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Ultra Petroleum and XOP Trend Higher

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Apr. 10 2015, Published 4:06 p.m. ET

Ultra Petroleum

Ultra Petroleum (UPL) is an independent oil and gas exploration and production company. The company’s major revenue comes from the sale of natural gas. Ultra Petroleum has a market capitalization of $2.39 billion. It has an average volume of 1.67 million shares. Despite the fall in natural gas prices, Ultra Petroleum surged almost 4% in yesterday’s trade.

Stocks like Rice Energy (RICE), Cabot Oil (COG), and EQT (EQT) also surged more than 2% in yesterday’s trade. These stocks account for 4.16% of the Spider Oil and Gas ETF (XOP). XOP also increased by 1.83% and settled at $52.14 at the close of trade.

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These four stocks have a cumulative market capitalization of $31.34 billion. These producers have a natural gas production mix that’s greater than 90% of their total oil and gas production. Lower natural gas impacts their profitability. Out of these four companies, Ultra Petroleum has the highest short interest ratio of 20%. The rest of the stocks’ short interest is less than 7%. Lately, the short-term coverage of Ultra Petroleum might have pushed the stock higher. However, the stock prices lost 43% in the last year. Ultra Petroleum gained more than 20% YTD (year-to-date).

Ultra Petroleum’s income grew by 53% to $402 million YoY (year-over-year). Its EBITDA (earnings before interest, tax, depreciation, and amortization) increased 34% to $810 million—compared to 2013. Ultra Petroleum raised $850 million in debt at a 6.25% rate. It’s continuously improving its operational efficiency and cost reductions.

Ultra Petroleum is one of the lowest cost natural gas producers at $3.29 MMcfe (million cubic feet equivalent). It has its natural gas under production in a hedging program in 2015. The stock is trading above its 50-day moving average. The RSI (relative strength index) is in overbought territory. RSI signals that Ultra Petroleum could correct.

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