Natural gas producer
Ultra Petroleum Corporation
) entered into an agreement with Leawood-based
CorEnergy Infrastructure Trust Inc
) to sell its Liquids Gathering System (LGS). The deal was
finalized at $225 million.
CORENERGY INFRA (CORR): Free Stock Analysis
ULTRA PETRO CP (UPL): Free Stock Analysis
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The transaction will be financed through three sources to which
CorEnergy - an energy infrastructure investor - will contribute
$130 million and Prudential Capital Group will add $30 million.
The remaining $65 million will be financed through a non-recourse
The LGS is located in the Pinedale field in Wyoming. It is among
the top five natural gas fields in the U.S.
Through a long-term lease agreement, Ultra Petroleum will
continue to operate the LGS. Minimum annual rent of $20 million
will be paid by the company. The rent will be based on the volume
Management at CorEnergy believes that this deal will prove to be
a beneficial tool in fulfilling the aim of being a real estate
Houston, Texas-based Ultra Petroleum Corp. is an independent
energy firm 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 Jonah fields.
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 these areas are endowed with rich
natural gas reserves, which have remained largely untapped to
However, a significant portion of Ultra Petroleum's production
growth in the last few years has come from asset acquisitions,
exposing it to acquisition-related risks. The company may find it
difficult to complete accretive transactions in the future, which
may negatively impact its growth rate.
The company retains a Zacks #3 Rank, which is equivalent to a
short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock.