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Ultra Petroleum Management Discusses Q2 2012 Results - Earnings Call Transcript

I'd like to point out that many of the comments during this conference call are forward-looking statements that involve risks and uncertainties affecting outcomes, many of which are beyond our control and are discussed in more detail in the risk factors and forward-looking statements section of our annual and quarterly filings with the SEC. Although we believe these expectations expressed are based on reasonable assumptions, they are not guarantees of future performance, and the actual results or developments may differ materially.

Also, this call may contain certain non-GAAP financial measures. Reconciliation and calculation schedules can be found on our website also.

Let me start my comments this morning by picking up where I left off last quarter. I shared a view where I thought that natural gas prices have bottomed, that production was flattening, that natural gas rigs would continue to decline and a correction in pricing was imminent. We were limiting our investments with reductions in capital while preserving our valuable long-life assets. We also anticipate a noncash accounting directed ceiling test write-down caused by unsustainably low natural gas prices. This write-down muddies our financial statement presentation going forward, but has no lasting impact on the health of our business. Today, that view expressed 3 months ago appears fairly accurate.

Now let me summarize our financial performance for the quarter. We produced 65.1 Bcfe, just above our quarterly guidance range with strong well performance and better runtimes offsetting planned reduced completions in Wyoming and a slower partner activity pace in Pennsylvania. Our hedged natural gas price for the quarter was $4.04 per Mcf. On an unhedged basis, our realized price was $2.23 per Mcf, down 49% year-over-year. We've hedged 103 Bcfe, representing over 80% of our remaining 2012 production at a weighted-average price of $4.31 per MMBtu. We generated $190.6 million in cash flow or $1.25 per diluted share and $55.1 million or $0.36 per diluted share and adjusted net income during the second quarter.

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