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Ultra Petroleum Announces Third Quarter 2015 Financial And Operating Results

The following excerpt is from the company's SEC filing.

HOUSTON, Oct. 29, 2015 /PRNewswire/ -- Ultra Petroleum Corp. (NYSE: UPL) continued to deliver strong financial and operating performance for the third quarter of 2015. Highlights include:

Raised 2015 production guidance to 288 – 292 Bcfe,

Produced a record 75.4 Bcfe of natural gas and oil during the third quarter of 2015, an increase of 7% from the second quarter of 2015 and 21% compared with the third quarter of 2014,

Reduced Pinedale well costs to $2.85 million for the third quarter of 2015, a decrease of 25% compared to average 2014 well costs,

Capital expenditures of $123.4 milli on during the third quarter,

Generated operating cash flow

Earnings of $32.6 million in the third quarter of 2015, or $0.21 per diluted share – adjusted

Third Quarter Results

For the third quarter of 2015, production of natural gas and oil increased 21 percent to 75.4 billion cubic feet equivalent (Bcfe). This is the largest quarterly production level ever achieved by Ultra Petroleum. The company's production for the third quarter was comprised of 70.2 billion cubic feet (Bcf) of natural gas and 863.4 thousand barrels (Mbls) of oil and condensate.

Ultra Petroleum reported adjusted net income

of $32.6 million, or $0.21 per diluted share for the quarter ended September 30, 2015. Operating cash flow

was $125.4 million for the quarter ended September 30, 2015.

During the third quarter of the year, Ultra Petroleum's average realized natural gas price was $3.33 per thousand cubic feet (Mcf), including realized gains and losses on commodity hedges. Excluding realized gains and losses on commodity derivatives, the company's average price for natural gas was $2.68 per Mcf. The company's average realized oil and condensate price was $39.43 per barrel (Bbl). Third quarter 2015 results included an unrealized, mark-to-market loss of $35.9 million on the company's commodity hedges. The unrealized loss is typically excluded by the investment community in published estimates.

Year-to-Date Results

of $85.8 million, or $0.56 per diluted share for the nine months ended September 30, 2015. Operating cash flow

was $358.7 million for the nine months ended September 30, 2015.

For the nine months ended September 30, 2015, production of natural gas and oil was 216.3 Bcfe. The company's production for the nine months ended September 30, 2015 was comprised of 200.0 Bcf of natural gas and 2.7 million barrels of oil and condensate.

During the nine months ended September 30, 2015, Ultra Petroleum's average realized natural gas price was $3.32 per Mcf, including realized gains and losses on commodity hedges. Excluding realized gains and losses on commodity derivatives, the company's average price for natural gas was $2.68 per Mcf. The company's average realized oil and condensate price was $41.75 per Bbl. Year-to-date 2015 results included an unrealized, mark-to-market loss of $84.7 million on the company's commodity hedges. The unrealized loss is typically excluded by the investment community in published estimates.

Wyoming - Operational Highlights

During the third quarter, Ultra Petroleum and its partners drilled 55 gross (38 net) Pinedale wells and placed on production 61 gross (40 net) wells.

The third quarter average initial production (IP) rate for new operated wells brought online was 8.4 million cubic feet equivalent (MMcfe) per day. Wyoming production reached an all-time record of 778.8 MMcfe per day during the quarter, while quarterly production averaged 751.1 MMcfe per day. Production is comprised of 716.1 million cubic feet per day of gas and 5,842 barrels per day of condensate. Total production during the third quarter was 69.1 Bcfe.

Year to date, Ultra Petroleum and its partners drilled 157 gross (105 net) Pinedale wells and placed on production 153 gross (102 net) wells. The company produced 197.3 Bcfe from Wyoming during the nine months ended September 30, 2015.

The company continues to improve operational efficiency as well as realize decreased service costs as outlined in the table below. Average well costs declined to $2.85 million during the third quarter of 2015, down 25% from 2014 average well costs of $3.8 million. Approximately 33% of the cost savings is related to productivity improvements and 67% is due to service cost reductions.

Pinedale Efficiency Gains

Average Well Cost ($MM)

Spud to TD (Days)

Rig Release to Rig Release (Days)

FY 2014

Q1 2015

Q2 2015

Q3 2015

The table below outlines the internal rates of return (IRR's) the company expects to realize in Pinedale for the remainder of the year. It details expected returns for well costs between $2.8 million and $3.2 million per well and Estimated Ultimate Recoveries (EURs) ranging from 4.0 to 6.0 Bcfe for wellhead prices of $3.00 per Mcf and $50 per barrel.

Pinedale IRR's

Well Cost (millions)

Reserve Size (Bcfe)

Economics at $3.00 per Mcf; $50 per barrel

"The 34 operated wells brought on line during the quarter averaged 4.2 Bcfe and $2.85 million per well. This program delivered an IRR of 39% at an F&D cost of $0.85 per Mcfe," commented Brad Johnson.

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