Ultra Petroleum Corporation
), an independent energy firm, has entered into a definitive
contract for acquiring 100% working interest in oil-producing
assets, based in Uinta Basin, northeast Utah, from an undisclosed
seller. The $650 million deal is expected to close by Dec 2013,
dependent on customary closing conditions.
Ultra Petroleum is going to finance the transaction entirely with
debt. The company expects to start recovering costs from the
first year of operations and projects to recuperate the entire
amount within five years. After the debt recovery, the properties
will generate significant free cash flow for shareholders going
As of now, the to-be-acquired Uinta Basin acreage consists 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 drop in oil prices to below $75 per barrel.
Moreover, as Ultra Petroleum derives a majority of its
reserves/production from natural gas, we expect the deal to
reduce its dependency on natural gas to some extent.
Houston, Texas-based Ultra Petroleum is engaged in the
acquisition, development, exploration and production of oil and
gas properties. The company's operations are focused on the Green
River Basin of southwest Wyoming, mainly covering the Pinedale
and the Jonah fields. Ultra also holds impressive acreage in the
north-central Pennsylvania area of the Appalachian Basin.
Ultra Petroleum currently retains a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
BONANZA CREEK (BCEI): Free Stock Analysis
RESOLUTE ENERGY (REN): Free Stock Analysis
STONE ENERGY CP (SGY): Free Stock Analysis
ULTRA PETRO CP (UPL): Free Stock Analysis
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Meanwhile, one can look at oil and gas exploration and production
Stone Energy Corp.
Resolute Energy Corp.
Bonanza Creek Energy Inc.
) that offer better prospects. All the stocks sport a Zacks Rank
#1 (Strong Buy).