Ultra Petroleum Meets Zacks View – Analyst Blog

Natural gas producer Ultra Petroleum Corp. (UPL) reported in-line first quarter 2010 results, primarily due to increased production combined with stronger commodity prices. Earnings per share, excluding special items, came in at 55 cents, almost at par with the Zacks Consensus Estimate. On a year-over-year basis, Ultra’s adjusted earnings per share more than doubled (from 26 cents to 55 cents), while operating revenue was up 62.6% to $273.1 million.

 

 

Production during the quarter increased 15.2% year over year and 1.8% sequentially to a record 48.5 billion cubic feet equivalent (Bcfe), reflecting the company’s successful drilling activities. Natural gas volumes jumped 15.9% year over year to 46.6 billion cubic feet (Bcf), while oil production increased slightly (by 0.8%) to 321,874 barrels.

 

 

Ultra Petroleum’s average realized price on natural gas increased 36.2% to $5.38 per thousand cubic feet (Mcf). Including commodity derivative gains/losses, average realized natural gas price for the quarter was $5.37 per Mcf, up 20.4% from the prior-year level. The average oil price for the quarter, at $69.52 per barrel, was up significantly from the first quarter 2008 level of $28.56 per barrel.

 

 

Lease operating expense rose marginally (by 0.8%) from the first quarter of 2009 to $10.3 million, mainly on the back of higher severance of production taxes due to higher commodity prices, somewhat offset by reductions in unit production cost and gathering expenses. During the quarter, the company reported all-in costs of $2.80 per Mcfe, down 5.1% from the same period in 2009. As a result of Ultra’s low cost structure, it was able to achieve a healthy 69% cash flow margin and a 31% net income margin.

 

 

As of March 31, 2010, the company had cash and cash equivalents of $6.0 million and long-term debt of $1.0 billion.