Ultra Petroleum
Achieves Record Production in Second Quarter 2007; Increases Full Year 2007
Production Growth Target to 27 Percent
HOUSTON, Aug. 7 /PRNewswire-FirstCall/ --
Ultra Petroleum Corp.
(NYSE: UPL)
today announced financial and operating
results for the second quarter of 2007. Highlights include:
-- Production increases to a record 30.5
Bcfe for second quarter 2007, up
57% over second quarter 2006, including
a 63% increase for the period
in Wyoming alone
-- Operating cash flow(1) for second
quarter 2007 of $109.1 million, up
19% from second quarter 2006
-- Earnings in the second quarter were
$49.1 million, or $0.31 per diluted
share, essentially unchanged from the
same period in 2006
-- Annual production guidance grows to
116.5 Bcfe, a 27% increase over
2006
Earnings for the second quarter ended June 30, 2007 were $49.1 million,
or $0.31 per diluted share, essentially flat compared to $50.7 million, or
$0.31 per diluted share for the same period in 2006. Operating cash flow(1) was $109.1
million, or $0.69 per diluted share for the second quarter 2007, an increase of
19% from $91.4 million, or $0.56 per diluted share for the same period in 2006.
Ultra's natural gas and crude oil
production for the quarter ended June 30, 2007 increased 57% to 30.5 billion
cubic feet equivalent (Bcfe) compared to 19.5 Bcfe for the second quarter of
2006. The second quarter 2007 amount represents the largest quarterly
production in the company's history. Second quarter 2007 production in Wyoming
alone, at the company's core asset, increased 63% from the same period in 2006.
Production for the second quarter 2007 is comprised of 26.6 billion cubic feet
(Bcf) of domestic natural gas, 221.8 thousand barrels (MBbls) of domestic
condensate, and 434.6 MBbls of crude oil from China. Domestic natural gas
prices realized for the second quarter 2007, including the effects of hedging,
were $4.38 per thousand cubic feet (Mcf), a decrease from $5.85 per Mcf for the
same period in 2006. Domestic condensate prices were $65.15 per barrel (Bbl)
compared to $69.72 per Bbl in the second quarter of 2006. China crude oil
prices realized in the second quarter were $59.72 per Bbl, compared to $65.10
per Bbl in the second quarter of 2006.
"Our margins were resilient given the
depressed Rockies natural gas prices during the quarter. At gas prices just
over $4.00 per Mcf we achieved returns equivalent to many of our peers at $8.00
per Mcf. We achieved a net income margin of 31% and a cash flow margin of 70%
for the quarter. Our all-in costs of $2.62 per Mcf is most likely the lowest in
the industry and helps position us to continue our sector leadership in growth
and returns," commented Michael D. Watford, Chairman, President and Chief
Executive Officer.
Earnings for the six month period ended
June 30, 2007 were $115.7 million, or $0.73 per diluted share, essentially flat
from $118.1 million, or $0.72 per diluted share, for the first half of 2006.
Operating cash flow(1) for the six month period increased to $242.5 million, or
$1.52 per diluted share, up 17% from $207.5 million, or $1.27 per diluted
share, for the same period in 2006.
Natural gas and crude oil production for
the six month period ended June 30, 2007 increased to 59.0 Bcfe, compared to
39.6 Bcfe for the first six month period ended June 30, 2006, a 49% increase.
Production for the first six months of 2007 is comprised of 51.4 Bcf of domestic
natural gas, 415.3 MBbls of domestic condensate, and 852.2 MBbls of crude oil
from China. Including the effects of hedging, realized domestic natural gas
prices during the six month period were $5.13 per Mcf, compared to $6.49 per
Mcf during the same period in 2006. Domestic condensate prices were $57.17 per
Bbl compared to $66.07 per Bbl during the comparable 2006 period. China crude
oil prices for the six months ended June 30, 2007 were $53.47 per Bbl compared
to $59.33 per Bbl in 2006.
Operational Highlights
During the second quarter of 2007, there
were 59 gross, 26.1 net new producing wells in Wyoming. For the first half of
the year 90 gross, 44.1 net new wells were placed on production. On a net well
basis, this represents a 275% increase in activity for the first six months of
2007 over the same period in 2006.
At quarter end in the Pinedale Field,
Ultra had 12 operated rigs drilling while their partners were running an
additional 12 rigs on Ultra interest lands. There were 33 gross, 11.4 net wells
being completed or awaiting completion, largely consisting of wells drilled on
Ultra's non-operated winter pads and wells being batch drilled.
Since the beginning of the year, Ultra has
36 operated wells that were drilled from spud to total depth (TD) at an average
of 40 days per well. This compares to the 61 days per well in 2006. Included in
the second quarter drilling results is the fastest drill time yet -- from spud
to TD in 23 days.
"This continued improvement in
drilling time illustrates that the initiatives we instituted late last year are
paying off. With this improvement, we have begun to accelerate our drilling
program in advance of the SEIS approval. This will also provide Ultra with a
jump in having production ready to go when the Rockies Express Pipeline becomes
operational on January 1, 2008," commented Watford.
Ultra's ongoing delineation drilling
program has continued during the second quarter with five additional
delineation wells reaching TD during the quarter. Early indications are that
all have met or exceeded our production expectations. At this time the company
plans to drill an additional 13 delineation wells prior to year-end.
In June 2007, the Wyoming Oil and Gas
Conservation Commission approved Ultra's application, filed jointly with Shell,
for 10-acre well density on an approximate 11.3 additional square miles in the
Pinedale Field. Ultra owns an interest in approximately 71% of these lands.
Rockies Express Pipeline Update
The Federal Energy Regulatory Commission
(FERC) has approved the construction of all seven segments of the Rockies
Express Pipeline (REX). REX is expected to be operational on January 1, 2008.
Once operational, REX will move natural gas from the Rockies to the Midwest and
eventually the Northeast and is expected to significantly increase the
take-away capacity for natural gas in the Rockies by an approximate 27%,
allowing Ultra to diversify away from the West Coast markets. Ultra, an anchor
shipper on REX, has committed to firm capacity of 200 Mmcf per day of natural
gas. The increased capacity represented by REX to the Midwest and eventually
Northeast, will have a positive impact on Wyoming natural gas prices as
evidenced by forward price quotes.
Production and Capital Budget Update
Ultra revised its annual natural gas and
crude oil production guidance for 2007 to 116.5 Bcfe, up from 2007's original
guidance of 110.0 Bcfe and from the first quarter's revised guidance of 114.0
Bcfe. The current annual production guidance is a 27% increase from 2006 annual
production of 91.6 Bcfe. Ultra is re-affirming preliminary guidance for 2008
and 2009 of 135.0 Bcfe and 160.0 Bcfe, respectively.
The company's plan to accelerate
development of the Pinedale Field is commencing. Total net wells to Ultra
planned to be drilled in 2007 has increased from 75 at the beginning of the
year to 95 today, a 27% increase in net wells. Ultra's capital expenditure
budget will be increased 23% to $740 million from the previous $600 million.
The company plans to fund the 2007 capital budget by a combination of cash on
hand and its current banking facility.
"Our new production target for 2007,
reflecting a 27% increase over 2006, assumes no production contribution from
our China asset in the fourth quarter and continued shut-ins by another
Pinedale operator impacting us through the end of the year. With the expanding
productivity of our rig fleet, we are increasing the number of wells we will
drill in 2007 and correspondingly our capital budget," commented Watford.
Share Repurchase Activity
During the six months ended June 30, 2007,
Ultra repurchased 703,571 shares of its common stock for an aggregate $39.0
million dollars at a weighted average price of $55.48 per share. Since the
program's inception in May 2006, the company has repurchased 4.7 million shares
of its common stock for an aggregate $237.3 million at a weighted average price
of $50.48 per share. Total shares outstanding as of June 30, 2007 for Ultra
were 151,892,002.
Hedging
Through August 3, 2007, Ultra had the
following open commodity derivative contracts to manage price risk on a portion
of its natural gas production whereby the company receives the fixed price and
pays the variable price. All prices are Northwest Pipeline Rockies basis.
Type
Remaining Contract Period Volume
- mmbtu/day Average Price /mmbtu
Swap
Aug 2007 - Dec 2007
10,000 $4.59
Swap
Apr 2008 - Oct 2008
10,000 $7.10
Swap
Apr 2008 - Oct 2008
10,000 $7.12
Swap
Apr 2008 - Oct 2008
10,000 $7.16
At this time, Ultra has
the following fixed price physical delivery contracts in place on behalf of its
interest and those of other parties. All fixed price contracts are at the Opal,
Wyoming hub.
Contract Period
Volumes mmbtu/day Average
Price per Mcf/mmbtu
Apr 2007 - Oct 2007
40,000 $6.73
Mcf/$6.20 mmbtu
Jan 2008 - Dec 2008 100,000 $7.41 Mcf/$6.83 mmbtu
Apr 2008 - Oct 2008
30,000 $7.73
Mcf/$7.13 mmbtu
Jan 2009 - Dec 2009
10,000 $8.15
Mcf/$7.51 mmbtu
Subsequent to Quarter-End
On August 3, 2007, the company's common
stock began trading on the New York Stock Exchange under the ticker symbol
"UPL".
Mr. James C. Roe retired from the Board of
Directors on August 6, 2007. He served as a Director for Ultra since 2001.
"Over the past six years, Jim has
been instrumental in shaping Ultra into the successful company that it is
today. All of us at Ultra wish him the best in his retirement," commented
Watford.
Conference Call Webcast Scheduled for
August 8, 2007
Ultra Petroleum's second quarter 2007 conference call will be available
via live audio webcast at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on
Wednesday, August 8, 2007. To listen to this webcast, log on to
http://www.ultrapetroleum.com. The webcast will be archived on Ultra Petroleum's
website through October 8, 2007.
About Ultra
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. Ultra is listed on the New York Stock Exchange under the symbol
"UPL". The Company had 151,892,002 shares outstanding as at June 30, 2007.
This release can be found at http://www.ultrapetroleum.com
Ultra Petroleum Corp.
Consolidated Statement of Operations
(unaudited)
All amounts expressed in US$000's
For the Six Months Ended For the Quarter Ended
30-Jun-07 30-Jun-06
30-Jun-07 30-Jun-06
Volumes
Oil liquids
(Bbls) - Domestic
415,327 254,310 221,820
125,899
Oil crude
(Bbls) - China
852,154 851,255 434,569
385,110
Natural Gas
(Mcf) - Domestic
51,417,039 32,962,616 26,597,603
16,431,357
MCFE
59,021,925 39,596,006 30,535,937
19,497,411
Revenues
Oil sales - Domestic $23,743
$16,803 $14,451 $8,777
Oil sales - China
45,567 50,503 25,951
25,072
Natural Gas
sales - Domestic
263,705 213,837 116,420
96,044
Total Revenues 333,015 281,143
156,822 129,893
Expenses
Production
Costs - Domestic
10,251 4,807 5,574
2,398
Production Costs - China
5,609 4,714 2,982 1,926
Severance/Production
Taxes - Domestic
32,207 26,674 14,694
12,049
Severance/Production
Taxes - China
5,125 5,365 3,514
4,093
Gathering Fees 13,473 8,112
6,980 4,363
Total Lease
Operating Costs
66,665 49,672 33,744
24,829
DD&A - Domestic
62,220 30,633 32,591 15,377
DD&A - China 11,043 6,055
5,648 2,671
General and
administrative
4,101 7,392 2,103
3,190
Stock compensation
2,842 524 1,572
524
Total Expenses
146,871 94,276 75,658 46,591
Interest and other income
636 1,344 309
770
Interest and debt expense
6,921 311 4,221
139
Net income before
income taxes 179,859 187,900 77,252 83,933
Income tax
provision - current
12,254 17,623 6,743
11,087
Income tax
provision - deferred
51,945 52,128 21,440 22,171
Net Income
$115,660 $118,149 $49,069
$50,675
Operating Cash Flow
(see non-GAAP
reconciliation)
$242,515 $207,489 $109,125
$91,418
Weighted Average
Shares - Basic
151,975 155,222 152,022
155,223
Weighted Average
Shares- Diluted
159,056 163,115 158,992
162,966
Earnings per
Share - Basic
$0.76 $0.76 $0.32
$0.33
Earnings per
Share - Diluted
$0.73 $0.72 $0.31
$0.31
Realized Prices
Oil liquids
(Bbls) - Domestic
$57.17 $66.07 $65.15 $69.72
Oil crude (Bbls) - China
$53.47 $59.33 $59.72
$65.10
Natural Gas
(Mcf) - Domestic
$5.13 $6.49 $4.38
$5.85
Costs Per MCFE - Corporate
Lease Operating Costs
$1.13 $1.25 $1.11 $1.27
DD&A $1.24 $0.93 $1.25 $0.93
General and
administrative - total
$0.12 $0.20 $0.12 $0.19
Interest and debt expense
$0.12 $0.01 $0.14 $0.01
$2.61 $2.39
$2.62 $2.40
Segment Costs Per MCFE
United States
Production Costs
$0.19 $0.14
$0.20 $0.14
Severance/Production
Taxes
$0.60 $0.77 $0.53 $0.70
Gathering Fees
$0.25 $0.24 $0.25 $0.25
DD&A $1.15 $0.89
$1.17 $0.89
$2.19 $2.04
$2.14 $1.99
China
Production Costs
$1.10 $0.92 $1.14 $0.83
Severance/Production
Taxes
$1.00 $1.05 $1.35 $1.77
DD&A $2.16 $1.19 $2.17 $1.16
$4.26 $3.16
$4.66 $3.76
Note: Amounts on a per MCFE basis may not total due to
rounding.
Margins
Pre-tax income
54% 67% 49% 65%
Net Income
35% 42% 31% 39%
Operating segment margins
United States
81% 83% 79% 82%
China
76% 80% 75% 76%
Ultra Petroleum Corp.
Reconciliation of Cash Flow from
Operations Before Changes in Non-Cash
Items and Working Capital
(unaudited)
All amounts expressed in US$000's
(1) Operating cash flow is defined as net
cash provided by operating
activities before changes in non-cash items and working capital.
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.
The following table reconciles cash flow
from operations before changes in non-cash items and working capital with net
cash provided by operating activities as derived from the company's financial
information.
For the Six Months Ended For the Quarter Ended
30-Jun-07 30-Jun-06
30-Jun-07 30-Jun-06
Net cash provided by
operating activities
$257,826 $237,711 $107,304
$105,930
Excess tax benefit
from stock based
compensation
$11,548 $8,058 $8,542
$5,034
Other
$(43) $-- $(43) $--
Accounts payable and
accrued liabilities
$(46,349) $(28,198) $(20,527) $(28,467)
Prepaid expenses
and other current
assets
$(3,019) $(15) $(110) $(7)
Accounts receivable
$18,498 $(3,677) $6,216 $5,223
Inventory
$(106) $(794) $(25) $ (83)
Restricted cash
$1,207 $1 $ 649
$--
Deferred revenue
$-- $(780) $-- $(780)
Other long-term
obligations
$1,748 $(1,092) $7,189
$5,323
Taxation payable
$1,205 $(3,725) $(70) $(755)
Cash flow from
operations before
changes in non-cash
items and working
capital
$242,515 $207,489 $109,125
$91,418
These statements are unaudited and subject to adjustment.
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 business 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
crude oil and natural gas, particularly in Wyoming, risks inherent in
operations in China, 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 June 30, 2007.
SOURCE Ultra Petroleum
Corp.
-0- 08/07/2007
/CONTACT: Kelly L. Whitley, Manager Investor Relations
of Ultra Petroleum Corp., +1-281-876-0120, Ext. 302, info@ultrapetroleum.com/
/Photo: http://www.newscom.com/cgi-bin/prnh/20020226/DATU029LOGO
AP
Archive: http://photoarchive.ap.org
PRN Photo
Desk, photodesk@prnewswire.com/
/Web site: http://www.ultrapetroleum.com /
(UPL)