Ultra Petroleum’s Production Fell to a 2-Year Low in 4Q16



Yearly production

Ultra Petroleum (UPL) (UPLMQ) reported 2016 production of 281.8 Bcfe (billion cubic feet equivalent), which was at the lower end of its production guidance range of 281–284 Bcfe. 

In 2016, Ultra Petroleum’s Wyoming operations contributed ~260.2 Bcfe (or ~92%) to its total production.

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Quarterly production

Sequentially, Ultra Petroleum’s 4Q16 production was ~2% lower than it was in 3Q16. Year-over-year (or YoY), Ultra Petroleum’s 4Q16 production was ~8% lower than it was in 4Q15. UPL’s YoY production fall can be attributed to its reduced capital expenditure (capex) over the last year.

Production mix

Ultra Petroleum reported 4Q16 natural gas (UNG) production of 64 Bcf (billion cubic feet) and crude oil (USO) and condensate production of 706.5 MBbl (thousand barrels), meaning that its 4Q16 production was made up of ~94% natural gas. In 4Q15, UPL’s production mix contained ~93% natural gas.

Operational update

According to UPL’s press release, it drilled 32 gross (or 24.1 net) wells in 4Q16, bringing its 2016 total to 110 gross (or 78.4 net) wells. These wells were drilled at its Pinedale assets in Wyoming. In 4Q16, Ultra Petroleum added two additional rigs at Pinedale, bringing its total number of rigs to four.

In 4Q16, UPL spent ~$80 million in capex, bringing its 2016 capex to ~$270 million, ~45% lower than its 2015 capex of ~$495 million.

UPL’s peer Southwestern Energy (SWN) reported lower production of 202 Bcfe in 4Q16, compared to 249 Bcfe in 4Q15. 

Next, we’ll take a look at how UPL’s lower production affected its operating cash flow and free cash flow in 4Q16.


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