Pad drilling program for Pinedale vertical wells is lowering costs

Ultra Petroleum Corp. (ticker: UPL) has appointed two officers. David Honeyfield has been named CFO, and Andrew Kidd was named general counsel.

David Honeyfield has more than 25 years of experience in the energy and natural resources fields with a strong background in accounting and the corporate management of public oil and gas companies, including as CFO of PDC Energy, Inc. and CFO for Jonah Energy LLC.  Honeyfield previously served as President and CFO of Intrepid Potash, Inc., CFO of SM Energy, and Controller and Chief Accounting Officer of Cimarex Energy Co.

Andrew Kidd has more than 29 years of experience advising clients in the energy industry with a strong background in managing legal risk related to oil and gas operations, drilling and development, as well as experience in corporate and project finance, and mergers and acquisitions. Kidd serves on the boards of Highpoint Resources Corporation and Genon Americas Generation, Inc. Prior to those roles, he was general counsel, president, and CEO of Samson Resources Corporation, and general counsel of Quantum Utility Generation, LLC, Anthem Energy, LLC, and Constellation Energy Resources.

Honeyfield and Kidd succeed Garland Shaw and Garrett Smith, respectively, who both did not relocate from Houston following the move of the company’s headquarters to Englewood, Colorado.

Ultra Petroleum Pad drilling program for Pinedale vertical wells is lowering costs - Oil & Gas 360

Source: Ultra Petroleum

Ultra’s Q3 financial results

During the third quarter of 2018, total revenues were $203.8 million as compared to $217.6 million during the third quarter of 2017.

Net income was $18.6 million, or $0.09 per diluted share. Ultra Petroleum reported adjusted net income(2) of $33.0 million, or $0.17 per diluted share for the quarter ended September 30, 2018.

The company’s production of natural gas and oil was 67.5 billion cubic feet equivalent (Bcfe), a decrease of 5% over the third quarter of 2017, with 63.8 billion cubic feet (Bcf) of natural gas and 624.2 thousand barrels (MBbls) of oil and condensate.

During the third quarter of 2018, Ultra Petroleum’s average realized natural gas price was $2.38 per thousand cubic feet (Mcf), which includes realized gains and losses on commodity hedges and compares to $2.87 for the same period in 2017.

Excluding the realized gains and losses from commodity derivatives, the company’s average price for natural gas was $2.46 per Mcf, compared to $2.74 per Mcf for the third quarter of 2017.

The company’s average realized oil and condensate price was $58.02 per barrel (Bbl), which includes realized losses on commodity hedges, for the quarter ended September 30, 2018. Excluding the realized losses from oil commodity derivatives, the Company’s average price for oil was $66.54 per Bbl as compared to $45.86 per Bbl for the same period in 2017.

Q3 highlights

  • Third quarter 2018 production averaged 734 MMcfe/d, above mid-point of guidance,
  • Brought 19 vertical wells online with average 24-hour IP rate of 7.4 MMcfe/d,
  • Reduced vertical well costs to $3.3 million, a 10% reduction from second quarter 2018, with continued reductions expected,
  • Closed the previously announced sale of its Utah assets for $75 million with proceeds used to fully pay down the revolver balance at September 30, 2018,
  • Liquidity as of September 30, 2018 of $338 million, including cash and availability under the revolver,

Additional financial and operating highlights can be found in the new investor presentation posted at www.ultrapetroleum.com.

Pinedale vertical program

During the third quarter, Ultra and its partners brought online 24 gross (17.7 net) vertical wells in Pinedale. The average 24-hour initial production (IP) rate for new operated vertical wells brought online in the third quarter of 2018 was 7.4 million cubic feet equivalent (MMcfe) per day. Operated vertical well costs for the quarter was $3.3 million, a 10% reduction compared to second quarter 2018.

“Our vertical well costs are trending down toward historical averages as we have returned to pad drilling and simultaneous operations on pads dedicated to vertical development,” said Ultra Petroleum Interim CEO Brad Johnson. “We are very focused on bringing down well costs and expect significant further improvement in the fourth quarter and into 2019.”

Pinedale horizontal program

During the third quarter, Ultra completed three horizontal gross (2.2 net) wells targeting the Lower Lance A1 zone. A total of nine wells are now producing from the Lower Lance A1 zone with an average 24-hour IP rate of 20.8 million MMcfe/d.

Johnson said the company is analyzing “significant amount of data we have gathered from the horizontal wells drilled this year. We will use this data to refine and optimize our horizontal program prior to drilling our next set of horizontal wells.

“While our near-term drilling efforts will be focused on our vertical program, we remain confident in our ability to unlock material incremental value from Pinedale through horizontal development.”

$400-$415 million capital program for 2018

Ultra said it is adjusting its capital plan for the remainder of 2018, refining its 2018 total capital budget to a range of $400-$415 million.

Ultra said maintaining a three-rig program in the fourth quarter with all rigs currently focused on vertical development.

The company is narrowing annual production guidance to a range of 274 Bcfe – 278 Bcfe. In the fourth quarter, the average daily production rate is expected to range between 690-730 MMcfe/d.

Horizontal potential

Ultra Petroleum Appoints CFO, General Counsel - Reports Q3 Profits - Oil & Gas 360

Ultra Petroleum Hz potential for Lance A1 Zone – Source: Ultra Petroleum

 


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