HOUSTON, Aug. 1 /PRNewswire-FirstCall/ -- Ultra Petroleum Corp. (AMEX:UPL) today announced financial and operating results for the second quarter ended June 30, 2006. Highlights include: -- Second quarter earnings of $50.7 million, up 6 percent from the same
period in 2005
-- Six month earnings of $118.1 million, up 39 percent from the same
period in 2005
-- Second quarter operating cash flow(1) of $91.4 million, up 5 percent
from second quarter 2005
-- Six month operating cash flow(1) of $207.5 million, up 33 percent from
the same period in 2005
-- Natural gas and crude oil production of 19.5 Bcfe for second quarter
2006, up 10 percent over second quarter 2005 levels
-- Six month natural gas and crude oil production of 39.6 Bcfe, up 18
percent over the same period in 2005 Earnings for the second quarter ended June 30, 2006 were $50.7 million or $0.31 per diluted share, an increase of 6 percent compared to $47.9 million or $0.30 per diluted share for the same period in 2005. Operating cash flow(1) for the second quarter 2006 increased to $91.4 million, or $0.56 per diluted share, up 5 percent compared to $86.8 million, or $0.54 per diluted share for the same period in 2005.
Ultra Petroleum's natural gas and crude oil production for the quarter ended June 30, 2006 increased 10 percent to 19.5 billion cubic feet equivalent (Bcfe) compared to 17.7 Bcfe in the second quarter 2005. This is the highest second quarter production level ever achieved. Production for the second quarter 2006 is comprised of 16.4 billion cubic feet (Bcf) natural gas from Wyoming, 385 thousand barrels (MBbls) oil from China, and 126 MBbls oil from Wyoming. Wyoming natural gas prices realized for the second quarter 2006, including the effects of hedging, were unchanged from second quarter 2005 at $5.85 per thousand cubic feet (Mcf). China oil prices realized in the second quarter were an all time corporate high of $65.10 per barrel (Bbl), an increase of 44 percent, compared to $45.18 per Bbl in the second quarter of 2005. In the second quarter of 2006, the realized Wyoming oil price was up 29 percent to $69.72 per Bbl compared to $53.99 per Bbl in the second quarter 2005.
Earnings for the six month period ended June 30, 2006 were $118.1 million, or $0.72 per diluted share, up 39 percent from $85.2 million, or $0.53 per diluted share, for the first half of 2005. Operating cash flow(1) for the six month period increased to $207.5 million, or $1.27 per diluted share, up 33 percent from $156.2 million, or $0.97 per diluted share, for the same period in 2005.
Natural gas and crude oil production for the six month period ended June 30, 2006 increased to 39.6 Bcfe, compared to 33.6 Bcfe, an 18 percent increase from the first half of 2005. Production for the first six months of 2006 is comprised of 33.0 Bcf natural gas from Wyoming, 851 MBbls oil from China, and 254 MBbls oil from Wyoming. Including the effects of hedging, average realized natural gas prices in Wyoming during the six month period were up 13 percent to $6.49 per Mcf, compared to $5.72 per Mcf during the same period in 2005. China oil prices for the six months ended June 30, 2006 averaged $59.33 per Bbl compared to $39.50 per Bbl in 2005, a 50 percent increase while Wyoming oil prices averaged $66.07 per Bbl compared to $51.98 per Bbl during the comparable 2005 period, a 27 percent increase.
On May 17, 2006, Ultra Petroleum announced that its Board of Directors approved a share repurchase program for up to an aggregate $1 billion of the company's outstanding stock with an initial authorization of $250 million. The share repurchase program has been funded and will continue to be funded by cash on hand and the company's senior credit facility. The share repurchase program has no effect on the projected capital budget for 2006. As of June 30, the company had purchased and retired a total of 1,430,574 shares at an average price of $51.27 per share. It is anticipated that the company will continue its share repurchase program during the third quarter 2006. In conjunction with the share repurchase program the company incurred $3.8 million of withholding tax which is included in current income tax expense. The company's effective income tax rate increased from 35.1 percent to 39.6 percent during the second quarter directly as a result of the withholding tax related to the share repurchase program.
The company is increasing its 2006 capital budget to $450 million from the previously announced $425 million. The six percent capital budget increase will be employed to accommodate the Pennsylvania exploration effort. During the quarter the company increased its total acreage in the area to approximately 246,617 acres, up from 26,868 acres at year-end 2005. To date, Ultra has drilled one exploration well, the Marshlands #1, and plans to commence drilling of its offset, the Marshlands #2, by year-end 2006. Marshlands #1 has been on production for two months and has produced in excess of 150 million cubic feet of natural gas during that time. The well is currently flowing at approximately 3.9 million cubic feet per day at approximately 3,200 psi flowing casing pressure.
Beginning in March 2006, the Chinese government levied a Petroleum Special Profits Tax effective for crude oil prices in excess of $40 per barrel. This new and additional cost caused severance and production taxes in China to increase by $2.8 million for the quarter.
Subsequent to the quarter end and in a joint application with Shell, Ultra gained approval from the Wyoming Oil and Gas Conservation Commission for additional increased density drilling equivalent to 10-acre spacing on two areas totaling 16.3 square miles on the Pinedale Anticline. Currently the two areas covered by the application are on a mix of 40-acre, 20-acre, and 10-acre equivalent density -- with 20's being the majority. Approval of the application will result in the ability to drill 1,042 wells within the two areas. To date only 174 wells have been drilled within these areas. Of the 1,042 wells, Ultra will own an interest in 947 and will operate 724.
Also subsequent to the quarter end, Stephen J. McDaniel, 44, President of Midstates Petroleum Corporation, was elected to the board of directors of Ultra Petroleum. McDaniel will fill a vacancy left by James E. Nielson, who retired from the board on July 31, 2006. Mr. McDaniel joined Midstates Petroleum in March 2004, after spending seven years with Merrill Lynch in the oil and gas investment banking group in Houston, Texas. He began his investment banking career with Gordon Capital Corporation and Midland Walwyn Capital, Inc. both Canadian firms. Mr. McDaniel started his career with Conoco, Inc. in 1983 in various engineering, operations and business development positions in domestic and international operations.
"In the first half of the year, production is up 18 percent as we remain on track to deliver our 2006 production growth target of 27 percent. Both cash flow and earnings are at record levels for the first six months of the year and we are well on our way to a record year of drilling with an expected 160 wells. Our cost structure remains lean and we enjoy high margins. As always we're focused on profitable growth," stated Michael D. Watford, Chairman, President and Chief Executive Officer.
Ultra Petroleum Corp. Consolidated Statement of Operations
(unaudited)
All amounts expressed in US$ For the For the
Six Months Ended Quarter Ended
30-Jun-06 30-Jun-05 30-Jun-06 30-Jun-05
Volumes
Oil liquids (Bbls) - WY 254,310 207,444 125,899 107,844
Oil crude (Bbls) - China 851,255 840,266 385,110 503,216
Natural Gas (Mcf) - WY 32,962,616 27,278,391 16,431,357 14,025,339
MCFE 39,596,009 33,564,653 19,497,411 17,691,699 Revenues
Oil sales - WY $16,802,532 $10,782,120 $8,777,116 $5,822,704
Oil sales - China 50,503,426 33,189,317 25,071,448 22,735,684
Natural Gas sales - WY 213,836,896 156,027,616 96,044,048 82,076,643
Total Revenues 281,142,854 199,999,053 129,892,612 110,635,031 Expenses
Production Costs - WY 4,807,460 4,017,670 2,398,072 2,032,364
Production Costs - China 4,713,000 3,620,000 1,926,000 2,166,000
Severance/Production
Taxes - WY 26,673,957 19,226,756 12,048,702 10,204,694
Severance/Production
Taxes - China 5,365,360 1,659,466 4,093,723 1,136,784
Gathering Fees 8,112,061 7,716,775 4,362,715 4,086,231
Total Lease Operating
Costs 49,671,838 36,240,667 24,829,212 19,626,073 DD&A - WY 30,633,491 19,906,227 15,376,562 10,236,718
DD&A - China 6,054,438 3,989,686 2,671,226 2,419,686
General and
administrative 7,916,390 6,692,611 3,714,045 3,516,253
Total Expenses 94,276,157 66,829,191 46,591,045 35,798,730
Interest and other income 1,344,143 193,558 771,090 118,693
Interest and debt expense 311,048 2,068,406 139,267 1,167,763 Net income before
income taxes 187,899,792 131,295,014 83,933,390 73,787,231 Income tax provision
- current 17,622,658 - 11,087,658 -
Income tax provision
- deferred 52,127,827 46,084,549 22,170,620 25,899,318 Net Income $118,149,307 $85,210,465 $50,675,112 $47,887,913 Operating Cash Flow
(see non-GAAP
reconciliation
below) $207,489,179 $156,201,586 $91,416,968 $86,839,718 Weighted Average
Shares - Basic 155,222,092 151,903,632 155,223,335 152,929,693
Weighted Average
Shares - Diluted 163,114,589 161,067,073 162,966,067 161,275,842 Earnings per Share
- Basic $0.76 $0.56 $0.33 $0.31
Earnings per Share
- Diluted $0.72 $0.53 $0.31 $0.30 Realized Prices
Oil liquids (Bbls) - WY $66.07 $51.98 $69.72 $53.99
Oil crude (Bbls) - China $59.33 $39.50 $65.10 $45.18
Natural Gas (Mcf) $6.49 $5.72 $5.85 $5.85 Costs Per MCFE - Corporate
Lease Operating Costs $1.25 $1.08 $1.27 $1.11
DD&A $0.93 $0.71 $0.93 $0.72
General and administrative
- total $0.20 $0.20 $0.19 $0.20
Interest and debt expense $0.01 $0.06 $0.01 $0.07
$2.39 $2.05 $2.40 $2.09 Segment Costs Per MCFE
United States
Production Costs $0.14 $0.14 $0.14 $0.14
Severance/Production Taxes $0.77 $0.67 $0.70 $0.70
Gathering Fees $0.24 $0.27 $0.25 $0.28
DD&A $0.89 $0.70 $0.89 $0.70
$2.04 $1.78 $1.99 $1.81 China
Production Costs $0.92 $0.72 $0.83 $0.72
Severance/Production
Taxes $1.05 $0.33 $1.77 $0.38
DD&A $1.19 $0.79 $1.16 $0.80
$3.16 $1.84 $3.76 $1.90 Note: Amounts on a per MCFE basis may not total due to rounding.
Margins
Pre-tax income 67% 66% 65% 67%
Net Income 42% 43% 39% 43% Operating segment margins
United States 83% 81% 82% 81%
China 80% 84% 76% 85% Ultra Petroleum Corp. Reconciliation of Cash Flow from Operations Before Changes in Non-Cash
Items and Working Capital
(unaudited)
All amounts expressed in US$ (1) Operating cash flow is defined as net cash provided by operating
activities before changes in non-cash items and working capital. Management believes that the non-GAAP measure of operating cash flow
is useful as an indicator of an oil and gas exploration and production
company's ability to internally fund exploration and development
activities and to service or incur additional debt. The company also
has included this information because changes in operating assets and
liabilities relate to the timing of cash receipts and disbursements
which the company may not control and may not relate to the period in
which the operating activities occurred. Operating cash flow should
not be considered in isolation or as a substitute for net cash
provided by operating activities prepared in accordance with GAAP.
The following table reconciles cash flow from operations before
changes in non-cash items and working capital with net cash provided
by operating activities as derived from the company's financial
information. For the For the
Six Months Ended Quarter Ended
30-Jun-06 30-Jun-05 30-Jun-06 30-Jun-05 Net cash provided
by operating
activities $245,769,428 $167,738,289 $111,869,010 $76,219,113
Accounts payable
and accrued
liabilities (28,198,271) (26,105,193) (28,467,302) (10,556,231)
Prepaid expenses
and other
current assets (14,804) 17,917 (7,402) (2,542,902)
Accounts
receivable (3,676,917) 14,652,671 5,223,486 24,992,424
Inventory (794,000) 155,576 (155,000) (1,218,550)
Restricted cash 1,244 878 663 466
Deferred revenue (780,311) - (780,311) -
Other long-term
obligations (1,092,180) (388,552) 4,488,824 (184,602)
Taxation payable (3,725,010) 130,000 (755,000) 130,000
Cash flow from
operations
before changes
in non-cash
items and working
capital 207,489,179 156,201,586 91,416,968 86,839,718 These statements are unaudited and subject to adjustment. 2005 per share amounts are restated to account for the 2:1 stock split effective May 10, 2005.
Conference Call Webcast Scheduled for August 2, 2006 Ultra Petroleum's second quarter 2006 conference call will be available via live audio webcast at 10:00 a.m. Central Daylight Time (11:00 a.m. Eastern Daylight Time) on Wednesday, August 2, 2006. To listen to this webcast, log on to http://www.ultrapetroleum.com/. The webcast will be archived on Ultra Petroleum's website through November 4, 2006.
About Ultra Petroleum Ultra Petroleum is an independent, exploration and production company focused on developing its long-life natural gas reserves in the Green River Basin of Wyoming, and oil reserves in Bohai Bay, offshore China. Ultra Petroleum is listed on the American Stock Exchange under the symbol "UPL" with 154,165,855 shares outstanding at June 30, 2006.
This release can be found at http://www.ultrapetroleum.com/ This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The opinions, forecasts, projections or other statements, other than statements of historical fact, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Certain risks and uncertainties inherent in the Company's businesses are set forth in our filings with the SEC, particularly in the section entitled "Risk Factors" included in our Annual Report on Form 10-K for our most recent fiscal year and from time to time in other filings made by us with the SEC. These risks and uncertainties include increased competition, the timing and extent of changes in prices for oil and gas, particularly in Wyoming, risks inherent in operations in China, the timing and extent of the Company's success in discovering, developing, producing and estimating reserves, the effects of weather and government regulation, availability of oil field personnel, services, drilling rigs and other equipment, and other factors listed in the reports filed by the Company with the SEC. Full details regarding the selected financial information provided above will be available in the Company's Report on Form 10-Q for the quarter ended June 30, 2006. http://www.newscom.com/cgi-bin/prnh/20020226/DATU029LOGO http://photoarchive.ap.org/ DATASOURCE: Ultra Petroleum Corp.
CONTACT: Kelly L. Whitley, Manager Investor Relations of Ultra Petroleum Corp., +1-281-876-0120 Extension 302, Web site: http://www.ultrapetroleum.com/
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