Natural gas producer Ultra Petroleum Corporation (UPL) reported second-quarter 2014 adjusted earnings of 52 cents per share, which failed to meet the Zacks Consensus Estimate of 54 cents per share. Higher expenses led to the miss.
The results were released before the opening bell on Jul 31. Following the announcement, shares fell nearly 5% on the day to $22.92.
However, the bottom line increased from the year-ago quarter level of 47 cents per share. Substantially higher oil production and better gas and oil realizations led to the year-over-year improvement.
Total operating revenue of $296.1 million not only beat the Zacks Consensus Estimate of $270 million but was also higher than the second-quarter 2013 level of $261.4 million.
Production
Production during the reported quarter increased marginally year over year to 58.5 billion cubic feet equivalent (Bcfe) from 58.4 Bcfe. Natural gas volumes — accounting for approximately 92.2% of the total — decreased 4.6% to approximately 54 Bcf. However, oil production increased a whopping 153.7% year over year to 758,844 barrels.
Realized Prices
Ultra Petroleum's average realized price on natural gas (excluding commodity derivatives’ realized gain or loss) increased about 2% to $4.23 per thousand cubic feet (Mcf). The average oil price for the reported quarter was $88.94 per barrel, marginally higher than the second-quarter 2013 figure of $88.90 per barrel.
Costs, Expenses & Margins
Total lease operating costs increased 17.3% from the prior-year quarter to approximately $66.1 million. Ultra Petroleum reported all-in costs of $3.06 per Mcfe, 6.3% higher than the comparable quarter last year.
Total operating expenses came in at $150.9 million, reflecting a 5.5% increase from $143 million in the year-ago period.
Ultra Petroleum’s adjusted operating cash flow margin came at 56%, flat year over year. Moreover, adjusted net income margin improved to 31% from 30% in the year ago quarter.
Balance Sheet
As of Jun 30, 2014, the company had cash and cash equivalents of $5.1 million and long-term debt of $2.4 billion.
Guidance
Ultra Petroleum anticipates production of 60–62 Bcfe for the third quarter. For 2014, the guidance was lowered to 243–250 Bcfe from the earlier guidance of 243–253 Bcfe. Ultra Petroleum expects total operating cost per Mcfe of $3.07–$3.25 for the third quarter.
Zacks Rank
Currently, Ultra Petroleum carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked players from the oil and gas exploration and production space like RSP Permian Inc. (RSPP), Clayton Williams Energy Inc. (CWEI) and Carrizo Oil & Gas Inc. (CRZO). All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment