Ultra increases 2003 production by 66 per cent
2004-02-09 16:43 ET - News Release
Mr. David Russell reports
ULTRA PETROLEUM PROVED RESERVES INCREASE 53% TO 1.073 TCFE AND 2003 PRODUCTION INCREASES 66%
Ultra Petroleum's year-end 2003 proved reserves from its Wyoming properties were 1.073 trillion cubic feet equivalent, a 53-per-cent increase over year-end 2002 reserves of 700.5 billion cubic feet equivalent. Year-end 2003 proved reserves include 1.02 trillion cubic feet of natural gas and 8.34 million barrels of oil. Proved plus probable reserves at year-end 2003 totalled 2.1 trillion cubic feet. Estimated future net revenue from proved reserves discounted at 10 per cent (SEC PV-10) was $1.8-billion, based on year-end Opal, Wyo., price of $5.575 per million British thermal units, or $5.59 per wellhead million cubic feet. The reserve report was prepared by Netherland, Sewell & Associates, Ultra's third party independent reserve consultants.
During 2003, Ultra produced 27.6 million cubic feet of natural gas and 212,000 barrels of oil, or 28.9 billion cubic feet equivalent, a 66-per-cent increase over 2002 production. During the fourth quarter of 2003 Ultra produced 9.4 billion cubic feet of gas and 64,000 barrels of oil, or 9.7 billion cubic feet equivalent, a 59-per-cent increase over fourth quarter production in 2002 and the highest quarterly production in the history of the company. Ultra's production replacement ratio was 1,291 per cent for the year ended 2003.
On Feb. 6, 2004, the board of directors of Ultra Petroleum approved the 2004 capital budget of $190-million, with $160-million targeted for continued exploration and development in Wyoming, a 45-per-cent increase over 2003 Wyoming expenditures. The plan anticipates participating in approximately 80 gross wells in Wyoming and three to five exploration/appraisal wells in China, as well as continued development of the already discovered fields, of which the first two are anticipated to begin production in the second half of 2004.
Based on the approved budget, Ultra expects annual production from Wyoming to reach 40 billion cubic feet equivalent for 2004, a 38-per-cent increase over 2003 levels. Guidance relating to Bohai Bay will be provided once the date of first production becomes more certain. Currently, Ultra has hedges in place covering approximately 17.5 billion cubic feet of 2004 production at an average price of $4.25 per million British thermal units, or approximately $4.50 per million cubic feet, basis Opal, Wyo. Additionally Ultra has hedged approximately 12 billion cubic feet of 2005 production at an average price of $4.23 per million British thermal units ($4.49 per million cubic feet) and approximately four billion cubic feet of 2006 production at an average price of $4.07 per million British thermal units ($4.31 per million cubic feet), basis Opal, Wyo. Additional details on Ultra's year-end reserves and hedges is available on Ultra's Web site, www.ultrapetroleum.com.
"This year's extraordinary reserve and production growth reflect our continuing success in the delineation of the world-class Pinedale anticline field. In fact, on average our 2003 wells came in approximately 25 per cent better than Netherland, Sewell's predrill estimates. The 2003 program wells averaged over 10 billion cubic feet equivalent per well of reserves with some exceeding 20 billion cubic feet equivalent. Additionally, we believe the risk profile of our reserve base has been reduced. In accordance with Ultra's three-year planning and budgeting cycle, proved undeveloped reserves include only economic locations that are direct 40-acre offsets to producing wells and are forecast to be drilled and on production during the next three years.
"Over 97 per cent of our 2003 wells include completions in the Mesaverde, significantly enhancing the per-well reserves and giving us confidence that this section will be a major contributor to overall well productivity. As we continue to add penetrations at Pinedale, our ability to accurately predict what we'll find has increased. Since acquiring the 3-D seismic, we've yet to drill a well at Pinedale that doesn't have commercial quantities of gas.
"Our 2004 budget allows us to pursue the most aggressive drilling program in Ultra's history while our hedge position and availability under our credit facility assures that we can conservatively fund this growth. With our 2004 activity, we will continue to test the east, west and vertical boundaries of production at Pinedale as well as execute our pilot program to gather the data needed to assess the appropriateness of 20-acre, or tighter, spacing for the field.
"With over two trillion cubic feet equivalent of net proved and probable reserves on 40-acre spacing as identified by Netherland, Sewell, we are positioned to easily deliver industry-leading organic reserve and production growth over the next several years. And as we gather the necessary data from the 20-acre pilot programs at Pinedale over the course of this year, we'll have a much clearer picture of how large the reserves from the currently identified fairway may become," stated Michael D. Watford, chairman, president and chief executive officer.
WARNING: The company relies upon litigation protection for "forward-looking" statements. |
