Ultra Petroleum Corp.
) hit a 52-week high of $28.76 on Apr 3. In fact, the Houston,
Texas-based predominantly natural gas producer has seen its stock
price climb some 32% over the past three months. This price
appreciation can be attributed to the company's focus on
Why the Bullishness?
Ultra Petroleum is noted for growing its reserve base through
balanced acquisitions, as well as through development and
exploration programs. This has been supplemented by successful
drilling activities, which helped the company boost its year-end
2013 proven reserves by 18% to 3.61 trillion cubic feet
Ultra Petroleum controls substantial acreage in and around the
prolific Jonah natural gas field and the Pinedale Anticline area
in the Green River Basin. Both of these areas are endowed with
rich natural gas reserves, which have remained largely untapped
However, concerned by the continuing volatility in gas prices of
late, Ultra Petroleum has aligned its capital program more toward
growing oil production. In the last quarter of 2013, the company
achieved oil production of 331,263 barrels, representing an 18%
year-over-year increase. The recent purchase of high-return
oil-rich acreage in Utah's Uinta basin will is expected to
further drive Ultra Petroleum's liquids volumes.
The acquired properties consist of 38 operating wells that
generate roughly 4,000 barrels of oil each day. Management
anticipates strong earnings from the assets even if there is a
to below $75 per barrel.
Finally, Ultra Petroleum maintains a very competitive cost
structure, which contributes to the consistency of its growth and
returns throughout the business cycle. During 2013, the company
reported all-in operating costs of $2.86 per thousand cubic feet
equivalent - one of the best in its peer group. As a result of
Ultra's low cost base, it was able to achieve a 55% cash flow
margin and a 28% net income margin amid low
Zacks Rank & Stock Picks
With Ultra Petroleum shares trading at 52-week high, any upside
from here may be limited, as suggested by the company's Zacks
Rank #3 (Hold).
Some better-ranked stocks in the domestic upstream sector include
Range Resources Corp.
Clayton Williams Energy Inc.
Abraxas Petroleum Corp.
). While Range Resources holds a Zacks Rank #1 (Strong Buy),
Clayton Williams and Abraxas Petroleum carry a Zacks Rank
(We are reissuing this article to correct a mistake. The
original article, issued Wednesday, April 2, 2014, should no
longer be relied upon.)
ABRAXAS PETE/NV (AXAS): Free Stock Analysis
WILLIAMS(C)ENGY (CWEI): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
ULTRA PETRO CP (UPL): Free Stock Analysis
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