Challenging Market Conditions Hurt Ultra Petroleum Corp. (NYSE:UPL) Financials


Ultra Petroleum Corp. (NYSE:UPL) reported improvement in operational efficiency, but failed to enhance its bottom line as the weakening energy market continues to adversely affect overall financial performance. The natural gas producer firm posted adjusted earnings of $0.21 a share for 3Q2015, surpassing consensus analyst estimates of $0.17.

Ultra Petroleum surpassed analysts’ expectations on efficiency gains by minimizing service costs and maintained its reputation of being a low-cost natural gas producer. The realized natural gas prices declined 28% YOY, to $2.68 a thousand cubic feet, dealing a sharp blow to the bottom line.

Challenging market

Ultra Petroleum Corp. (NYSE:UPL) reported that revenue in 3Q2015 declined 23% YOY to 222.5 million in the reported quarter. While natural gas revenue declined 11% to 188 million, crude oil revenue dropped 56% to $34 million. Natural gas revenue command a big share in the sales pie chart. However, this time higher-margin crude oil revenue offered the company a support in terms of cash flow.

Operationally, Ultra Petroleum Corp. (NYSE:UPL) produced 75.4 Bcfe, of natural gas and oil. This is a remarkable 21% increase over the third quarter of 2014 and a noteworthy 7% hike QOQ. Natural gas alone comprised 93.1% of total production while crude oil accounted 6.9%. The low oil price scenario snatched away a big part of the extra wiggle room.Cash flow from operations, minus working capital changes, came at $125 million, a decline of 22% over the comparable period.

Core operations

The company’s core acreage in Wyoming, yielded 92% of the total production. Ultra Petroleum Corp. (NYSE:UPL) famed operational efficiency worked once again with well expenses at Pinedale down 25% YOY to $2.85 million per well. The total number of days required to drill a well declined to 8.6 days, down from 10.8 days in last year. Management stated that the cost savings and service cost reductions helped in improving production.