Ultra Petroleum Achieves Record Production in Second Quarter 2007; Increases Full Year 2007 Production Growth Target to 27 Percent



    HOUSTON, Aug. 7 /CNW/ -- 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.




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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