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Gold/Mining/Energy : Ultra Petroleum (UPL)
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To: Gerald Atwater who wrote (4043)4/8/1999 1:55:00 PM
From: Darwyn Petras  Read Replies (1) of 4851
 
Gerry

There are several of us "nuts" who believe in the story. No question there is a lot of gas under the ground. One of several questions I have is can they get it out in sufficient volumes and maintain the flow rates to recover the drilling investment. This play seems to be encountering these technical difficulties and it is hard getting a picture of the progress in this area. I like what I see with Mr. Watford coming on board. There are a couple of issues that are critical for UP to resolve before we can significantly move forward.

1) A US listing ( preferably NASDAQ ) is a must for US institutional investors to even get into the game. I think they would ultimately love to participate in a solid gas play with strong growth prospects.

2) A US listing is difficult with the price of the stock where it is. Nasdaq requires a minimum $ 1.00 to retain its listing.A reverse split is unlikely event in the near future.

3)Raising capital through a share offering given current price and o\s issue creates further share dilution which is not the direction most of us would want to see go.

4)Lines of credit based on cashflow.Not a lot of room here either, at 2-3 million with fracs per well we need some big wells to come in.

5) Sell a piece of the play. Makes sense given the acreage holdings.

6) J\V with a major. Most likely option with Mr. Watford's comnnections and background. Probably the only way to get the job done.

It would really be a shame to get taken out by someone at these levels and a bargain for anyone looking at an acquisition for the land holdings alone.

Darwyn
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