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Ultra Petroleum Promoted to Buy

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On Dec 24, Zacks Investment Research upgraded natural gas producer, Ultra Petroleum Corporation (UPL) to a Zacks Rank #2 (Buy).
Why the Upgrade?

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 replete with rich natural gas reserves which are largely untapped to date. The company has also amassed a large acreage in the prolific Marcellus Shale play – a key natural gas drilling area.

Ultra Petroleum’s production growth over the last few years highlights its attractive asset base. Moreover, the company maintains a competitive cost structure that acts in its favor.

The company belongs to the neutral group from a Zacks Industry Rank perspective (to learn more visit: About Zacks Industry Rank). However, it looks pretty good on an individual basis with decent short-term momentum and solid positive shift in estimates in the past two months. In the past 60 days, the Zacks Consensus Estimate for the fourth quarter has moved up 3 cents (or 7.1%) to 45 cents per share. The Zacks Consensus Estimate for the full year has also moved up 4 cents (or 2.5%) to $1.66 per share, with 8 estimates moving higher for UPL against just 3 going lower, in the same time frame.  The stock has also started to move higher lately, adding 6.8% over the past four weeks.

Moreover, the company consistently beat the Zacks Consensus Estimate for the past three quarters, with the most recent quarter reporting an 8.8% positive surprise. Ultra Petroleum had reported third quarter earnings of 37 cents per share, beating the Zacks Consensus Estimate by 3 cents, primarily on account of a significant reduction in operating expenses.  

Other Stocks that Warrant a Look

In addition to Ultra Petroleum, one can also consider other exploration and production stocks such as Harvest Natural Resources Inc. , Penn Virginia Corporation and Clayton Williams Energy, Inc. . All these stocks currently sport a Zacks Rank #1 (Strong Buy).

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