EX-99.1 2 up4753ex991.htm EXHIBIT 99.1

Exhibit 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE

ULTRA PETROLEUM REPORTS RECORD
2005 FINANCIAL AND OPERATING RESULTS

HOUSTON, Texas – February 7, 2006 – Ultra Petroleum Corp. (AMEX: UPL) today reported record financial and operating results for the fourth quarter and full-year 2005.  Highlights include:

•

Record earnings for 2005 of $230.0 million, up 111 percent from 2004

•

Record operating cash flow(1) for 2005 of $412.7 million, up 108 percent from 2004

•

Record production of 73.4 Bcfe for 2005, up 49 percent over 2004 levels

Earnings for the year-ended December 31, 2005 were $230.0 million or $1.42 per diluted share, an increase of 111 percent compared to $109.1 million or $0.68 per diluted share for the same period in 2004. Operating cash flow(1)for the period 2005 increased 108 percent to $412.7 million, compared to $198.3 million for the same period in 2004.

Ultra Petroleum’s production for 2005 increased 49 percent to an all time high of 73.4 billion cubic feet equivalent (Bcfe) compared to 49.3 Bcfe in 2004. Production for 2005 is comprised of 464 thousand barrels (Mbls) oil from Wyoming, 1,478 Mbls oil from China, and 61.7 billion cubic feet (Bcf) natural gas from Wyoming. In 2005, the realized Wyoming oil price was $57.37 per barrel (bbl) as compared to $41.92 per bbl in 2004. China oil prices realized in the year were $43.54 per bbl as compared to $32.31 per bbl in 2004. Natural gas prices realized for 2005 were $6.84 per million cubic feet (Mcf) as compared to $5.13 per Mcf or an increase of 33 percent from 2004.

Earnings for the fourth quarter 2005 were $83.9 million or $0.52 per diluted share, a 96 percent increase from $42.8 million or $0.26 per diluted share for the fourth quarter in 2004. Operating cash flow(1) for the quarter was $148.2 million, a 95 percent increase from $76.0 million for the same quarter in 2004.

Fourth quarter 2005 production increased 25 percent to 21.3 Bcfe compared to 17.0 Bcfe for the same quarter in 2004. In the fourth quarter of 2005, the realized Wyoming oil price was $58.51 per bbl as compared to $48.86 per bbl in the fourth quarter 2004. China oil prices realized in the fourth quarter of 2005 were $48.16 per bbl as compared to $29.88 per bbl in the fourth quarter 2004. Natural gas prices realized for the fourth quarter of 2005 were $8.49 per Mcf as compared to $5.70 per Mcf or an increase of 49 percent over fourth quarter 2004.

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“Ultra Petroleum continues to excel. 2005 was another record year in a continuing string of record reporting periods. Our operating cash flow and earnings doubled on the back of a nearly 50 percent increase in production, all with the drill bit, and stronger commodity prices. Our margins and returns continued to improve with a 45 percent net income margin and a return on capital of 49 percent. Ultra’s finding and development cost for 2005 was $0.56 per Mcfe and our reserve replacement ratio was 773 percent, both industry leading metrics,” stated Michael D. Watford, Chairman, President and Chief Executive Officer. “Our 2006 plans continue the growth theme with a record capital expenditure budget of $425 million. We plan to execute the most aggressive drilling program in our history with 160 gross wells in Wyoming, and bring into production three more fields in China. With over seventeen years of identified drilling opportunities in Wyoming coupled with our low cost structure, we remain positioned to continue delivering industry leading performance for many years to come.”

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Ultra Petroleum Corp.
Consolidated Statement of Operations
(unaudited)
All amounts expressed in US$

 

 

For the Twelve Months Ended

 

For the Quarter Ended

 

 

 

 

 

 

 

Dec. 31, 2005

 

Dec. 31, 2004

 

Dec. 31, 2005

 

Dec. 31, 2004

 

 

 

 

 

 

 

Volumes

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil liquids (Bbls) - WY

 

 

464,330

 

 

349,673

 

 

133,089

 

 

107,886

 

Oil crude (Bbls) - China

 

 

1,478,466

 

 

593,332

 

 

373,430

 

 

382,409

 

Natural Gas (Mcf) - WY

 

 

61,722,349

 

 

43,667,384

 

 

18,304,467

 

 

14,070,402

 

 

 

 

 

 

 

MCFE

 

 

73,379,125

 

 

49,325,414

 

 

21,343,581

 

 

17,012,172

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil sales - WY

 

$

26,639,931

 

$

14,659,219

 

$

7,786,409

 

$

5,271,551

 

Oil sales - China

 

 

64,373,947

 

 

19,170,436

 

 

17,984,911

 

 

11,425,343

 

Natural Gas sales - WY

 

 

422,091,034

 

 

224,207,694

 

 

155,398,237

 

 

80,169,948

 

 

 

 

 

 

 

Total Revenues

 

 

513,104,912

 

 

258,037,349

 

 

181,169,557

 

 

96,866,842

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Production Costs - WY

 

 

9,047,390

 

 

6,286,715

 

 

2,711,074

 

 

2,182,457

 

Production Costs - China

 

 

7,352,000

 

 

2,286,000

 

 

2,653,000

 

 

1,397,000

 

Severance/Production Taxes

 

 

52,689,060

 

 

28,151,661

 

 

19,526,869

 

 

10,175,579

 

Gathering Fees

 

 

17,125,147

 

 

13,135,809

 

 

4,806,252

 

 

4,357,264

 

 

 

 

 

 

 

Total Lease Operating Costs

 

 

86,213,597

 

 

49,860,185

 

 

29,697,195

 

 

18,112,300

 

 

 

 

 

 

 

DD&A - WY

 

 

48,456,043

 

 

27,346,061

 

 

16,428,058

 

 

9,772,488

 

DD&A - China

 

 

7,060,928

 

 

2,903,000

 

 

1,922,175

 

 

1,871,587

 

General and administrative

 

 

11,483,663

 

 

6,152,097

 

 

3,043,177

 

 

1,845,329

 

Stock compensation

 

 

2,858,515

 

 

923,623

 

 

586,683

 

 

150,050

 

 

 

 

 

 

 

Total Expenses

 

 

156,072,746

 

 

87,184,966

 

 

51,677,288

 

 

31,751,754

 

 

 

 

 

 

 

Interest and other income

 

 

612,153

 

 

90,760

 

 

241,132

 

 

48,061

 

Interest and debt expense

 

 

3,286,087

 

 

3,783,070

 

 

430,077

 

 

980,689

 

Net income before income taxes

 

 

354,358,232

 

 

167,160,073

 

 

129,303,324

 

 

64,182,460

 

Income tax provision - deferred

 

 

124,379,736

 

 

58,010,278

 

 

45,385,467

 

 

21,413,761

 

Net Income

 

$

229,978,496

 

$

109,149,795

 

$

83,917,857

 

$

42,768,699

 

Operating Cash Flow (see non-GAAP reconciliation below)

 

$

412,733,718

 

$

198,332,757

 

$

148,240,240

 

$

75,976,585

 

Weighted Average Shares – Basic

 

 

153,100,067

 

 

149,735,666

 

 

154,834,231

 

 

150,145,990

 

Weighted Average Shares – Diluted

 

 

162,289,130

 

 

161,205,534

 

 

162,868,965

 

 

162,839,042

 

Earnings per Share - Basic

 

$

1.50

 

$

0.73

 

$

0.54

 

$

0.28

 

Earnings per Share - Diluted

 

$

1.42

 

$

0.68

 

$

0.52

 

$

0.26

 

Realized Prices

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil liquids (Bbls) – WY

 

$

57.37

 

$

41.92

 

$

58.51

 

$

48.86

 

Oil crude (Bbls) - China

 

$

43.54

 

$

32.31

 

$

48.16

 

$

29.88

 

Natural Gas (Mcf)

 

$

6.84

 

$

5.13

 

$

8.49

 

$

5.70

 

Costs Per MCFE - Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Operating Costs

 

$

1.17

 

$

1.01

 

$

1.39

 

$

1.06

 

DD&A

 

$

0.76

 

$

0.61

 

$

0.86

 

$

0.68

 

General and administrative - total

 

$

0.20

 

$

0.14

 

$

0.17

 

$

0.12

 

Interest, net

 

$

0.04

 

$

0.08

 

$

0.02

 

$

0.06

 

 

 

 

 

 

 

 

 

$

2.17

 

$

1.84

 

$

2.44

 

$

1.92

 

 

 

 

 

 

 

Segment Costs Per MCFE

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

 

 

 

 

 

 

 

 

 

 

Production Costs

 

$

0.14

 

$

0.14

 

$

0.14

 

$

0.15

 

Severance/Production Taxes

 

$

0.82

 

$

0.62

 

$

1.02

 

$

0.69

 

Gathering Fees

 

$

0.27

 

$

0.29

 

$

0.25

 

$

0.30

 

DD&A

 

$

0.75

 

$

0.60

 

$

0.86

 

$

0.66

 

 

 

 

 

 

 

 

 

$

1.97

 

$

1.64

 

$

2.28

 

$

1.80

 

 

 

 

 

 

 

China

 

 

 

 

 

 

 

 

 

 

 

 

 

Production Costs

 

$

0.83

 

$

0.64

 

$

1.18

 

$

0.61

 

DD&A

 

$

0.80

 

$

0.82

 

$

0.86

 

$

0.82

 

 

 

 

 

 

 

 

 

$

1.62

 

$

1.46

 

$

2.04

 

$

1.42

 

 

 

 

 

 

 

Note: Amounts on a per MCFE basis may not total due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

 

Margins

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income

 

 

69

%

 

65

%

 

71

%

 

66

%

Net Income

 

 

45

%

 

42

%

 

46

%

 

44

%

Operating segment margins

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

82

%

 

80

%

 

83

%

 

80

%

China

 

 

89

%

 

88

%

 

85

%

 

88

%

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Ultra Petroleum Corp.
Reconciliation of Cash Flow from Operations Before Changes in Non-Cash Items and Working Capital
(unaudited)
All amounts expressed in US$

(1) Operating cash flow is defined as net cash provided by operating activities before changes in non-cash items and working capital. Management believes that the non-GAAP measure of operating cash flow is useful as an indicator of an oil and gas exploration and production company’s ability to internally fund exploration and development activities and to service or incur additional debt. The company also has included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the company may not control and may not relate to the period in which the operating activities occurred. Operating cash flow should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with GAAP.

The following table reconciles cash flow from operations before changes in non-cash items and working capital with net cash provided by operating activities as derived from the company’s financial information.

 

 

For the Twelve Months Ended

 

For the Quarter Ended

 

 

 

 

 

 

 

Dec. 31, 2005

 

Dec. 31, 2004

 

Dec. 31, 2005

 

Dec. 31, 2004

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

410,291,184

 

$

175,342,606

 

$

133,122,202

 

$

55,126,404

 

Accounts payable and accrued liabilities

 

$

(34,169,717

)

$

10,430,908

 

$

(18,430,877

)

$

12,214,084

 

Prepaid expenses and other current assets

 

$

(1,597,799

)

$

14,106

 

$

(953,478

)

$

(2,781,334

)

Accounts receivable

 

$

42,997,311

 

$

16,400,426

 

$

35,869,736

 

$

4,518,258

 

Inventory

 

$

518,576

 

$

275,424

 

$

300,700

 

$

275,424

 

Restricted cash

 

$

1,938

 

$

1,292

 

$

539

 

$

344

 

Deferred revenue

 

$

—  

 

$

—  

 

$

137,500

 

$

3,436,624

 

Other long-term obligations

 

$

(5,632,775

)

$

(3,870,179

)

$

(1,936,082

)

$

3,448,607

 

Taxation payable

 

$

325,000

 

$

(261,826

)

$

130,000

 

$

(261,826

)

Cash flow from operations before changes in non-cash items and working capital

 

$

412,733,718

 

$

198,332,757

 

$

148,240,240

 

$

75,976,585

 

These statements are unaudited and subject to adjustment.

Fourth quarter and full - year 2004 per share amounts are restated for the two-for-one stock split effective May 10, 2005.

Conference Call Webcast Scheduled for February 8, 2006

Ultra Petroleum’s fourth quarter and full year 2005 conference call will be available via live audio webcast at 10:00 a.m. Central Standard Time (11:00 a.m. Eastern Standard Time) Wednesday, February 8, 2006. To listen to this webcast, log on to www.ultrapetroleum.com. The webcast will be archived on Ultra Petroleum’s website through April 26, 2006.

About Ultra Petroleum

Ultra Petroleum is an independent, exploration and production company focused on developing its long-life natural gas reserves in the Green River Basin of Wyoming, and oil reserves in Bohai Bay, offshore China. Ultra Petroleum is listed on the American Stock Exchange under the symbol “UPL” with 155,075,864 shares outstanding as at December 31, 2005.

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This release can be found at http://www.ultrapetroleum.com

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We  use certain terms in this press release relating to reserves and/or production that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K available from us at 363 North Sam Houston Parkway E., Suite 1200, Houston, TX 77060. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

This news release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The opinions, forecasts, projections or other statements, other than statements of historical fact, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, they can give no assurance that such expectations will prove to have been correct. Certain risks and uncertainties inherent in the Company’s businesses are set forth in their filings with the SEC. These risks and uncertainties include increased competition, the timing and extent of changes in prices for oil and gas, particularly in Wyoming, risks inherent in operations in China, the timing and extent of the company’s success in discovering, developing, producing and estimating reserves, the effects of weather and government regulation, availability of oil field personnel, services, drilling rigs and other equipment, and other factors listed in the reports filed by the company with the SEC. For additional information with respect to these and other factors, see reports filed by the company with the SEC. Full details regarding the selected financial information provided above will be available in the Company’s annual report and in the Form 10-K.

“Completion of 2005 Audit.” It should be noted that the Company’s independent accountants’ audit will not be completed, and the related audit opinion with respect to the year-end financial statements will not be dated, until the Company completes the final 10-K report and evaluation of internal controls over financial reporting. Accordingly, the financial results reported in this earnings release are preliminary and are subject to adjustment. The Company expects to report full audited financial results and file a Form 10-K with the SEC by March 1, 2006.

For further information contact:

Kelly L. Whitley
Manager Investor Relations
Phone: 281-876-0120 Extension 302
Email: info@ultrapetroleum.com
Website: www.ultrapetroleum.com

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