Ultra Petroleum activity on Pinedale anticline
Ultra Petroleum Corp UP
Shares issued 56,424,325 Dec 24 close $1.04
Wed 29 Dec 99 News Release
Mr. Mike Watford reports
Ultra Petroleum has received the results of field activity on the Pinedale
anticline area of the Green River basin, Wyoming. Ultra's 77 square mile
3-D seismic survey has been acquired and the data are in processing in
Denver, Colo. The company expects to receive the fully processed data by
early February, 2000, and will begin its interpretation of the data during
the first quarter of 2000. The company's preliminary review indicates
excellent data quality. The company feels that this survey will be an
important tool in the continuing evaluation of its acreage position in the
Green River basin and in determining locations for the 2000 drilling
campaign.
Since June, 1999, Ultra has participated in the drilling of five wells and,
to date, the completion of three of these wells. All of these wells were
drilled under the terms of the acreage sale on the northern portion of the
Pinedale anticline and were drilled off the eastern flank of the Pinedale
anticline to test the easterly extent of the productive Lance fairway. Four
of the wells were operated by Anschutz Wyoming Corp. The two wells that
have been completed, the Mocroft No. 11-22 and Mocroft No. 1-21 have
established limited stabilized gas production and appear to lack the
quantity and quality of net pay seen in the wells along the crest of the
anticline. The Mocroft No. 1-21 stabilized at 120,000 cubic feet a day from
83 feet of completed net sands and the Mocroft No. 11-22 stabilized at
40,000 cubic feet a day from 127 feet of completed net sands. Both wells
have uncompleted sands up hole and are shut-in pending results from the
Gannett 13-16 well currently being completed by Anschutz.
The Gannett 13-16 well was drilled to a total depth of 13,260 feet and was
logged and cased. It encountered 450 feet of net pay. The bottom three
zones or approximately one-third of the net pay has been completed and is
flowing at a stabilized rate of 2.3 million cubic feet a day at 6,501
pounds per square inch FCP. The remaining zones are scheduled for
completion early in January, 2000. The fourth well operated by Anschutz
Wyoming Corp., the Mocroft 4-27d, appears to have less sand than the other
Mocroft locations and will be plugged and abandoned.
Additionally, the company participated in the drilling and completion of
one well operated by Questar Corp. The Stewart Point No. 11-34d well
encountered 345 feet of net pay. The first zones hydraulically fracture
stimulated had limited response. Because of questions surrounding adequate
isolation of several zones and evaluation of potential water-bearing sands,
as well as time constraints with winter game habitat restrictions, the well
was put on production at 150,000 cubic feet a day from approximately 40
feet of completed net pay in the uppermost section of the overpressured
Lance sandstone.
"The mixed results of these wells further confirm that success in the Lance
sand play will be driven primarily by technology and not by the drill bit.
Over the coming months, the technical staff of Ultra will be focused on
integrating all of the information we've gathered from these wells and the
3-D shoot to improve our understanding of this asset and increase our
success rate going forward," stated Mike Watford, chairman and chief
executive officer.
The 757 page draft environmental impact statement for the Pinedale EIS area
was released on Nov. 26, 1999. The EIS process now enters its final phases
prior to issuance and will finally provide the guide to full-scale
development of the gas resources on the Pinedale anticline. The final
version will be released in March, 2000. A record of decision is expected
by May, 2000.
Additionally, an effort is under way to allow 40-acre infill drilling in
the Jonah field. A draft of the EA is due out in February with a final
decision by April. This will result in more than a doubling of Ultra's
current proved reserves.
During October, the company elected to settle litigation relating to the
1998 plugging and abandonment of the White Estate No. 1 well in Henderson
county, Texas. The terms of the settlement are confidential. Management
assessed that settlement of this suit provided less risk to the company's
continuing viability than to continue through the trial. This settlement
and the legal fees associated with this litigation will result in a
one-time charge of approximately $2-million against earnings for the
quarter ending Dec. 31, 1999. Mr. Watford, chairman and CEO, commented:
"I'm pleased to have this suit behind us. By settling it, we have closed a
chapter in Ultra's history and resolved the last of the inherited, company
threatening issues facing Ultra. Now we will be able to exert 100 per cent
of our effort on developing our Wyoming assets."
Over the last 10 months, management has been working diligently to resolve
many issues that threatened the continuing viability of the company. To
that end, the company has made much progress. Litigation has been resolved,
expenses dramatically reduced, the EIS moved forward and the financial
position of the company greatly improved. Moving forward into year 2000,
Ultra is positioned to create value from its assets and continue to improve
its financial position while achieving its objectives of increased
reserves, production, cash flow and earnings.
WARNING: The company relies upon litigation protection for
"forward-looking" statements. |
