Ultra Petroleum announces 2018 1st quarter financial and operating results
Plans to transition Pinedale and Jonah field development from the legacy vertical well program to new best-in-class horizontal well opportunity
May 11, 2018
Ultra Petroleum Corp. (NASDAQ:UPL) 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. In addition, Ultra Petroleum currently has an oil development project underway in the Uinta Basin, Three Rivers area in Utah. On May 10th, they released their financial and operating results for the quarter ended March 31, 2018.
First Quarter 2018 Financial Results
During the first quarter of 2018, total revenues increased 2% to $225.4 million as compared to $221.0 million during the first quarter of 2017. The Company’s production of natural gas and oil was 72.3 billion cubic feet equivalent (Bcfe), an increase of 13% over the first quarter of 2017, with 68.2 billion cubic feet (Bcf) of natural gas and 677.8 thousand barrels (MBbls) of oil and condensate.
During the first quarter of 2018, Ultra Petroleum’s average realized natural gas price was $2.68 per thousand cubic feet (Mcf), which includes realized gains on commodity hedges. Excluding the realized gains from commodity derivatives, the Company’s average price for natural gas was $2.66 per Mcf, compared to $3.15 per Mcf for the first quarter of 2017. The Company’s average realized oil and condensate price was $60.36 per barrel (Bbl), which includes realized gains on commodity hedges, for the quarter ended March 31, 2018. Excluding the realized gains from oil commodity derivatives, the Company’s average price for oil was $60.90 per Bbl as compared to $47.29 per Bbl for the same period in 2017.
Ultra Petroleum’s reported net income was $47.5 million, or $0.24 per diluted share. Ultra reported adjusted net income(2) of $55.3 million, or $0.28 per diluted share for the quarter ended March 31, 2018.
"Based on encouraging early results, we have significantly ramped up horizontal well development and now plan to drill 25-30 horizontal wells this year while maintaining our $400 million capital expenditure guidance. We believe, on average, the horizontal program can provide strong economic returns at, or even materially below, current strip pricing," said Brad Johnson, Interim Chief Executive Officer.
Pinedale Vertical Program
During the first quarter, the Company and its partners brought online 48 gross (35.9 net) vertical wells in Pinedale. The average initial production (IP) rate for new operated vertical wells brought online in the first quarter of 2018 was 7.7 million cubic feet equivalent (MMcfe) per day.
Unless pricing improves, the Company plans to devote a significant amount of its remaining capital spending for 2018 to drilling horizontal wells, which provide superior economic returns to vertical wells.
"As we transition our Pinedale field development from the legacy vertical well program to our new best-in-class horizontal well opportunity, the reaffirmation of our borrowing base and leverage covenant amendment provides the flexibility to manage the business in a disciplined fashion while maintaining compliance with all debt covenants. With liquidity in excess of $400 million, cash flow positive assets and an inside maturity nearly four years away, Ultra is well positioned to continue executing its long-term business plan to maximize shareholder value," added Brad Johnson.
Headquarters to be relocated to Englewood, Colorado
Later this year, the Company plans to relocate its headquarters from Houston, Texas to Englewood, Colorado with an expected effective date of and closure of the Houston office as of September 30, 2018. "Our office in the Denver area has long served as the hub for our operations, with over 65 employees. Consolidating our Houston and Denver activities into one office provides enhanced focus and cost savings as we pursue increased shareholder value," said Brad Johnson.
"On behalf of the Board of Directors, we want to thank all of our Houston-based employees for their many contributions to Ultra. Garland Shaw, our Chief Financial Officer, and Garrett Smith, our General Counsel, will not be relocating to Colorado, but we expect them to remain with the Company in the coming months to help manage this transition as we embark on a search for a new CFO and a new General Counsel," said Evan Lederman, Chairman of the Board.
Source: Ultra Petroleum Announces First Quarter 2018 Results, Provides Update on Horizontal Program & Development Plan