Completion of Acquisition and Disposition of Assets

12 Months Ended

Dec. 31, 2014

Business Combination Description [Abstract]

COMPLETION OF ACQUISITION AND DISPOSITION OF ASSETS

13. COMPLETION OF ACQUISITION AND DISPOSITION OF ASSETS:

On September 25, 2014, a wholly owned subsidiary of Ultra Petroleum Corp. completed the acquisition of all producing and non-producing properties (including gathering systems) in the Pinedale field in Sublette County, Wyoming (the “SWEPI Properties”) from SWEPI LP, an affiliate of Royal Dutch Shell, plc in exchange for certain of the Company’s producing and non-producing properties (including gathering systems) in Pennsylvania (the “Pennsylvania Properties”) and a cash payment of $925.0 million (the “SWEPI Transaction”) pursuant to a Purchase and Sale Agreement dated August 13, 2014 (“PSA”). In connection with the transaction, the Company settled certain liabilities with SWEPI, LP that were incurred prior to the effective date. The effective date of the transaction is April 1, 2014.

On September 18, 2014, the Company issued $850.0 million of 6.125% Senior Notes due 2024 (“2024 Notes”) in order to finance a portion of the purchase price of the SWEPI Transaction. The remainder of the cash payment was funded through borrowings under the Company’s senior revolving credit facility. See Note 5.

The costs related to the issuance of the 2024 Notes of $13.1 million are included with deferred financing costs and other on the Consolidated Balance Sheets and will be amortized over the term of the 2024 Notes. Additionally, the Company incurred $0.6 million of costs associated with the acquisition, which are included with general and administrative expenses in the Consolidated Statements of Operations.

The SWEPI Properties that we acquired consist primarily of 19,600 net mineral acres in Wyoming and associated oil and gas production and wells and the Pennsylvania Properties that we sold consist primarily of 155,000 net acres in Pennsylvania and associated oil and gas production and wells.The transaction represents a strategic repositioning of the Company’s portfolio. The Company expects the acquisition will lead to improved returns, increased reserves, higher value markets in which to sell production, and increased control of capital allocation.

The transaction was accounted for as a business combination and after customary effective-date adjustments and closing adjustments, the adjusted cash payment on the closing date of September 25, 2014 was $890.8 million and is subject to further post-closing adjustments. The adjusted cash payment was allocated to assets and liabilities based upon fair values at the closing date. There was no gain or loss recognized on the disposition of the Pennsylvania Properties since the relationship between capitalized costs and proved reserves of oil and natural gas was not significantly altered.

The adjusted cash payment was allocated to assets and liabilities based upon fair values at the closing date as follows:

Adjusted cash payment			$890,785
Assets:
	Joint interest billing and other receivables - SWEPI Properties		(4,182)
	Other current assets:
		Acquired condensate inventory - SWEPI Properties	819
		Acquired yard inventory - SWEPI Properties	3,515
	Subtotal - Other current assets		4,334
	Proven oil and gas properties		1,033,960
	Property, plant and equipment:
		Divested gathering system - Pennsylvania Properties	(98,580)
		Acquired other fixed assets - SWEPI Properties	869
		Divested other fixed assets - Pennsylvania Properties	(50)
	Subtotal - Property, plant and equipment		(97,761)
Total assets acquired, net of divested assets			$936,351
Liabilities:
	Current liabilities:
		Current liabilities - Pennsylvania Properties	8,657
		Current liabilities - SWEPI Properties	(601)
	Subtotal - Current liabilities		$8,056
	Other long-term obligations:
		Acquired asset retirement obligations - SWEPI Properties	53,270
		Divested asset retirement obligations - Pennsylvania Properties	(15,760)
	Subtotal - Other long-term obligations		37,510
Total liabilities, net			$45,566

Contingent consideration

In the PSA for the SWEPI Transaction, the Company agreed to attempt to extend or renew certain expiring leases in Pennsylvania at its expense. In satisfaction of this obligation, during January and February 2015 the Company made or will make a cash payment to SWEPI LP and to various landowners who agreed to extend their leases.

Pro Forma Operating Results

The following pro forma combined results for the years ended December 31, 2014 and 2013 reflect the consolidated results of operations of the Company as if the SWEPI Transaction and related financing had occurred on January 1, 2013. The pro forma information includes adjustments primarily for revenues and expenses from the acquired SWEPI Properties less revenues and expenses from the divested Pennsylvania Properties as well as depreciation, depletion, amortization and accretion, and interest expense associated with the financing related to the SWEPI Transaction.

The unaudited pro forma combined financial statements give effect to the events described below:

• The acquisition and divestiture of oil and gas properties in the SWEPI Transaction completed on September 25, 2014
• Issuance of $850.0 million of 6.125% senior notes due 2024 to finance a portion of the SWEPI Transaction, and the related adjustments to interest expense
• Increase in borrowings under the Credit Agreement to finance a portion of the SWEPI Transaction, and the related adjustments to interest expense
• Includes transportation charges of $74.6 million and $113.4 million for the years ended December 31, 2014 and 2013, respectively, incurred with respect to operation of the properties acquired in the SWEPI Transaction that will not be incurred by the Company.

The pro forma combined financial information is for informational purposes only and is not intended to represent or to be indicative of the combined results of operations that the Company would have reported had the SWEPI Transaction and related financing been completed as of the date set forth in the pro forma combined financial information and should not be taken as indicative of the Company’s future combined results of operations. The actual results may differ significantly from that reflected in the pro forma combined financial information for a number of reasons, including, but not limited to, differences in assumptions used to prepare the pro forma combined financial information and actual results.

		For the year ended December 31,
		2014		2013
Revenues	$	1,421,537	$	1,160,394
Net income	$	531,188	$	164,303
Net income per common share - basic	$	3.47	$	1.07
Net income per common share - fully diluted	$	3.43	$	1.06

Post-Acquisition Operating Results

The amounts of revenues and earnings included in the Company’s Consolidated Statements of Operations for the year endedDecember 31, 2014 related to the SWEPI Transaction represents activity from September 25, 2014 through December 31, 2014 and includes $74.7 million in revenues and $23.5 million in earnings.

2013 Acquisition:

On December 12, 2013 the Company, through its subsidiary, UPL Three Rivers Holdings, LLC, closed on the acquisition of crude oil assets (“the Assets”) located in Three Rivers Field in Uintah County, Utah. The Assets were acquired at a contract priceof $652.0 million and consist of producing wells, undeveloped acreage and water and gas gathering assets. A purchase and sale agreement was executed between the parties on October 18, 2013 with an effective date of October 1, 2013. The acquisition was financed through the issuance of $450.0 million of senior notes and the remainder under the Company’s credit facility.