Ultra Petroleum Spends $400 Million On 80,000 Acres Of Marcellus Shale In PA

Ultra Petroleum Corp. announced this week it has signed a purchase and sale agreement to acquire approximately 80,000 (net) acres in the Pennsylvania Marcellus Shale, from a private company at a cost of $400 million.

Following the acquisition, Ultra Petroleum will hold approximately 250,000 net acres in this region, with the potential for 1,800 net drilling locations.

In November, the Department of Environmental Protection revoked two Marcellus Shale well drilling permits because of numerous technical deficiencies and after the Chesapeake Bay Foundation appealed the issuance of the permits to the Environmental Hearing Board.

"We are strategically increasing the scale of our Marcellus position with assets that rival the returns of our current acreage. With this acquisition, we believe that our net recovered resource in the Marcellus alone will exceed 8.5 trillion cubic feet equivalent (Tcfe), an increase of 3.5 Tcfe from current estimates," stated Michael D. Watford, Chairman, President and Chief Executive Officer.

The company expects the transaction to close late February 2010, subject to standard closing conditions, with an effective date of October 1, 2009.

2009 year-to-date, the company has drilled 30 horizontal wells with 13 producing. Initial production rates for the producing wells average 7,500 Mcf per day with preliminary estimated ultimate recoveries ranging from 3.5 to 4.0 Bcf.

The company started 2009 with 288,000 gross (152,000 net) acres in the Marcellus. Through a combination of land acquisitions and swaps, including today's announcement, Ultra Petroleum has added over 192,000 gross acres, nearly doubling its position to approximately 480,000 gross (250,000 net) acres.

The company's expanding core position is concentrated around Tioga, Bradford, Lycoming, Potter, Clinton and Centre counties in north central Pennsylvania.

A PowerPoint presentation regarding the acquisition is posted on Ultra Petroleum's homepage.