Ultra Petroleum (UPL) Message Board

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Gold/Mining/Energy : Ultra Petroleum (UPL)

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To: Little Joe who wrote (4808)	5/10/2003 7:19:03 PM
From: Bob Walsh	of 4851

Hi Little Joe, Why did I pick a P/E of 30? Because I think that it will far outperform most stocks with a P/E of 30. I think that Ultra may be a hard stock for many people to value since it is not your traditional O & G company. It has elements of an O & G producing company, an O & G exploration company and (I say with trepidation)it has elements of a high tech company. Why do I say hi tech? Because Ultra appears to be continually using new technology/methods such as extensive use of 3D seismic, improvements to frac technology and improvements to completion methods which reduce time to production. While O & G companies are usually valued at some multiple of cash flow or NAV, I think that Ultra is different enough with so many factors involved that cash flow and/or NAV may not fit. In addition NAV is only done at year end whereas changes in estimated EPS are done at anytime. Regarding gas prices: The older Opal pricing had a very large delta to Henry Hub pricing with I believe a larger differential in the summer. With the new Kearns river pipeline in place as of May 1 the differential is much less. In addition Ultra has hedged about 30% of it's 2003 production. Also the indications are that gas storage is low and demand should continue high. With Ultra having 600 approved permits in place, drilling a net of 19.3 wells this year, achieving over 90% success in drilling, replacing every Mcf of gas sold at $2.33 or higher with 15Mcf of new gas for an outlay of only $0.23/Mcfe, and without even considering the potential of Bohai Bay, I sleep very comfortably. Look at the new slide show on the Ultra home site at ultrapetroleum.com Regards, Bob

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