Ultra to Escalate NatGas Operations in Rockies, Ignore Marcellus

With natural gas pricing differentials continuing to accentuate the negative in the Appalachian Basin, Ultra Petroleum Corp. plans to continue to escalate operations in the Rockies while continuing to decrease operations in the Marcellus Shale, CEO Mike Watford said last week.”Our production mix is changing, with increasing higher-returning oil being added while natural gas production overall grows modestly, with a clear goal of increasing Western basin production and decreasing Eastern basin production,” he told analysts during a conference call to discuss 2Q2014 results.”Price discounts on our oil is decreasing, as is the basis differential on Western basin gas. Eastern basin gas differentials are expanding significantly. So on a relative basis, our margins should be improving as we enter the second half of the year…We continue to be constructive on natural gas demand going forward, particularly 2016 and beyond.”The Houston-based independent reported net income of $106,049 million 69 cents/share in 2Q2014, versus $116,377 million 76 cents in 2Q2013. Operating cash flow rose year/year to $145,086 million from $135,064 million. Total operating revenue of $296.1 million in the latest period easily beat year-ago numbers of $261.4 million, mostly on higher oil prices.Once a gas-only operator, Ultra’s total oil and gas production in the period increased marginally to 58.5 Bcfe from 58.4 Bcfe. Gas volumes, which account for around 92.2% of Ultra’s output, fell 4.6% to 54 Bcf. However, oil production increased 153.7% year/year to 758,844 bbl.”Our oil and natural gas production is growing again,” said Watford. “But more importantly, we are generating healthy returns.” The company’s crude oil investments are returning 400-500% internal rates of return, “with an impressive payout period of months, not years.

via Ultra to Escalate NatGas Operations in Rockies, Ignore Marcellus | 2014-08-04 | Natural Gas Intelligence.

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