Ultra Petroleum Announces Second Quarter 2009 Financial and Operating Results


    HOUSTON, Aug. 4 /CNW/ -- Ultra Petroleum Corp. (NYSE:   UPL) continued to
deliver strong financial and operating performance for the second quarter of
2009. Highlights for the quarter include:

    --  Record natural gas and crude oil production of 44.5 Bcfe, an increase
        of 30 percent from second quarter 2008
    --  Operating cash flow(1) of $168.5 million
    --  Earnings of $78.3 million, or $0.51 per diluted share - adjusted
    --  Per unit all-in costs of $2.43 per Mcfe, down 29 percent from the same
        period in 2008

    --  Superior returns in second quarter (adjusted): 73 percent cash flow
        margin, 34 percent net income margin, 63 percent return on equity, and
        25 percent return on capital

    For the second quarter of 2009, production of natural gas and crude oil
increased 30 percent to a record 44.5 billion cubic feet equivalent (Bcfe) as
compared to 34.3 Bcfe during the second quarter of 2008. Ultra Petroleum's
second quarter 2009 production levels were the highest ever achieved by the
company. The company's production for the second quarter was comprised of 42.5
billion cubic feet (Bcf) of natural gas and 329.8 thousand barrels of
condensate (MBbls).

    Ultra Petroleum reported operating cash flow(1) for the second quarter of
$168.5 million. Adjusted net income was $78.3 million or $0.51 per diluted
share for the quarter. Due to a non-cash unrealized mark-to-market charge of
$159.9 million ($103.8 million after-tax) on the company's financial commodity
contracts, the company incurred a net loss of $25.5 million, or $0.17 per
diluted share. The unrealized loss on commodity derivative contracts is
typically excluded by the investment community in published estimates.

    "In a difficult period, Ultra Petroleum again overachieved. We grew our
production by 30 percent while decreasing per unit all-in costs by 29 percent
to an industry low $2.43 per Mcfe. While enduring lower commodity prices
during the quarter, we were able to maintain a 34 percent net income margin.
These values compare favorably with year-ago margins earned at markedly higher
commodity prices. Ultra Petroleum provides a unique combination of top-tier
growth rates at the industry's lowest cost structure," stated Michael D.
Watford, Chairman, President and Chief Executive Officer.

    During the second quarter of 2009, Ultra Petroleum's average realized
natural gas price was $5.04 per thousand cubic feet (Mcf), including realized
gains and losses on commodity derivatives. The company's average price for
natural gas was $2.71 per Mcf, excluding realized gains and losses on
commodity derivatives. The realized condensate price in the second quarter of
2009 was $46.27 per barrel (Bbl).

    Natural gas and crude oil production for the six month period ended June
30, 2009, increased to 86.6 Bcfe compared to 68.4 Bcfe for the six month
period ended June 30, 2008, a 27 percent increase. Production for the first
six months of 2009 was comprised of 82.7 Bcf of natural gas and 649.2 MBbls of

    Operating cash flow(1) for the first half of 2009 was $292.7 million.
Adjusted earnings for the six month period ended June 30, 2009, were $117.9
million or $0.77 per diluted share.

    The realized natural gas price during the six month period was $4.76 per
Mcf, including realized gains and losses on commodity derivatives. The
company's average price for natural gas was $3.31 per Mcf, excluding realized
gains and losses on commodity derivatives. The realized condensate price was
$37.56 per Bbl.

    Wyoming - Operational Highlights

    In the second quarter of 2009, 64 Pinedale-Lance wells were placed on
production, including 23 operated by Ultra. The average initial production
rate (IP) for the 23 Ultra-operated Pinedale wells was 11,675 Mcf per day. The
average of all Ultra-interest wells was 8,529 Mcf per day while the average of
the Ultra non-operated wells was 6,720 Mcf per day. The table below details
the IP rates for Ultra's operated wells during the second quarter of 2009.

                        Pinedale Well Performance - Ultra Operated
          Area               Well Name            IP (Mcf per day)
          ----               ---------            ----------------
         Mesa              MS 10D1-28D                12,695
         Mesa              MS 13A1-27D                14,097
         Mesa              MS 13B1-27D                11,320
         Mesa              MS 13C1-27D                15,248
         Mesa              MS 14A1-27D                11,781
         Mesa              MS 14B1-27D                15,531
         Mesa              MS 14D1-27D                11,631
         Mesa              MS 16C1-33D                13,799
         Mesa              MS 9A1-28D                 12,564
         Mesa              MS 9C1-28D                 15,185
         Riverside         RS 3D1-11D                 12,291
         Riverside         RS 3D2-2D                   8,027
         Riverside         RS 4B1-11D                 15,621
         Riverside         RS 4C1-11                  12,925
         Riverside         RS 4C1-2D                  10,747
         Riverside         RS 5A2-2                   12,494
         Riverside         RS 5B1-2D                   9,120
         Riverside         RS 6A2-2D                   7,276
         Riverside         RS 6B2-2D                  11,310
         Riverside         RS 8C1-4D                   8,600
         Rainbow           RB 6C-30                    9,520
         Rainbow           RB 7A1-30D                 10,838
         Warbonnet         WB 11B1-23D                 5,914
        Average Q2 2009 IP                            11,675

    The average IP for an Ultra-operated well substantially increased from
2008 as the company gained year-round access to development areas in a larger
part of the Pinedale field where the wells are more productive, leading to
larger average per-well reserve estimates. Year-round access to these
development areas was granted in the September 2008 Record of Decision (ROD)
from the Bureau of Land Management (BLM). The company expects that over the
next decade, a majority of the wells will be drilled in these areas of the

    The increase in IP rates during 2009, as compared to 2008, corresponds to
an increase in the average reserve size of Pinedale wells drilled in the year.
The table below details the increase in average estimated ultimate recovery
(EUR) of Ultra-operated wells 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           -           -

    "Since the ROD was issued in September 2008, Ultra has been able to move
and keep rigs in areas previously not accessible year-round. This has resulted
in fewer rig moves, leading to more efficient operations while drilling in the
better parts of Pinedale. One of our best wells this year is the Riverside
4B1-11D which had an IP rate of 15,621 Mcf per day and is located in a
development area where all of our rigs are currently located," stated Watford.

    The company continues to collect and analyze data from five-acre pilot
areas. During the second quarter, Ultra completed five wells as part of this
pilot program. The five wells are exceeding pre-drill expectations with an
average IP of over 9,300 Mcf per day and an average EUR of 4.6 Bcfe per well

    During the second quarter ended June 30, 2009, Ultra Petroleum drilled
and cased to total depth 53 wells, including outside operated. For the first
six months of 2009, the company drilled and cased 132 wells.

    The second quarter 2009 average drilling days for Ultra-operated wells as
measured by spud to total depth (TD) was 21 days. Largely as a result of pad
drilling and a decrease in cost of services, well costs are also lower. In the
second quarter of 2009, well costs decreased to $5.25 million, as compared to
$5.7 million in the second quarter of 2008.

                                 2006    2007    2008   Q1 2009    Q2 2009
                                 ----    ----    ----   -------    -------
    Spud to TD (days)              61      35      24        23         21
    Rig release to rig
     release (days)                79      48      32        31         24
    % wells drilled in < 30
     days                           0%     36%     84%       78%        84%
    % wells drilled < 20 days       0%      2%     27%       33%        74%
    Well cost - pad ($MM)        $7.0    $6.2    $5.5      $5.5      $5.25

    "Our costs are decreasing while our average well size is increasing and
our five-acre pilot wells are performing positively," stated Watford.

    Pennsylvania - Operational Highlights

    During the second quarter, Ultra drilled and completed five horizontal
Marcellus wells. All five wells tested greater than 5,300 Mcf per day. First
production began in mid-July with two wells placed on-line with combined
production over 13,000 Mcf per day. Based on favorable results to date, Ultra
continues to expand its Pennsylvania activity and currently expects to drill
over 32 horizontal Marcellus Shale wells by year-end. The company has secured
four pipeline interconnects to major interstate pipelines with total capacity
of 80 MMcf per day growing to over 300 MMcf per day by year-end. The company
recently opened a field office in Wellsboro, Pennsylvania to accommodate
accelerating its presence in the play.

    "We are pleased with the early results in our Marcellus program. The
initial assessment of our acreage is positive, and we are moving forward with
acceleration of our horizontal drilling activity in the play. With continued
success in the second half of 2009, we have the acreage, resources and
logistics in place to drill over 100 horizontal Marcellus wells in 2010,"
stated Watford.

    Mid-Year Reserve Update

    Netherland, Sewell & Associates, Inc. (NSAI) conducted a mid-year update
of Ultra Petroleum's Wyoming natural gas and crude oil reserves using the 2009
SEC reserve reporting guidelines. Proved reserves total 6.7 trillion cubic
feet equivalent (Tcfe) unrestricted by Ultra's self-imposed three year PUD
limit. This compares to year-end 2008 proved reserves of 3.5 Tcfe restricted
by the three year PUD limit and 4.8 Tcfe unrestricted.

    The estimated future net cash flow (before tax) discounted at 10 percent,
or pre-tax PV-10, for proved reserves is $6.8 billion at $5.00 per Mcf natural
gas price and $9.4 billion at $6.00 per Mcf. Both values assume $825.0 million
per year of capital expenditures in Wyoming. All reserves are engineered,
economic, and within the defined field limits in Wyoming.

    Hedges - Derivative Contracts

    The total volume of commodity derivative contracts for the remainder of
2009 is 51.9 Bcf at an average price of $5.80 per Mcf. In 2010, the total is
98.3 Bcf at an average price of $5.49 per Mcf and in 2011 the total volume is
69.4 Bcf at an average price of $5.56 per Mcf.

    "Our large hedge position for 2010 and 2011 underpins our excellent
economics in Wyoming. Our hedged volumes along with our 73 Bcf of annual firm
transportation on Rockies Express, that will access Northeast markets by the
end of this year, creates a solid foundation for financial success," stated

    As of today, Ultra Petroleum has the following positions in place to
mitigate its commodity price exposure:

                                                  Average Price per Mcf
                          Total Volume (Bcf)      ---------------------
                          ------------------         at Point of Sale
    Q3 2009                         33.1                 $5.84 Mcf
    Q4 2009                         18.8                 $5.73 Mcf
    -------                         ----                 ---------
    Total 2009                      51.9                 $5.80 Mcf

    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                         17.1                 $5.56 Mcf
    Q2 2011                         17.3                 $5.56 Mcf
    Q3 2011                         17.5                 $5.56 Mcf
    Q4 2011                         17.5                 $5.56 Mcf
    -------                         ----                 ---------
    Total 2011                      69.4                 $5.56 Mcf

    Production Guidance

    Ultra Petroleum is reaffirming its annual natural gas and crude oil
production guidance for 2009 of 172 to 177 Bcfe. Production for 2009 is an 18
to 22 percent increase over 2008's record annual production of 145.3 Bcfe. All
forecast production growth is generated organically and does not currently
include any contribution from Marcellus Shale in Pennsylvania.

    Capital Expenditures

    Due to Ultra's accelerated exploration efforts in Pennsylvania, cap-ex
for the second half of 2009 is estimated to be $352.6 million. This compares
to the first half of the year cap-ex of $382.4 million. Total 2009 cap-ex is
estimated at $735.0 million. In Pennsylvania, the company increased the number
of wells it expects to drill to 35 from 23.

    "We continue to pursue a conservative and disciplined capital program
that is consistent with our long-term strategy of balancing growth and
profitability," stated Watford. "Ultra's legacy Wyoming field warrants growth
and profitable re-investment throughout the energy cycle. Plus, we are excited
with the early results from our first Marcellus horizontal wells that we have
recently brought into production. We own long-term assets and believe that
long-term commodity price assumptions drive value, not near-term commodity
prices," Watford added.

    Rockies Express Pipeline Update

    At the end of the second quarter, the first phase of the REX-East
pipeline commenced service from Audrain County, Missouri to Lebanon, Ohio.
Currently, REX provides natural gas transportation capacity of 1.8 Bcf per day
which is an increase from the previous 1.5 Bcf per day. The company is
realizing natural gas prices that are generally referenced to Lebanon Hub
pricing. The final phase of REX from Lebanon, Ohio to Clarington, Ohio is
expected to be in service on November 1, 2009. Natural gas delivered to the
final phase in Clarington, Ohio is expected to generally receive prices which
are referenced to Dominion South pricing.

    The table below provides a historical and future perspective on basis
differentials for Wyoming gas (NW Rockies) and premium markets in the
Northeast (Dominion South). The basis differential is expressed as a
percentage of Henry Hub.

                        Basis Differential as a Percentage (%) of Henry Hub
                                           2009      2009
                   2006    2007    2008     YTD     Balance     2010    2011
                   ----    ----    ----    -----   ---------    ----    ----
    NW Rockies        78      57      68      67          83      86      88
    Dominion South   104     106     106     108         104     103     102

    "The basis table highlights the changes afoot. NW Rockies basis has been
decreasing since 2005 and now is poised to increase significantly for the
balance of 2009 and more so in 2010 and 2011. Dominion South basis is forecast
to moderate a bit. With our 2010 and 2011 natural gas sales targeted at 50
percent sold into each market, Ultra's effective basis to Henry Hub pricing
will be 94 to 95 percent," stated Watford.

    Subsequent to Quarter-End

    On July 8, 2009, Ultra Petroleum was a recipient of the 2009 Oil, Gas,
Geophysical, and Geothermal Development Environmental Best Management
Practices (BMP) Awards from the BLM. 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 designed 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 environment
while still allowing for the orderly development of natural gas and crude oil
resources in Federal lands. The orderly development ensures a reliable source
of affordable energy for American consumption.

    Conference Call Webcast Scheduled for August 4, 2009

    Ultra Petroleum's second quarter 2009 conference call will be available
via live audio webcast at 11:00 a.m. Eastern Daylight Time (10:00 a.m. Central
Daylight Time) Tuesday, August 4, 2009. To listen to this webcast, log on to
www.ultrapetroleum.com. The webcast replay and podcast will be archived on
Ultra Petroleum's website through August 19, 2009.

    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
stages of exploration in the Appalachian Basin in Pennsylvania. Ultra is
listed on the New York Stock Exchange and trades under the ticker symbol
"UPL".  The company had 151,440,114 shares outstanding on July 31, 2009.

    Financial tables to follow.

    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-09   30-Jun-08   30-Jun-09   30-Jun-08
      Oil liquids (Bbls)         649,243     530,156     329,835     273,876
      Natural gas (Mcf)       82,682,313  65,181,443  42,491,032  32,661,802
                              ----------  ----------  ----------  ----------
      MCFE - Total            86,577,771  68,362,379  44,470,042  34,305,058
                              ----------  ----------  ----------  ----------

      Oil sales                  $24,386     $52,809     $15,262     $30,794
      Natural gas sales          273,908     526,568     115,079     277,446
                                 -------     -------     -------     -------
    Total operating revenues     298,294     579,377     130,341     308,240
                                 -------     -------     -------     -------

      Lease operating expenses    20,387      19,299      10,144       8,562
      Production taxes            30,089      66,711      12,738      35,776
      Gathering fees              22,364      18,764      11,573       8,766
                                  ------      ------      ------       -----
    Total lease operating costs   72,840     104,774      34,455      53,104
                                  ------     -------      ------      ------

      Transportation charges      26,540      21,671      13,185      12,013
      Depletion and
       depreciation              105,635      85,030      44,974      42,780
      Write-down of proved oil
       and gas properties      1,037,000           -           -           -
      General and
       administrative              5,405       6,039       2,956       2,548
      Stock compensation           4,819       2,755       2,694       1,901
                                   -----       -----       -----       -----
    Total operating expenses   1,252,239     220,269      98,264     112,346
                               ---------     -------      ------     -------

    Other (expense) income,
     net                         (3,117)         692       (505)         609
    Interest and debt expense   (17,195)     (9,814)     (9,897)     (4,543)
    Realized gain on commodity
     derivatives                 119,561    (14,119)      99,205    (14,119)
    Unrealized gain (loss) on
     commodity derivatives        26,169    (25,150)   (159,903)       2,523
                                  ------    -------    --------        -----
    (Loss) income before
     income taxes              (828,527)     310,717    (39,023)     180,364

    Income tax provision
     (benefit) - current              23       (193)           -           6
    Income tax (benefit)
     provision - deferred      (290,436)     110,703    (13,497)      63,483
                               --------      -------    -------       ------

    Net (loss) income         $(538,114)    $200,207   $(25,526)    $116,875
                              ---------     --------   --------     --------

    Impairment of proved
     oil and gas properties,
     net of tax                 $673,013          $-          $-          $-
    Unrealized (gain) loss
     on commodity derivatives,
     net of tax                 (16,984)      16,322     103,777     (1,637)
                                -------       ------     -------     ------
    Adjusted net income         $117,915    $216,529     $78,251    $115,238
                                --------    --------     -------    --------
    Operating cash flows (1)    $292,735    $423,430    $168,548    $222,034
                                --------    --------    --------    --------

    (1) (see non-GAAP reconciliation)

    Weighted average shares
     - basic                     151,285     152,781     151,331     153,061
    Weighted average shares
     - diluted                   151,285     157,905     151,331     157,818

    Earnings per share
      Net income - basic          ($3.56)      $1.31      ($0.17)      $0.76
      Net income - fully
       diluted                    ($3.56)      $1.27      ($0.17)      $0.74

    Adjusted earnings per
      Adjusted net income -
       basic                       $0.78       $1.42       $0.52       $0.75
      Adjusted net income
       - fully diluted (4)         $0.77       $1.37       $0.51       $0.73

    Realized Prices
      Oil liquids (Bbls)          $37.56      $99.61      $46.27     $112.44
      Natural gas (Mcf),
       including realized
       gain (loss) on
       commodity derivatives       $4.76       $7.86       $5.04       $8.06
      Natural gas (Mcf),
       excluding realized gain
       (loss) on commodity
       derivatives                 $3.31       $8.08       $2.71       $8.49

    Costs Per MCFE
      Lease operating expenses     $0.24       $0.28       $0.23       $0.25
      Production taxes             $0.35       $0.98       $0.29       $1.04
      Gathering fees               $0.26       $0.27       $0.26       $0.26
      Transportation charges       $0.31       $0.32       $0.30       $0.35
      Depletion and
       depreciation                $1.22       $1.24       $1.01       $1.25
      General and
       administrative - total      $0.12       $0.13       $0.13       $0.13
      Interest and debt
       expense                     $0.20       $0.14       $0.22       $0.13
                                   -----       -----       -----       -----
                                   $2.68       $3.37       $2.43       $3.41
                                   -----       -----       -----       -----
     Note: Amounts on a per MCFE basis may not total due to rounding.

    Adjusted Margins
      Adjusted Net Income (2)         28%         38%         34%         39%
       Operating Cash Flow
        Margin (3)                    70%         75%         73%         75%

    Ultra Petroleum Corp.
    Supplemental Balance Sheet Data
    All amounts expressed in US$000's
                                                   As of
                                         30-Jun-09       31-Dec-08
    Cash and cash equivalents               $9,299         $14,157

    Long-term debt
      Bank indebtedness                   $229,000        $270,000
      Senior Notes                         535,000         300,000
                                           -------         -------
                                          $764,000        $570,000
                                          --------        --------

    Ultra Petroleum Corp.
    Reconciliation of Cash Flow and Cash Provided by Operating Activities
    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 Six Months Ended    For the Quarter Ended
                             ------------------------    ---------------------
                             30-Jun-09      30-Jun-08   30-Jun-09   30-Jun-08
    Net cash
     provided by
     activities               $240,400       $403,340    $108,483    $205,808
      Net changes in
       working capital
       and other
       non-cash items(*)          52,335         20,090      60,065      16,226
    Cash flow from
     before changes
     in non-cash items
     and working
     capital                  $292,735       $423,430    $168,548    $222,034

    (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.
    (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
    (3) Operating Cash Flow Margin is defined as Operating Cash Flow divided
by the sum of Oil and Natural Gas Sales plus Realized Gain (Loss) on Commodity
    (4) Fully diluted shares includes 2,718,792 and 2,962,342 potentially
dilutive instruments that were anti-dilutive due to the net loss for the year
to date and quarter periods ended June 30, 2009, respectively.
    (*)Other non-cash items include excess tax benefit from stock based
compensation and other.

    This release can be found at http://www.ultrapetroleum.com

    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
businesses 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 oil and gas, particularly in
Wyoming, 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, 2009.


For further information:

For further information: Kelly L. Whitley, Manager Investor Relations,
+1-281-876-0120, Ext. 302, info@ultrapetroleum.com Web Site:

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