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Ultra Petroleum/Natural Gas Reports Strong Financial Results In 2009, Updates PA Play
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Ultra Petroleum this week reported total natural gas and crude oil production for the year-ended December 31, 2009 increased 24 percent, or 26 percent on a per share basis, to a record high of 180.1 billion cubic feet equivalent (Bcfe) compared to production of 145.3 Bcfe for 2008. This is the largest annual production level ever achieved by Ultra Petroleum. For 2009, production is comprised of 172.2 billion cubic feet (Bcf) of natural gas and 1.3 million barrels of condensate. “Margins do matter in the oil and gas industry. Over the past four years, Ultra has sustained healthy operating cash flow margins averaging 72 percent and net income margins averaging 37 percent. These outstanding margins were achieved in a widely fluctuating commodity price environment,” commented Michael D. Watford, Chairman, President and Chief Executive Officer. “We have the dominant position in a world-class asset that we operate at a very low cost, which provides us with a competitive advantage in the consistency and sustainability of our growth and returns. We intend to replicate these superior returns as we continue to grow our position in the Marcellus,” Watford added.
During 2009, Ultra drilled 37 gross (22.5 net) wells in Pennsylvania. The company’s first production in the Marcellus program began in July 2009, and by year-end 13 wells were producing. Initial production (IP) rates for the producing wells average 7,500 Mcf per day with an average lateral length of just over 3,800 feet. Preliminary estimated ultimate recoveries affirm Ultra’s 3.75 Bcfe type-curve, with some preliminary EURs exceeding 6.0 Bcfe. The cost to drill and complete a horizontal Marcellus well during 2009 was $3.5 million.
The company’s four pipeline interconnects to major interstate pipelines remain well ahead of the drilling campaign. By mid-year, this interconnect capacity is expected to exceed 560 MMcf per day.
The company began 2009 with 288,000 gross (152,000 net) acres in the Marcellus. Through a combination of land acquisitions, trades and swaps, Ultra increased its holdings to 326,000 gross (169,000 net) acres by year-end. On December 21, 2009, Ultra announced that it had signed a purchase and sale agreement to acquire approximately 160,000 gross (80,000 net) acres in the Marcellus Shale. Upon closing of the acquisition in late February 2010, the company will hold approximately 486,000 gross (249,000 net) acres. With the acquisition, the company’s core position in Tioga, Bradford, Lycoming, and Potter counties in north-central Pennsylvania will expand to include the adjacent counties of Clinton and Centre.
“In 2009, we initiated our horizontal Marcellus activity with above expectation results. Accordingly, we believe that we have substantially de-risked our Marcellus acreage due to these results. Well performance is improving along with our returns. Of the horizontal wells that we have completed so far, IP rates have ranged from over 3,400 Mcf per day to 10,400 Mcf per day, including two wells that are producing over 7,500 Mcf per day after 30 days. Examining our early wells, the first six have 30-day production averaging over 3,000 Mcf per day with the next seven wells averaging over 5,700 Mcf per day. In 2010, our Marcellus development program will expand with a drilling program exceeding 110 wells. In addition, our Marcellus production will access the traditionally higher value natural gas markets in the Northeast,” stated Watford.
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2/12/2010 |
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