On Jul 30, Ultra Petroleum Corporation UPL reported second-quarter 2015 results. Shares of the company gained over 2% following the earnings beat.
The natural gas producer reported adjusted earnings of 21 cents per share that easily surpassed the Zacks Consensus Estimate of 18 cents. Increase in production volumes supported the results.
However, the bottom line was significantly lower than the year-ago quarter adjusted earnings of 52 cents. A substantial fall in realized prices as well as an increase in operating costs hampered the results.
Ultra Petroleum Corporation - Earnings Surprise | FindTheBest
Total operating revenue of $208 million not only missed the Zacks Consensus Estimate of $245 million but was also substantially below the second-quarter 2014 level of $296 million.
Production
Production during the reported quarter increased year over year to 70.5 billion cubic feet equivalent (Bcfe) from 58.6 Bcfe. Natural gas volumes – that account for approximately 92% of the total – increased 20.6% to 65.1 Bcf. Oil production rose to 900,008 barrels in the reported quarter from 758,844 barrels a year ago.
Realized Prices
Ultra Petroleum's average realized price on natural gas (excluding realized gain or loss on commodity derivatives) decreased more than 40% to $2.52 per thousand cubic feet (Mcf). Also, the average oil price for the reported quarter was $48.64 per barrel, substantially down from the second-quarter 2014 figure of $88.94 per barrel.
Costs, Expenses & Margins
Total lease operating costs increased nearly 10% from the prior-year quarter to approximately $72.6 million. Ultra Petroleum reported all-in costs of $3.26 per Mcfe, 6.5% higher than that in the comparable quarter last year.
Total operating expenses came in at $188.5 million. This reflects a 25% increase from $150.8 million in the year-earlier period.
Ultra Petroleum’s adjusted operating cash flow margin came in at 47% compared with 56% in the prior-year quarter. Adjusted net income margin was 12% compared with 32% in the year-ago quarter.
Balance Sheet
As of Jul 30, 2015, the company had cash and cash equivalents of approximately $5.4 million and long-term debt of $3.43 billion.
Guidance
For 2015, production is guided in the 283–290 Bcfe range, up from the earlier guidance of 280–290 Bcfe. The midpoint of the guidance reflects 15% year-over-year growth.
Ultra Petroleum expects total operating cost per Mcfe of $3.21–$3.38 for the third quarter.
The company increased its outlook for full-year capital spending to $500 million from the prior projection of $460 million. The increase in spending will be owing to the plan of drilling additional wells in the Wyoming region.
Zacks Rank
Currently, Ultra Petroleum carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the oil and gas exploration and production space are Linn Energy, LLC LINE, Vanguard Natural Resources, LLC VNR and Murphy Oil Corporation MUR. While both Linn Energy and Vanguard Natural sport a Zacks Rank #1 (Strong Buy), Murphy Oil holds a Zacks Rank #2 (Buy).
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MURPHY OIL (MUR): Free Stock Analysis Report
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