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We expect natural gas producer Ultra Petroleum Corp. (UPL - Analyst Report) to beat expectations when the company reports its fourth-quarter and full-year 2012 results tomorrow on Friday, Feb 15.  

Why a Likely Positive Surprise?

Our proven model shows that Ultra Petroleum is likely to beat earnings because it has the right combination of two key factors.

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate estimate of 54 cents and the Zacks Consensus Estimate of 50 cents, stands at +8.00%. This is a meaningful and leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): The stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating the earnings. The Sell-rated stocks (#4 and #5) should never be considered while going into an earnings announcement.

The combination of Ultra Petroleum’s Zacks Rank #3 (Hold) and +8.00% ESP makes us very confident in looking for a positive earnings beat on Feb 15, 2013.

What is Driving the Better than Expected Earnings?

Ultra Petroleum controls substantial acreage in and around the prolific Jonah natural gas field and the Pinedale Anticline area in the Green River Basin. Both these areas are endowed with rich natural gas reserves, which have remained largely untapped to date.

Ultra Petroleum’s performance over the last few years highlights its attractive growth prospects. During the last 5 years, the company has increased its production at a compounded annual growth rate of approximately 21%.

The positive trend is seen in the trailing four-quarter average surprise of 34.24%. The company’s third-quarter 2012 surprise was 25.49% owing to better margin and a drop in production taxes and gathering fees.   

Other Stocks to Consider

Here are some other firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Atlas Energy LP (ATLS - Snapshot Report), earnings ESP of +520.00% and Zacks Rank #1 (Strong Buy).

Northern Tier Energy LP (NTI - Snapshot Report), earnings ESP of +6.57% and Zacks Rank #1 (Strong Buy).

Western Refining Inc. (WNR - Analyst Report), earnings ESP of +7.09% and Zacks Rank #2 (Buy).

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