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Gold/Mining/Energy : Ultra Petroleum (UPL)
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To: dgz who wrote (4562)1/3/2000 10:59:00 AM
From: Hickory   of 4851
 
DGZ,

It's not just the leases which UP paid for and which they are letting revert to the former owners. The drilling results are rapidly shrinking the acreage that even has a chance of being economic.

Ross Ridge, on the southeastern part of the Pinedale anticline encountered "thousands of feet of pressurized gas sands" which were too tight to get the gas out by fraccing. The Lizard Head and Lovatt Draw wells also were non-economic. Cut out these sections of the Pinedale and the prospective Pinedale acreage shrinks dramatically.

Off the Pindedale anticline, the plugged Bull Draw 1-8 showed that UP's fairly large leasehold position southeast of the Jonah doesn't hold very bright prospects. North of Jonah only 1 of the Warbonnet wells was viable.

A lot of UP's huge leaseholdings are shaping up as great leases of sagebrush.

There still is room for a good number of wells to be drilled near the crest of the Pinedale anticline, but how many of those will be prolific and how many will encounter "thousands of feet of pressurized sands" that are too tight to let the gas out remains to be seen.

Very soon UP is going to have to start paying its share of the drilling and completion costs. Without a dramatic increase in gas revenue, UP is going to have to go deep into debt to finance even a few wells.

And that doesn't even take into account the Wyoming lawsuits it is facing, which conceivably could whack off a significant chunk of prime assets.

Quite a different picture from the one that Maedel, Frazier and Jarvis painted a couple of years ago---fabulous new fraccing techniques enabling hundreds of wells to tap several trillion cubic feet of gas under hundreds of thousands of acres.
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