IBD Article re Ultra - Part 2:
At last count, Ultra was the principal partner in 162 wells. Its land position in the so-called Pinedale anticline of the Green River Basin totals 122,000 acres. The company claims that between 30,000 acres and 70,000 acres of the tight sand formation are productive and have long lives. At the end of 2002, Ultra had proven gas reserves of 700 billion cubic feet. Based on engineering data, company execs contend there's much more on hand to tap. "The ultimate potential could be as large as 4 trillion to 5 trillion cubic feet" said CFO Fox Benton. He puts the low end at 2 trillion cubic feet - still three times where Ultra was at the end of last year. It won't happen overnight. New drilling requires capital investment and patience. The company would probably reach at least 2 trillion cubic feet by the end of the decade, Benton says. Ultra expects to begin in-fill drilling at the end of the quarter. Plans over the next year call for drilling 16 new wells under the new 20-acre allotments. The company's board has approved two increases to this year's capital budget - the first for $30 million and the most recent for $20 million - for a total of $130 million. That's more than double last year's capital budget. If the Wyoming plays aren't enough, Ultra expects a new act to debut next year in another part of the world: China. The company is a minority partner with KMG in the Bohai Bay oil fields in offshore China. The partners have discovered nine fields to date. The first two are slated to go into production late next year. "Our goal is to bring a couple of new fields into production each year," Benton said. He expects the fields to produce oil for the next 15 years. "It's not as long life as Wyoming, but it's still long compared to the Gulf of Mexico," he said. About 20% of Ultra's production in 2005 will come from China, Benton says. Overall, the firm has identified projects that will let it deliver 30% to 50% production growth the next three to five years. Now if only commodity prices hold up. Analysts don't expect today's highs to last through 2004. But they don't figure they'll drop too much. Johnson & Rice has gas prices trending down to $4.75 next year and holding, from an estimated $5.19 this year. It estimates oil prices will drop from this year's projected $30.38 to $24.50 in 2004. |
