Back to top

Image: Bigstock

Ultra Petroleum (UPLMQ) Q2 Earnings Beat as Costs Decline

Read MoreHide Full Article

Ultra Petroleum Corp. posted second-quarter 2016 adjusted earnings of 25 cents per share against the Zacks Consensus Estimate of a loss of 12 cents. The bottom line also came in higher than the year-ago comparable quarter profit of 21 cents. A massive decline in operating expenses along with success on the production front led to the improvement. The positives were slightly offset by reduced commodity price realizations.

Total operating revenue of $146.6 million not only missed the Zacks Consensus Estimate of $151 million but was also substantially below the second-quarter 2015 level of $207.9 million.  

Production

Production during the reported quarter increased year over year to 70.8 billion cubic feet equivalent (Bcfe) from 70.5 Bcfe.

Natural gas volumes – that accounted for approximately 93.8% of the total – increased 2% year over year to 66.4 Bcfe. Oil production, however, declined to 735,377 barrels in the reported quarter from 900,008 barrels a year ago.

Realized Prices

Ultra Petroleum's average realized price on natural gas (excluding realized gain or loss on commodity derivatives) plunged 30.2% year over year to $1.76 per thousand cubic feet (Mcf). Also, the average oil price (excluding realized gain or loss on commodity derivatives) for the reported quarter was $40.54 per barrel, below the second-quarter 2015 figure of $48.64 per barrel.   

Costs, Expenses and Margins

Total lease operating costs decreased nearly 14.7% from the prior-year quarter to approximately $62 million.

Moreover, the company witnessed a massive decrease in total operating expenses to $94.8 million from $188.5 million in the year-earlier quarter.

Ultra Petroleum’s adjusted operating cash flow margin came in at 43% compared with 47% in the prior-year quarter.

Balance Sheet

As of Jun 30, 2016, the company had cash and cash equivalents of approximately $269.5 million and debt of $3.76 billion.    

Guidance

For 2016, production is guided in the 277–284 Bcfe range. For 2017, 2018, 2019 and 2020, the company’s output is guided at 303 Bcfe, 382 Bcfe, 456 Bcfe and 486 Bcfe, respectively.

Moreover, the company increased its projected 2016 capital spending to $295 million from the prior guidance of $260 million. On top of that, capital spending for 2017, 2018, 2019 and 2020 is projected at $522 million, $837 million, $816 million and $797 million, respectively.

ULTRA PETRO CP Price, Consensus and EPS Surprise

Zacks Rank

Ultra Petroleum currently carries a Zacks Rank #2 (Buy). Other energy players that warrant a look include Devon Energy Corporation (DVN - Free Report) , Matador Resources Company (MTDR - Free Report) and NGL Energy Partners LP (NGL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>