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TheStreet Open House

Why Ultra Petroleum (UPL) Stock Is Up Today

NEW YORK (TheStreet) -- Shares of Ultra Petroleum Corp. (UPL) are higher by 1.51% to $22.80 on Thursday morning, after the company announced it has agreed to acquire all Pinedale field properties from SWEPI LP, an affiliate of Royal Dutch Shell (RDS.A).

The sale will be made in exchange for a portion of Ultra Petroleum’s Marcellus Shale properties and a cash consideration of $925 million.

Ultra Petroleum is purchasing Shell’s interest in the Pinedale filed, which is currently producing approximately 189 million cubic feet equivalent per day of natural gas and condensate.

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Following the transaction Ultra will operate 68% of the Pinedale field.

Separately, TheStreet Ratings team rates ULTRA PETROLEUM CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate ULTRA PETROLEUM CORP (UPL) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • UPL's revenue growth has slightly outpaced the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $171.08 million or 21.09% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.19%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • ULTRA PETROLEUM CORP's earnings per share declined by 9.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ULTRA PETROLEUM CORP turned its bottom line around by earning $1.54 versus -$14.24 in the prior year. This year, the market expects an improvement in earnings ($2.72 versus $1.54).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 8.9% when compared to the same quarter one year ago, dropping from $116.37 million to $106.05 million.
  • You can view the full analysis from the report here: UPL Ratings Report
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