Ultra Petroleum Corp. is an independent oil and gas company engaged in the
development, production, operation, exploration and acquisition of oil and natural
gas properties. The Company was incorporated on November 14, 1979, under the
laws of the Province of British Columbia, Canada. Ultra remains a Canadian company,
but since March 2000, has operated under the laws of Yukon, Canada pursuant
to Section 190 of the Yukon Business Corporations Act. The Company’s principal
business activities are developing its long-life natural gas reserves in the
Green River Basin of southwest Wyoming — the Pinedale and Jonah fields,
its oil reserves in the Uinta Basin in northeast Utah and its natural gas reserves
in the north-central Pennsylvania area of the Appalachian Basin.
Principal Operating Areas
Ultra’s operations in southwest Wyoming have historically focused on
developing its long-life natural gas reserves in a tight gas sand trend located
in the Green River Basin. The Company targets sands of the upper Cretaceous
Lance Pool in the Pinedale and Jonah fields. The Lance Pool, as administered
by the Wyoming Oil and Gas Conservation Commission (“WOGCC”), includes
sands of the Lance formation at depths between approximately 8,000 and 12,000
feet and the Mesaverde formation at depths between approximately 12,000 and
14,000 feet. As of December 31, 2016, Ultra owned interests in approximately
105,000 gross (69,000 net) acres in Wyoming covering approximately 190 square
miles.
The Company’s operations in the Uinta Basin in Utah have focused on developing
its oil-producing properties and undeveloped acreage covering approximately
8,000 net acres. The primary geologic target is the Eocene aged Green River
formation found between subsurface depths of approximately 4,000 and 7,500 feet.
Ultra’s operations in north-central Pennsylvania have focused on its
position in the Devonian aged Marcellus Shale and other horizons at depths between
approximately 4,500 and 8,500 feet. The Company’s assets are located predominantly
in Lycoming, Clinton and Centre counties. At December 31, 2016, the Company
owned interests in approximately 144,000 gross (72,000 net) acres in Pennsylvania.
Mission and Strategy
Our overall strategy is as follows:
Restructure the balance sheet through in-court process to provide financial
strength and flexibility to develop existing assets and pursue new opportunities;
Develop an additional 11 Tcfe of resource from existing, self-funding assets
over the next twenty years;
Maintain cost leadership status and continue to drive efficiencies and cost
reductions through commodity price cycles while maintaining strict safety and
environmental standards;
Improve cash flow visibility by hedging up to 50% of volumes annually to manage
commodity price risks and provide cash flow predictability;
Maintain an entrepreneurial work environment to attract high-quality employees
that are competitively rewarded for excellent performance
Ultra currently sells all of its natural gas production to a diverse group
of third-party, non-affiliated entities in a portfolio of transactions of various
durations and prices (daily, monthly and longer term). The Company’s customer
base includes a significant number of customers situated in the various regions
of the United States. The sale of the Company’s natural gas is “as
produced”. As such, the Company does not maintain any significant inventories
or imbalances of natural gas.
Midstream services. For its natural gas production in Wyoming, the Company
has entered into various gathering and processing agreements with several midstream
service providers that gather, compress and process natural gas owned or controlled
by the Company from its producing wells in the Pinedale Anticline and Jonah
fields. Recently, the Company was able to renegotiate its processing contracts
with processors of a majority of the Company’s production in Wyoming.
Under these agreements, the midstream service providers continue to expand their
facilities’ capacities in southwest Wyoming to accommodate growing volumes
from wells in which the Company owns an interest. The Company believes that
the capacity of the midstream infrastructure related to its production will
continue to be adequate to allow it to sell essentially all of its available
natural gas production.
In Pennsylvania, the Company and its partners have constructed gas gathering
pipelines and facilities, compression facilities and pipeline delivery stations
to gather production from the Company’s producing natural gas wells. These
facilities are gathering systems and related infrastructure, and their construction
is expected to continue, to some extent, until the Company’s properties
in Pennsylvania are fully developed. To date, none of the Company’s natural
gas production in Pennsylvania has required processing, treating or blending
in order to remove natural gas liquids or other impurities and it is anticipated
that treating facilities of this type will not be required in the future to
accommodate the Company’s Pennsylvania production.
Basis differentials. The market price for natural gas is influenced by a number
of regional and national factors which are beyond the Company’s ability
to control. These factors include, among others, weather, natural gas supplies,
imports from Canada, natural gas demand, inventory levels in natural gas storage
fields, and natural gas pipeline capacity to export gas from the basins where
the Company’s production is located. See Item 1A — Risk Factors
for more information about risks to our financial condition and business results
associated with basis differentials.
Wyoming. The Company markets its Wyoming condensate to various purchasers,
which are primarily refiners in the Salt Lake City, Utah area. The Company’s
condensate realized pricing is typically based on New York Mercantile Exchange
crude futures daily settlement prices, less a negotiated location/transportation
discount or differential. All of the Company’s condensate sales are denominated
in U.S. dollars per barrel and are paid for on a monthly basis. The Company
routinely maintains only operating inventories of condensate production and
sells its product on an “as produced” basis. A portion of the Company’s
condensate sales are entered into by its operating partners in the Pinedale
field.
Utah. The Company’s properties in the Uinta Basin produce what is typically
referred to as Black Wax Crude which is considered a medium grade of crude oil.
This oil is marketed through short-term or long-term contracts with refiners
in the Salt Lake City, Utah area. The price for the Company’s crude oil
production is typically based off of NYMEX pricing for West Texas Intermediate
Crude Oil or from a posting for Black Wax Crude in the Uinta Basin, less a negotiated
location/transportation discount or differential.
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