Ultra Petroleum Reports Record 2007 Production of 121.3 Bcfe and Record Earnings of $263.0 Million



    HOUSTON, Feb. 19 /CNW/ -- Ultra Petroleum Corp. (NYSE:   UPL) today
reported record financial and operating results for both the fourth quarter
and full-year 2007.
    Ultra Petroleum's total natural gas and crude oil production for the year
ended December 31, 2007, increased 32 percent to a record high of 121.3
billion cubic feet equivalent (Bcfe) compared to 91.6 Bcfe in 2006. Both
periods include production from China until the sale of Sino-American Energy.
Production for 2007 is comprised of 109.2 billion cubic feet (Bcf) of domestic
natural gas, 870.1 thousand barrels (Mbls) of domestic crude oil, and 1,153.3
Mbls of crude oil from China operations. Including the effects of hedging,
realized domestic natural gas prices for 2007 were $4.66 per thousand cubic
feet (Mcf) as compared to $6.00 per Mcf in 2006. Domestic condensate prices
realized were $66.08 per barrel (Bbl) as compared to $64.52 per Bbl in 2006.
China crude oil prices realized in 2007 were $56.21 per Bbl as compared to
$52.40 per Bbl in 2006.
    Earnings for the year-ended December 31, 2007, increased 14 percent to a
record $263.0 million, or $1.66 per diluted share, as compared to $231.2
million or $1.43 per diluted share for the same period in 2006. Total
operating cash flow(1), including discontinued Sino-American operations,
increased to an all time high of $453.3 million for the year-ended December
31, 2007, versus $431.9 million for the same period in 2006.
    "In 2007, Ultra Petroleum achieved record production, record earnings,
and record cash flow while receiving a $4.66 per Mcf realized natural gas
price - a 22 percent decline from 2006's realized natural gas price. Our
all-in costs of $2.61 per Mcfe are the lowest in the industry. Even with the
low natural gas prices we continue to deliver sector leading returns with a 32
percent net income margin from continuing operations and a return on capital
of 27 percent," commented Michael D. Watford, Chairman, President and Chief
Executive Officer. "Our committed team remains focused on delivering superior
financial performance while remaining true to our strategy of investing in
profitable growth," Watford added.
    Total consolidated production in the fourth quarter of 2007 increased 18
percent to 33.6 Bcfe which compares to 28.4 Bcfe, including discontinued
operations from China, in the fourth quarter of 2006. The fourth quarter 2007
period does not include China production. Production for the fourth quarter
2007 is comprised of 32.0 Bcf of domestic natural gas and 255.3 MBbls of
domestic condensate. Domestic natural gas prices realized for the fourth
quarter of 2007, including the effects of hedging, were $4.42 per Mcf, a
decrease from $5.62 for the same period in 2006. Domestic condensate prices
were $79.84 per Bbl compared to $57.06 per Bbl in the fourth quarter of 2006.
    Earnings for the fourth quarter ended December 31, 2007 increased 82
percent to $110.0 million, or $0.70 per diluted share, as compared to $60.6
million, or $0.38 per diluted share for the same period in 2006. Total
consolidated operating cash flow(1), was $120.4 million for the fourth quarter
2007, versus $118.1 million for the same period in 2006.
    
    Operational Highlights
    
    For the year-ended December 31, 2007, Ultra drilled 212 gross (105.01
net) wells. In Pinedale, the company averaged 35 days per well spud to total
depth (TD) as compared to its 61 days per well average for 2006. This is a 43
percent improvement over 2006. During the fourth quarter of 2007, Ultra
achieved a new record in drilling time in the Pinedale Field. Ultra drilled
the Warbonnet 4D1-9 well from spud to a TD of 13,175 feet in 17.5 days,
surpassing the previous record of 18.6 days. Encompassing all of the company's
Pinedale operations in 2007, 75 percent of the wells were drilled spud to TD
in 40 days or less.  Prior to 2007, the record time was 41 days spud to TD.
These improvements in drilling times have been achieved largely due to the use
of Oil Based Mud (OBM), the implementation of new drill bit technology, and
upgrades in the rig fleet.
    During the fourth quarter of 2007, Ultra brought on-line 49 gross (23.00
net) new producing wells in Wyoming. Since the first of the year, 193 gross
(89.90 net) new producing wells were placed on production. This compares to
124 gross (57.23 net) for 2006.
    In 2007, the average 24-hour delivery rate of the new Pinedale wells was
8.8 million cubic feet of gas (Mmcfg) per day with a maximum of 20.8 Mmcfg per
day. The maximum was achieved on the Ultra operated Mesa 3B-34D. The average
of the Ultra operated wells was 9.6 Mmcfg per day while the average of the
Ultra interest non-operated wells was 8.2 Mmcfg per day.
    At the end of 2007, in the Pinedale Field, Ultra had 11 operated rigs
drilling while its partners were running an additional 12 rigs on Ultra
interest lands. Five of the 11 Ultra rigs are skid capable at year-end. There
were 4 gross (3.02 net) wells being completed and 19 gross (9.48 net) wells
waiting on completion at the end of 2007.
    The company's ongoing delineation program is in full swing with five rigs
now drilling wells as part of this project. At the present time, there are
over 100 identified quarter sections (160 acres) for delineation drilling in
and around the Pinedale Field. Current plans call for continuing the
delineation drilling effort for at least the next five years in ongoing
efforts to fully define the ultimate potential of this gigantic asset.
Thirteen of the planned seventeen delineation wells for 2007 have sufficient
production history to be able to estimate reserves. For these 13 wells,
reserves averaged 31 percent better than the year-end 2006 reserve estimates
by Netherland Sewell and Associates (NSAI). These results are expanding the
resource size and our early 2008 delineation results are continuing to show
significant success.
    Included in the delineation wells, the Boulder 9B1-19 on the east side of
the Boulder area came on with a 24-hour flow rate of 11.6 Mmcfg per day and
has been given an 8.6 Bcfe Estimated Ultimate Recovery (EUR) by NSAI at
year-end 2007. Further to the south, the Boulder 10D-32 came on at a flow rate
of 11.9 Mmcfg per day and received a 6.8 Bcfe year-end 2007 EUR from NSAI. The
combination of these wells on the east side of Pinedale expands Ultra's
reserve mapping and removes the area previously known as the "Boulder Gap". An
additional delineation well on the west side of the Field, the Riverside
10C1-25, came on with a 24 hour flow rate of 9.8 Mmcfg per day, expanding the
western edge of the Field.
    In 2007, Ultra initiated a program to evaluate the effectiveness of
completing the "non-sand" section of the Pinedale Field. To date, 19 wells
have been completed with additional "non-sand" stages, and production logs
have been run on 12 of these wells. These production logs indicate that the
flow rates from the 63 additional frac stages pumped in this test have
averaged over 100 Mcf of gas per day per stage. On eight of the twelve, the
company has run a second production log. These logs confirm that the
"non-sand" stages are performing similarly to typical Lance sand intervals.
Should this production performance continue like the typical Lance completion,
these zones would appear to add materially to the overall reserves and
production at only the additional cost of the extra frac jobs. It is still
early in the process and additional testing will be needed to prove the
potential value that can be added from this work. However, early results are
very encouraging.
    Ultra continues to move ahead at the Mesa 10D-33 deep exploration well.
The top of the Blair was encountered at 16,204 feet. It appears this section
contains a significant thickness of potential pay-sand and has better porosity
than encountered at the Stewart Point 15-29 deep exploration well. The well is
currently at 17,878 feet in the Blair with an expected TD of 19,500 feet by
early March 2008.
    The Revised Draft Supplemental Environmental Impact Study (SEIS) was
issued by the Bureau of Land Management (BLM) in late December 2007 followed
by a public comment period. The public comment period closed February 11,
2008. It is anticipated that the BLM will issue the Record of Decision mid-
year 2008. With this, Ultra Petroleum gains access year-round to the Pinedale
Field for drilling and completion activities.
    "The opportunity to drill and complete wells year-round on additional
acreage in Pinedale that is currently off-limits in the winter would
significantly increase our ability to accelerate development. All of this
would be accomplished while ensuring preservation of significant undisturbed
wildlife habitat in the area," commented Watford.
    
    Rockies Express Pipeline Update
    
    The Rockies Express Pipeline (REX) commenced interim service in mid-
January 2008, for deliveries from Opal, Wyoming to the ANR delivery point in
Kansas. It is expected that in the next few weeks, REX will become fully
operational from Opal to the Panhandle Eastern Pipeline interconnect in
Audrian County, Missouri. REX is significant to Ultra, an anchor shipper,
because it is the first time in the company's history that it is delivering
significant portions of its natural gas east of the Rocky Mountains. In 2009,
REX will move gas from the midwest into the northeast. Since the pipeline
became operational, the significant increase in take-away capacity from the
Rockies has permitted Ultra to benefit from increasing Wyoming natural gas
prices.
    
    Share Repurchase
    
    During the year-ended December 31, 2007, Ultra Petroleum repurchased
1,696,492 shares of its common stock for an aggregate $96.3 million at a
weighted average price of $56.76 per share. Since the program's inception in
May 2006, the company has repurchased 5.7 million shares of its common stock
for an aggregate $294.5 million at a weighted average price of $51.73 per
share. Total shares outstanding for the company as of December 31, 2007 were
152,003,671.
    
    Hedging
    
    As of today, Ultra Petroleum has the following open commodity derivative
contracts in place to manage price risk on a portion of its natural gas
production whereby the company receives the fixed price and pays the variable
monthly index price. All prices are Northwest Pipeline Rockies basis.



    
              Remaining Contract      Volume -         Average Price per
     Type           Period            mmbtu/day            Mcf/mmbtu
    

    
     Swap    Apr 2008 - Oct 2008       120,000      $7.23 Mcf/$6.76 mmbtu
     Swap    Jan 2009 - Dec 2009        30,000      $7.86 Mcf/$7.35 mmbtu
    
    In addition to derivative contracts, Ultra Petroleum also utilizes fixed
price forward physical delivery contracts at southwest Wyoming delivery points
to hedge its commodity price exposure. As of today, the company has the
following fixed price physical delivery contracts in place on behalf of its
interest and those of other parties. In November 2007, the Minerals Management
Service commenced a Royalty-in-Kind program which had the effect of increasing
the company's average net interest in its physical gas sales from 80 percent
to approximately 91 percent.



    
                     Remaining        Volume -         Average Price per
        Type      Contract Period     mmbtu/day            Mcf/mmbtu
    

    
    Forward Sale   Calendar 2008       100,000     $7.31 Mcf/$6.83 mmbtu
    Forward Sale     Summer 2008        20,000     $7.36 Mcf/$6.88 mmbtu
    Forward Sale   Calendar 2009        10,000     $8.04 Mcf/$7.51 mmbtu
    Forward Sale     Summer 2009        70,000     $7.25 Mcf/$6.78 mmbtu
    
    In summary, the total net volume hedged for 2008 currently is 64.25 Bcfe
at an average price of $7.08 per Mcf and in 2009, the total net volume hedged
currently is 28.6 Bcfe at an average price of $7.83 per Mcf.
    
    Other Highlights During the Year
    
    On September 27, 2007, the company announced the execution of a stock
purchase agreement for the sale of Sino-American Energy Corporation which
represents all of Ultra's interest in Bohai Bay, China for $223.0 million.
Proved reserves at year-end 2006 for Sino-American, as measured by Ryder Scott
Company, were approximately 4.0 MMBbls which represented 1 percent of Ultra's
total booked proved reserves at December 31, 2006. Despite having owned
Sino-American since 2001, under generally accepted accounting principles
("GAAP"), its operations have been reclassified as "Discontinued Operations"
for 2007 and prior years. As a result, production, revenues and expenses
associated with Sino-American have been removed from continuing operations and
reclassified to discontinued operations. The sale closed on October 22, 2007,
with an effective date of June 30, 2007. The purchaser of Sino-American Energy
Corporation is SPC E&P (China) Pte Ltd, a wholly-owned subsidiary of Singapore
Petroleum Company Limited.
    "We are pleased with the value received for the non-core asset. We are
now turning our full attention to Ultra's legacy asset, the Pinedale Field,
one of the nation's largest natural gas fields," commented Watford.
    
    Conference Call Webcast Scheduled for February 20, 2008
    
    Ultra Petroleum's fourth quarter and full year 2007 conference call will
be available via live audio webcast at 11:00 a.m. Eastern Standard Time (10:00
a.m. Central Standard Time) Wednesday, February 20, 2008. To listen to this
webcast, log on to http://www.ultrapetroleum.com. The webcast will be archived
on Ultra Petroleum's website through May 4, 2008.

    Financial tables to follow.



    
    Ultra Petroleum Corp.
    Consolidated Statement of Operations
    (unaudited)
    All amounts expressed in US$000's
    

    
                             For the Twelve Months     For the Quarter Ended
                                     Ended
                            31-Dec-07     31-Dec-06   31-Dec-07    31-Dec-06
    

    
    Volumes
         Oil liquids (Bbls)
          - Domestic           870,123      594,128     255,332      181,655
         Natural Gas (Mcf)
          - Domestic       109,177,569   78,395,453  32,033,401   24,938,267
         MCFE from
         continuing
          operations       114,398,307   81,960,221  33,565,393   26,028,197
    

    
         Oil crude (Bbls) -
         China -
         discontinued
          operations         1,153,293    1,603,360           -      396,430
         MCFE - Total      121,318,065   91,580,381  33,565,393   28,406,777
    

    
    Revenues
         Oil sales             $57,498      $38,335     $20,387      $10,364
         Natural Gas sales     509,140      470,324     141,588      140,122
    Total Revenues             566,638      508,659     161,975      150,486
    

    
    Expenses
         Production Costs       23,969       15,067       7,294        4,850
         Severance/Production
          Taxes                 63,480       57,899      18,314       16,676
         Gathering Fees         27,922       19,722       7,782        6,099
    Total Lease Operating
     Costs                     115,371       92,688      33,390       27,625
    

    
         DD&A                  135,470       79,675      41,385       29,487
         General and
          administrative        13,261       14,885       3,152        2,793
    Total Expenses             264,102      187,248      77,927       59,905
    Interest and other
     income                      1,087        1,941         248          314
    Interest and debt
     expense                    17,760        3,909       5,288        2,726
    

    
    Net income before
     income taxes              285,863      319,443      79,008       88,169
    

    Income tax provision       105,621      122,741      31,916       30,877

    
    Net income from
     continuing operations    $180,242     $196,702     $47,092      $57,292
    Discontinued
     operations, net of tax    $82,794      $34,493     $62,885       $3,278
    Net Income                 263,036      231,195     109,977       60,571
    

    
    Operating Cash Flow
     from Continuing
     Operations  (1)          $420,241     $384,235    $120,881     $110,706
    Operating Cash Flow
     from Discontinued
     Operations (1)             33,091       47,695        (498)       7,442
    Operating Cash Flows(1)    453,332      431,930     120,383      118,148
    (1) (see non-GAAP
     reconciliation)
    

    
    Proceeds from Sale of
    Discontinued Operations,
     net of
    transaction costs             208,032           -     208,032          -
    

    
    Weighted Average Shares -
     Basic                        151,762     153,879     151,575    151,764
    Weighted Average Shares -
     Diluted                      158,616     161,615     158,090    159,245
    

    
    Basic earnings per share:
    Income from continuing
     operations, net of taxes       $1.19       $1.28       $0.31      $0.38
    Income from discontinued
     operations:
       Operating earnings, net
        of taxes                    $0.13       $0.22       $0.00      $0.02
       Gain on sale of
        subsidiary, net of taxes    $0.41       $0.00       $0.42      $0.00
    Net Income                      $1.73       $1.50       $0.73      $0.40
    

    
    Fully Diluted earnings per
     share:
    Income from continuing
     operations                     $1.14       $1.22       $0.30      $0.36
    Income from discontinued
     operations:
       Operating earnings, net
        of taxes                    $0.12       $0.21       $0.00      $0.02
       Gain on sale of
        subsidiary, net of taxes    $0.40       $0.00       $0.40      $0.00
    Net Income                      $1.66       $1.43       $0.70      $0.38
    

    
    Realized Prices
         Oil liquids (Bbls) -
          Domestic                 $66.08      $64.52      $79.84     $57.06
         Oil crude (Bbls) -
          China                    $56.21      $52.40       $0.00     $39.53
         Natural Gas (Mcf)          $4.66       $6.00       $4.42      $5.62
    

    
    Costs Per MCFE - Total
     Consolidated
         Lease Operating Costs      $1.11       $1.20       $1.02      $1.10
         DD&A                       $1.24       $1.02       $1.23      $1.21
         General and
          administrative - total    $0.11       $0.16       $0.08      $0.10
         Interest and debt
          expense                   $0.15       $0.04       $0.16      $0.10
                                    $2.61       $2.43       $2.49      $2.50
    

    
    Segment Costs Per MCFE
      United States
         Production Costs           $0.21       $0.18       $0.22      $0.19
         Severance/Production
          Taxes                     $0.55       $0.71       $0.55      $0.64
         Gathering Fees             $0.24       $0.24       $0.23      $0.23
         DD&A                       $1.18       $0.97       $1.23      $1.13
                                    $2.19       $2.10       $2.23      $2.19
      China
         Production Costs           $1.65       $0.93       $0.00      $0.89
         Severance/Production
          Taxes                     $1.17       $0.87       $0.00      $0.59
         DD&A                       $2.16       $1.44       $0.00      $2.01
                                    $4.99       $3.24       $0.00      $3.48
    

    Note: Amounts on a per MCFE basis may not total due to rounding.

    
    Margins - Continuing operations
         Pre-tax income              50 %        63 %        49 %       59 %
         Net Income                  32 %        39 %        29 %       38 %
    

    
    Margins - Both
         Pre-tax income              65 %        63 %       109 %       58 %
         Net Income                  42 %        39 %        68 %       36 %
    

    
    Operating segment margins
        United States                80 %        82 %        79 %       82 %
        China                        70 %        79 %         0 %       78 %
    
    Note: Certain prior period amounts have been reclassified to conform with
current period presentation.



    
                             DISCONTINUED OPERATIONS
    
    The Company has accounted for its Sino-American Operations as
discontinued operations and has reclassified prior period financial statements
to exclude these businesses from continuing operations.  A summary of
information related to the Company's discontinued operations is as follows:

    
                                     For the Twelve        For the Quarter
                                      Months Ended              Ended
                                  31-Dec-07  31-Dec-06   31-Dec-07  31-Dec-06
    

    
    Operating revenues              64,822     84,008           -     15,672
    Lease operating expenses        11,419      8,922         838      2,105
    Severance taxes                  8,113      8,398           -      1,398
    Depletion, depreciation and
     amortization expenses          14,981     13,822           -      4,783
    General and administrative
     expenses                           98         50        (419)         1
    

    
    Operating earnings before
     income tax provision           30,211     52,815        (419)     7,385
    

    
    Income tax provision,
     discontinued operations        10,455     18,321        (266)     4,106
    

    
    Operating earnings -
     discontinued operations        19,756     34,493        (153)     3,278
    

    
    Gain on sale of subsidiary,
     net of income tax provision    63,038          -      63,038          -
    

    
    Net income, discontinued
     operations                     82,794     34,493      62,885      3,278
    




    
    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
    
    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.



    TOTAL CONSOLIDATED

    
                                    For the Twelve Months   For the Quarter
                                            Ended                Ended
                                     31-Dec-07 31-Dec-06  31-Dec-07 31-Dec-06
    Net cash provided by operating
     activities from operations       $429,625  $436,151    $71,423  $106,844
         Excess tax benefit from
          stock based
          compensation                 $36,692   $10,503    $23,130      $987
         Other                           $(177)       $-       $(84)       $-
         Accounts payable and
          accrued liabilities         $(65,560) $(25,965)  $(29,157)   $5,618
         Prepaid expenses and other
          current assets                  $803     $(658)     $(338)    $(636)
         Accounts receivable           $41,844   $12,149    $41,725    $1,979
         Restricted cash                $1,923      $453       $441      $451
         Other long-term
          obligations                   $1,840   $(2,156)    $8,957    $3,099
         Taxation payable               $2,150   $(2,207)        $-   $(5,772)
         Net changes in non-cash items
          and working capital -
          discontinued operations       $4,192    $3,660     $4,286    $5,578
    

    
    Cash flow from operations before
     changes in non-cash
     items and working capital         $453,332 $431,930   $120,383  $118,148
    



    CONTINUING OPERATIONS

    
                                     For the Twelve Months  For the Quarter
                                             Ended               Ended
    

    
                                     31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06
    Net cash provided by operating
     activities from operations       $400,726  $392,116   $76,207  $104,980
         Excess tax benefit from
          stock based compensation     $36,692   $10,503   $23,130      $987
         Other                           $(177)       $-      $(84)       $-
         Accounts payable and
          accrued liabilities         $(65,560) $(25,965) $(29,157)   $5,618
         Prepaid expenses and other
          current assets                  $803     $(658)    $(338)    $(636)
         Accounts receivable           $41,844   $12,149   $41,725    $1,979
         Restricted cash                $1,923      $453      $441      $451
         Other long-term
          obligations                   $1,840   $(2,156)   $8,957    $3,099
         Taxation payable               $2,150   $(2,207)       $-   $(5,772)
    

    
    Cash flow from operations
    before changes in non-cash items
     and working capital              $420,241   $384,235  $120,881 $110,706
    

    
    These statements are unaudited and subject to adjustment.
    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. Ultra is listed on
the New York Stock Exchange and trades under the ticker symbol "UPL".  The
company had 152,313,738 shares outstanding on January 31, 2008.
    
    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 2007 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, 2008.




For further information:

For further information: Kelly L. Whitley, Manager Investor Relations of
 Ultra Petroleum Corp., +1-281-876-0120, Ext. 302, info@ultrapetroleum.com Web
Site: http://www.ultrapetroleum.com


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