Natural gas producer
Ultra Petroleum Corporation
) reported mixed second quarter results based on higher production
volume offset by higher operating expenses.
CABOT OIL & GAS (COG): Free Stock Analysis
ULTRA PETRO CP (UPL): Free Stock Analysis
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Earnings per share, excluding special items, came in at 36 cents,
beating the Zacks Consensus Estimate of 33 cents.
However, compared with the year-earlier period, Ultra Petroleum's
adjusted earnings per share declined 45.5% from 66 cents, hurt by a
weak natural gas price scenario.
Total operating revenue, at $170.3 million, was well below the
Zacks Consensus Estimate of $271.0 million and year-ago level of
Production during the quarter increased 10.1% year over year to
65.1 billion cubic feet equivalent (Bcfe), reflecting the company's
successful drilling activities. Natural gas volumes - accounting
for approximately 97.0% of the total - were up 10.5% year over year
to 63.1 billion cubic feet (Bcf). Oil production remained flat year
over year to 332,512 barrels.
Ultra Petroleum's average realized price on natural gas fell 49.1%
to $2.23 per thousand cubic feet (Mcf). Including commodity
derivative gains/losses, average realized natural gas price for the
quarter was $4.04 per Mcf, down 21.9% from the prior-year level.
The average oil price for the quarter, at $88.52 per barrel, was
down from the second quarter 2011 level of $92.35 per barrel.
Costs, Expenses & Margins
Lease operating expense rose 10.1% from the prior-year quarter to
$12.2 million. During the second quarter of 2012, the company
reported all-in costs of $3.16 per Mcfe, up 11.7% from the
comparable year-ago quarter. Ultra Petroleum's competitive cost
structure enabled it to achieve a 67% cash flow margin and a 19%
net income margin.
As of June 30, 2012, the company had cash and cash equivalents of
$15.7 million and long-term debt of $2.1 billion.
Ultra Petroleum expects its full-year 2012 production in the range
of approximately 250-260 Bcfe, implying an increase of 2% to 6%
from the 2011 level. For the third quarter, the company is looking
to produce 60-62 Bcfe.
Another natural gas firm
Cabot Oil & Gas Corporation
) reported weak second quarter 2012 results of 5 cents, below the
Zacks Consensus Estimate of 7 cents due to lower gas prices and
higher operating expenses.
Ultra Petroleum's high natural gas exposure raises its sensitivity
to gas price fluctuations, compared to its more-diversified
independent peers with higher oil production. The company, which
derives more than 95% of its reserves/production from natural gas,
has seen its sales and income being adversely affected in recent
quarters by a sharp drop in gas prices.
Ultra Petroleum currently retains a Zacks #3 Rank (short-term Hold