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Ultra Petroleum (UPLMQ) Exits Bankruptcy; Issues Outlook

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Texas-based oil and gas producer Ultra Petroleum Corp. recently won court’s approval on Chapter 11 exit plan. The verdict is likely to enable Ultra Petroleum avoid a bankruptcy.

The company has also issued financial and operational guidance for 2017.

Bankruptcy Exit Plan

Ultra Petroleum had filed for bankruptcy protection under Chapter 11 on Apr 29, 2016.  The company had fallen victim to plummeting oil and gas prices and recorded a loss of $3.2 billion in 2015. The company therefore filed a revised structuring plan to raise $2.4 billion in bankruptcy-exit financing.

The company has recently won the approval of the bankruptcy exit plan which enabled conversion of $1.38 billion in debt and common stock to equity in reorganized business. The plan led the company to raise $580 million in equity capital by the way of rights offering and $2.4 billion in exit financing.

2017 Outlook

Ultra Petroleum has set its capex budget at $500 million, reflecting 85% increase from the year-ago reported figure of $270 million. The company plans to bore 245 wells in 2017 as against the 110 wells drilled in 2016.

On the production front, the company is expected to generate 290 to 300 billion cubic feet equivalent (Bcfe) in 2017. This represents an improvement in the production from the year-ago recorded figure of 281.7 Bcfe. Around 96% of the output forecast of 2017 is expected to come from the Rockies.

The company estimates the total production cost to be of $1.83–$2.04 per thousand cubic feet equivalent. The EBITDA of the company is forecasted to be around $650–$700 million.

Zacks Rank and Key Picks

Headquartered in Houston, TX, Ultra Petroleum is an independent energy company that engages in the acquisition, exploration, development, operation, and production of oil and natural gas properties.

The company has underperformed the Zacks categorized US Oil and Gas Exploration & Production industry over the prior three years. During the aforesaid period, shares of Ultra Petroleum declined 75% while the broader industry fell 45%.

The company currently carries a Zacks Rank #5 (Strong sell).

Better-ranked players from the same industry include Antero Resources Corporation (AR - Free Report) , Pioneer Natural Resources Corporation (PXD - Free Report) and Abraxas Petroleum Corporation (AXAS - Free Report) .  While Antero Resources and Pioneer Natural Resources sport a Zacks Rank #1 (Strong Buy), Abraxas Petroleum carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources reported positive earnings surprise in each of the trailing four quarters, the average being 239.10%.

Pioneer Natural Resources is expected to deliver year-over-year growth of 1117.6% in its earnings in 2017.

Abraxas Petroleum is expected to post year-over-year growth of 86.84% and 314.29% in its revenue and earnings respectively in 2017.

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