Natural gas producer, Ultra Petroleum Corporation (UPL), reported better-than-expected second-quarter 2013 results, mainly due to significant increase in natural gas prices. Earnings per share, excluding special items, came in at 47 cents, breezing past the Zacks Consensus Estimate of 43 cents.
However, comparing year over year, Ultra Petroleum’s adjusted earnings per share declined 7.8% (from 51 cents to 47 cents) on lower production.
Total operating revenue, at $261.4 million, was above the Zacks Consensus Estimate of $240.0 million and was also up by 53.5% as compared to the year-ago period.
Production
Production during the quarter was down 10.3% to 58.4 billion cubic feet equivalent (Bcfe) against the prior year’s production of 65.1 Bcfe. Natural gas volumes — accounting for approximately 96.9% of the total production — were down 10.2% to 56.6 billion cubic feet (Bcf). Oil production dropped 10.0% year over year to 299,125 barrels.
Realized Prices
Ultra Petroleum's average realized price on natural gas rose 86.1% to $4.15 per thousand cubic feet (Mcf). The average oil price for the reported quarter reached $88.90 per barrel, marginally above the second-quarter 2012 figure of $88.52 per barrel.
Costs, Expenses & Margins
Lease operating expense rose 43.1% from the prior-year quarter to $17.5 million. During the second quarter of 2013, Ultra Petroleum reported all-in costs of $2.88 per Mcfe, down 8.9% from the comparable quarter last year. Ultra Petroleum’s competitive cost structure enabled it to achieve a 56% cash flow margin and a 30% net income margin.
Balance Sheet
As of Jun 30, 2013, Ultra Petroleum had cash and cash equivalents of $6.6 million and long-term debt of $1.9 billion.
Production Guidance
Ultra Petroleum expects full-year 2013 production of 230–236 Bcfe, and third-quarter 2013 production of 56.0–58.5 Bcfe.
Zacks Rank
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 1 to 3 months.
Meanwhile, one can look at exploration and production firms like Range Resources Corporation (RRC), VOC Energy Trust (VOC) and Clayton Williams Energy Inc. (CWEI) that offer value. All the stocks currently retain a Zacks Rank #1 (Strong Buy).
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