the Year Ultra Petroleum was a recipient of the
2009 Oil, Gas, Geophysical, and Geothermal Development
Environmental Best Management Practices (BMP) Award from the Bureau
of Land Management (BLM) in July 2009. The award is significant to
Ultra as the BLM recognizes natural gas and crude oil operators,
along with their partners, who demonstrate leadership and
creativity in reducing the impacts of developing natural gas and
crude oil on public lands. Ultra planned and is implementing best
management practices specifically designed to reduce the amount of
nitrogen oxide (NOx) and volatile organic compounds (VOCs) stemming
from everyday operations. The partnership between Ultra and the
government exemplifies the ability of industry to collaborate in
developing practices that reduce the impacts to the health and
welfare of the human and wildlife environment while still allowing
for the orderly development of natural gas and crude oil resources
on Federal lands. The orderly development ensures a reliable
American source of affordable energy for domestic consumption.
Conference Call Webcast Scheduled for February 12, 2010 Ultra
Petroleum's fourth quarter and full-year 2009 conference call will
be available via live audio webcast at 11:00 a.m. Eastern Standard
Time (10:00 a.m. Central Standard Time) Friday, February 12, 2010.
To listen to this webcast, log on to
http://www.ultrapetroleum.com/. The webcast will be archived on
Ultra Petroleum's website through April 30, 2010. Financial tables
to follow. Ultra Petroleum Corp. Consolidated Statements of
Operations (unaudited) All amounts expressed in US$000's For the
Year Ended For the Quarter Ended December 31, December 31,
------------------ --------------------- 2009 2008 2009 2008 ----
---- ---- ---- Volumes Oil liquids (Bbls) 1,320,072 1,121,525
329,344 304,254 Natural gas (Mcf) 172,189,447 138,563,717
45,656,098 38,823,824 ----------- ----------- ---------- ----------
MCFE - Total 180,109,879 145,292,867 47,632,162 40,649,348
----------- ----------- ---------- ---------- Revenues Oil sales
$65,739 $98,026 $21,727 $14,162 Natural gas sales 601,023 986,374
191,577 193,234 ------ ------ ------ ------ Total operating
revenues 666,762 1,084,400 213,304 207,396 ------- ---------
------- ------- Expenses Lease operating expenses 40,679 36,997
10,551 9,199 Production taxes 66,970 119,502 21,660 21,165
Gathering fees 45,155 37,744 11,402 10,123 ----- ----- ----- -----
Total lease operating costs 152,804 194,243 43,613 40,487 -------
------- ------ ------ Transportation charges 58,011 46,310 15,187
13,209 Depletion and depreciation 201,826 184,795 49,824 54,113
Write-down of proved oil and gas properties 1,037,000 - - - General
and administrative 8,871 11,230 1,141 3,053 Stock compensation
10,901 5,816 3,278 956 ------ ----- ----- --- Total operating
expenses 1,469,413 442,394 113,043 111,818 --------- -------
------- ------- Other (expense) income, net (2,888) 833 37 49
Interest and debt expense (37,167) (21,276) (10,229) (6,278)
Realized gain (loss) on commodity derivatives 239,366 18,991 30,185
15,908 Unrealized (loss) gain on commodity derivatives (92,849)
14,225 26,030 (1,540) ------- ------ ------ ------ (Loss) income
before income taxes (696,189) 654,779 146,284 103,717 Income tax
provision (benefit) - current 23,043 5,473 15,348 943 Income tax
(benefit) provision - deferred (268,179) 235,031 35,545 37,681
-------- ------- ------ ------ Net (loss) income $(451,053)
$414,275 $95,391 $65,093 --------- -------- ------- -------
Impairment of proved oil and gas properties, net of tax $673,013 $
- $ - $ - Unrealized loss (gain) on commodity derivatives, net of
tax 60,259 (9,232) (16,893) 999 ------ ------ ------- --- Adjusted
net income $282,219 $405,043 $78,498 $66,092 -------- --------
------- ------- Operating cash flows (1) $637,557 $825,277 $172,221
$159,383 -------- -------- -------- -------- (1) (see non-GAAP
reconciliation) Weighted average shares - basic 151,367 152,075
151,456 150,537 Weighted average shares - diluted 151,367 156,531
154,433 153,868 Earnings per share Net income - basic ($2.98) $2.72
$0.63 $0.43 Net income - fully diluted ($2.98) $2.65 $0.62 $0.42
Adjusted earnings per share Adjusted net income - basic $1.86 $2.66
$0.52 $0.44 Adjusted net income - fully diluted $1.86 $2.59 $0.51
$0.43 Realized Prices Oil liquids (Bbls) $49.80 $87.40 $65.97
$46.55 Natural gas (Mcf), including realized gain (loss) on
commodity derivatives $4.88 $7.26 $4.86 $5.39 Natural gas (Mcf),
excluding realized gain (loss) on commodity derivatives $3.49 $7.11
$4.20 $4.98 Costs Per MCFE Lease operating expenses $0.23 $0.25
$0.22 $0.23 Production taxes $0.37 $0.82 $0.45 $0.52 Gathering fees
$0.25 $0.26 $0.24 $0.25 Transportation charges $0.32 $0.32 $0.32
$0.32 Depletion and depreciation $1.12 $1.27 $1.05 $1.33 General
and administrative - total $0.11 $0.12 $0.09 $0.10 Interest and
debt expense $0.21 $0.15 $0.21 $0.15 ----- ----- ----- ----- $2.61
$3.19 $2.59 $2.91 ----- ----- ----- ----- Note: Amounts on a per
MCFE basis may not total due to rounding. Adjusted Margins Adjusted
Net Income (2) 31% 37% 32% 30% Adjusted Operating Cash Flow Margin
(3) 70% 75% 71% 71% Ultra Petroleum Corp. Supplemental Balance
Sheet Data All amounts expressed in US$000's As of As of December
December 31, 31, -------- -------- 2009 2008 ---- ---- Cash and
cash equivalents $14,254 $14,157 Long-term debt Bank indebtedness
260,000 270,000 Senior Notes 535,000 300,000 ------ ------ $795,000
$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 Year Ended For the
Quarter Ended December 31, December 31, ------------------
--------------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net
cash provided by operating activities $592,641 $840,803 $170,305
$132,617 Net changes in operating assets and liabilities and other
non- cash items* 44,916 (15,526) 1,916 26,766 ------ ------- -----
------ Cash flow from operations before changes in operating assets
and liabilities $637,557 $825,277 $172,221 $159,383 --------
-------- -------- -------- (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 has also 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) Adjusted
Operating Cash Flow Margin is defined as Operating Cash Flows
divided by the sum of Oil and Natural Gas Sales plus Realized Gain
(Loss) on Commodity Derivatives. * Other non-cash items include
excess tax benefit from stock based compensation and other. 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 exploration and development stages
in the Appalachian Basin of Pennsylvania. Ultra is listed on the
New York Stock Exchange and trades under the ticker symbol "UPL".
The company had 152,068,210 shares outstanding on January 31, 2010.
This release can be found at http://www.ultrapetroleum.com/ This
news release includes "forward-looking statements" as defined by
the Securities and Exchange Commission (SEC). These forward-looking
statements regarding this press release include, but are not
limited to, opinions, forecasts, and projections, other than
statements of historical fact. Although the company believes that
these expectations are obtainable based on reasonable assumptions,
it can give no assurance that such assumptions will prove to be
correct. Important factors that may cause actual results to differ
from these forward-looking statements, include, but are not limited
to, increased competition; the timing and extent of changes in
prices for crude oil and natural gas, particularly in Wyoming; the
timing and extent of its success in discovering, developing,
producing and estimating reserves; the effects of weather and
government regulation; the availability of oil field personnel and
services, drilling rigs and other equipment; and other risks
detailed in the company's SEC filings, particularly in its Annual
Report on Form 10-K available from Ultra Petroleum Corp. at 363
North Sam Houston Parkway E., Suite 1200, Houston, TX 77060
(Attention: Investor Relations). You can also obtain this
information from the SEC by calling 1-800-SEC-0330 or from the
SEC's website at http://www.sec.gov/. "Completion of 2009 Audit."
It should be noted that the company's independent accountants'
audit will not be completed, and the related audit opinion with
respect to the year-end financial statements will not be dated,
until the company completes the final 10-K report and evaluation of
internal controls over financial reporting. Accordingly, the
financial results reported in this earnings release are preliminary
and are subject to adjustment. The company expects to report full
audited financial results and file a Form 10-K with the SEC by
March 1, 2010.
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, ext. 302, Web Site:
http://www.ultrapetroleum.com/
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