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Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp.

Ultra Petroleum Corp. · Dec 11, 2013 · 49 slides

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Slides

  1. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 1
    Ultra Petroleum Corp. Michael D. Watford Chairman, President and CEO CapitalOne Southcoast Energy Conference December 11, 2013 Ultra Petroleum Corp. is an independent exploration and production company focused on developing its…
  2. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 2
    A Unique Energy Company 2001 2011 2012 Focused on Profitable Growth Disciplined Capital Allocation Strategy Production growth: 1,911% Reduce capital investments in declining 1P Reserve growth: 1,019% price environment ROE: 36%…
  3. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 3
    Strong Reserve Base Wyoming Pennsylvania Total Lance Marcellus Reserves 9.6 Tcfe 7.4 Tcfe 17.0 Tcfe 2,900 future net 1,700 future net 4,600 future net wells wells wells 13,600MM 11,300MM 24,900MM future capital future capital…
  4. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 4
    Growing Resource Base 3P Reserves Year-End 2012 20 17.1 Tcfe 18 6/Mcf 5/Mcf 16.0 Tcfe Reserves PV-10 PV-10 16 Reserve Category (Bcfe) (MM) (MM) 14 4.68 5.84 Proved 3,202 6,900 5,520 12 10 Probable 8,022 6,763 4,373 8 2P 2P: (PV…
  5. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 5
    Large and Diversified Operations Pinedale + Jonah Net Acres: 49,000 Total Proved (Bcfe): 2,822 %PD: 54% %Gas: 96% 3Q Prod. (mmcfe/d): 450 3Q 2013 Reserve Life Index: 17 Reserve Life Index 33 % Operated: 77% Marcellus Uinta Basin…
  6. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 6
    Industrys Low-Cost Producer 14.00 2012 All-In Costs per Mcfe 12.00 10.00 Mean - 7.31/Mcfe 8.00 All-in Costs per Mcfe 6.00 Q32013 Costs Per Mcfe LOE 0.37 Production Tax 0.31 4.00 Gathering Fees 0.22 Transportation 0.36…
  7. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 7
    Improving Operating Efficiencies 70 Pinedale Field 60 Spud to TD 50 Reduced by 40 67% Spud to TD (Days) 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 Q12013 Q22013 Q32013 80 70 Pinedale Field RR-RR 60 Reduced by 71%…
  8. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 8
    Leads to Further Cost Reductions 8.0 Pinedale Field 7.0 Total Well Costs 6.0 Reduced by 29% 5.0 Total Well Cost 4.0 (MM) 3.0 2.0 1.0 - 2006 2007 2008 2009 2010 2011 2012 Q12013 Q22013 Q32013 Ultra Petroleum…
  9. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 9
    Pinedales Profitable Well Economics 160% 140% Robust Reinvestment Opportunities 120% Reserve Size (Bcfe) 100% 4.0 5.0 6.0 7.0 Well Cost (/MM) IRR 80% 4.7 22% 37% 56% 77% 60% 40% 4.4 26% 44% 65% 92% 20% 3.8 36% 59%…
  10. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 10
    Strong Marcellus Well Economics 120% 100% Profitable Reinvestment Opportunities Reserve Size (Bcfe) 80% 6.0 7.0 8.0 9.0 Well Cost (/MM) IRR 60% 8.0 19% 27% 36% 47% 40% 7.0 25% 36% 48% 63% 20% 6.0 36% 51% 68% 88% *…
  11. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 11
    Uinta Basin Acquisition Overview Acquiring Uinta Basin oil-producing asset in northeast Utah Current net production of 4,100 barrels oil (BO) per day from 40 producing wells Transaction Details 2P reserves of 90+MMBO Proved reserves…
  12. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 12
    Complementary, Strategic Asset Excellent well 100% IRR at strip oil price at current well costs economics Robust economics at stress price scenario Enhances current portfolio of returns Immediate increase in production and…
  13. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 13
    Geologically Similar to Pinedale Pinedale Three Rivers Type Section Type Section Pinedale Three Rivers Reservoir Top (MD): 10,500 4,900 Reservoir Base (MD): 13,300 7,000 Upper Green River Average Porosity: 6% 7% Average…
  14. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 14
    Uinta Basin Regional Comparison Three Rivers Altamont Monument Butte Natural Buttes Operator UPL BBG NFX QEP Target Interval Lower Green River Wasatch/L. Green River Green River Mesaverde/Wasatch Vertical Depth 7,000 13,000 5,000 10,000…
  15. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 15
    Profitable Well Economics Single Well Returns 380 MBO 345 MBO 160 MBO 100 MBO 80/bbl 380% 345% 85% 40% Oil Price Strip 600% 550% 130% 60% 100/bbl 610% 560% 140% 65% Acquisition Burdened Returns 80/bbl 60% 60% 50% 40% Strip…
  16. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 16
    Three RiversRapid Production Growth 5000 100 4,700 Bbls/d current production 4500 90 4000 80 3500 70 Producing Well Count 3000 60 Avg Gross Bo/d 2500 50 39 wells 2000 40 1500 30 1000 20 500 10 0 0 Ultra…
  17. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 17
    Prolific Well Data Average Daily Production Rate, Bopd 1st 1st 1st 1st 1st 1st EUR, 30 60 90 120 150 180 Well Days On Production MBO Days Days Days Days Days Days A 396 260 100 105 102 103 109 116 B 150 508 181 222 221 219 216 C…
  18. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 18
    Lower Green River Well Performance 70 Cumulative Production 60 380 MBO Type Curve 258 MBO Type Curve 50 Cumulative Oil Produced, MBO 40 160 MBO Type Curve 30 Payout at 23,000 Bbls 20 Recent 19 wells 10 First 12…
  19. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 19
    Decreasing Well Costs Three Rivers Drilling, Complete & Equip Cost Summary 5,000 4,500 4,000 3,500 3,000 (M) 2,500 Last 10 Avg = 1.49K 2,000 1,500 1,000 500 0 Last 10 34-31 18-41 36-11 16-43 16-42 32-35…
  20. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 20
    Self-Funding Development Operating Cash Flow vs. Capital Expenditure 250 200 150 MM 100 Operating Cash Flow Capital Expenditure 50 0 Ultra Petroleum Corp. NYSE: UPL Economics based on strip pricing 20
  21. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 21
    Compelling Resource Value Resource Evaluation (Strip Pricing) Net Future Reserves PV-10 Economic Capital Resource Category (MBO) (MM) Wells (MM) Proved Developed 9,900 265 43 12 40-acre Bookable Offsets (LGR/UGR) 27,500 470 130…
  22. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 22
    The Ultra Petroleum Story High Highly concentrated assets Large scale, domestic onshore, profitable operations quality assets Industry leading all-in and F&D costs Robust 4,600 future net drilling locations 24.9B future…
  23. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 23
    Appendix Ultra Petroleum Corp. NYSE: UPL 24
  24. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 24
    Long-Life, Low-Cost, Lance Tight Gas Pinedale Field 81,800 gross (47,600 net) 2,200 wells / 1.5 Bcfd Field OGIP = 58.7 Tcf Recoverable = 38.2 Tcf HBP Status: 100% Jonah Field 2,200 gross (1,400 net) 1,760 wells / 0.7 Bcfd…
  25. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 25
    Extensive Future Wyoming Development
  26. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 26
    Abundant Marcellus Shale Ultra-Interest Lands Potter-Tioga Area 170,000 net acres HBP Status: 70% 202 producing horizontal wells Year-end 2012 Clinton-Lycoming Area 90,000 net acres HBP Status: 85% 120 producing horizontal…
  27. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 27
    Consistent Marcellus Performance Wellsboro Area 74 wells Avg. IP = 7.3 MMcf/d Krause Area Krause 64 wells Wellsboro Avg. IP = 6.9 MMcf/d Marshlands Potter Texas Tioga Creek Sproul Area 17 wells Avg. IP = 4.8 MMcf/d…
  28. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 28
    Early Stages of Marcellus Development 3,340 future 204 producing 322 producing locations wells YE2011 wells YE2012
  29. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 29
    Geneseo Resource Upside Geneseo Tully Hamilton Geneseo Area Ultra has dominant position 900 Geneseo Horizontal Activity UPL Participation Wells 3rd Party Wells Net Risked Resource Potential = 3.3 Tcfe Upper Marcellus…
  30. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 30
    Restoring 2012 Reserves YE12 Proved Reserves YE12 Restored Proved Reserves Sensitivity 2.63/Mcf 4.04/Mcf 3.1 Tcfe 5.0 Tcfe Restore YE11 PUD capital & gas price 1.89 Tcfe PUD PUD 1.19 Tcfe 1.19 Tcfe PD PD 1.88 Tcfe…
  31. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 31
    Restoring 2012 Reserve Values YE12 Proved Reserves PV-10 YE12 Restored Proved Reserves PV-10 Sensitivity 2.63/Mcf 4.04/Mcf 2,263MM 5,250MM Restore YE11 PUD capital & gas price 2,986MM PUD PUD 288MM 288MM PD PD 1,976MM…
  32. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 32
    Economic Fundamentals 2012 Reserve Cash flow F&D Full Cycle Replacement Per Mcfe Cost Returns Ratio 2.78 0.83 Per Per 335% 332% Mcfe Mcfe Ultra Petroleum Corp. NYSE: UPL 33
  33. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 33
    Strong & Stable Margins Cash Flow Margin Net Income Margin 100% 50% Cash Flow Breakeven (/Mcfe) Net Income Breakeven (/Mcfe) 90% 45% 1.20 1.20 1.18 1.15 1.35 80% 40% 2.69 2.54 2.53 2.82 3.07 70% 35% 60% 30% 50% 25% 40% 20% 75%…
  34. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 34
    Disciplined Capital Allocation Historical Capital Investment Programs 1,540MM 835MM 2011 Realized Natural Gas 385MM Prices (/Mcf) 2012 2011: 5.05 2012: 4.01 2013 2013: 3.60-estimate Ultra Petroleum Corp. NYSE: UPL 35
  35. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 35
    Prudently Investing Within Cash Flow 350,000 300,000 Cash flow positive 250,000 Q312 200,000 150,000 100,000 50,000 0 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013E Capex (000's) Cash Flow (000's)…
  36. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 36
    Enhancing Financial Flexibility Total Debt Capacity 2.3B 2,400,000 2,200,000 September 30, 2013 2,000,000 1,800,000 Debt Balance 1,600,000 Debt/EBITDA Short-term 2.9X Net Debt 1,400,000 Liquidity 1,855MM 700MM…
  37. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 37
    Slowing Natural Gas Production Growth Lower 48 Pipeline Data 68 66 64 62 Bcf/Day 60 58 56 54 52 Source: Genscape Ultra Petroleum Corp. NYSE: UPL 38
  38. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 38
    Increasing Natural Gas Demand Potential Demand Risked 2013 - 2015 Structural Demand Increases Demand (Bcf/d) 50% (Bcf/d) Natural Gas Fired Power Generation 5.00 2.50 LNG Exports 2.60 1.30 Mexican Exports 3.93 1.97 Industrial Demand…
  39. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 39
    Shift in Basis Differentials Basis Differential as Percentage (%) of Henry Hub 2007 2008 2009 2010 2011 2012 2013 2014 NW Rockies 58 69 77 90 94 94 96 95 Dominion South 105 105 107 104 104 100 95 84 Ultra Petroleum Corp. NYSE:…
  40. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 40
    Outlook for 2013 2013 Capital Investment Program 385MM Target drilling program 136 gross (62 net) Wyoming wells 5 5 15 25 gross (13 net) Pennsylvania wells 105 Production goal 230 236 Bcfe 142 gross (65 net) Wyoming wells online…
  41. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 41
    Production and Financial Guidance 2013 estimated production 230 236 Bcfe Q4 2013 realized pricing Natural gas: 5 - 7% discount to NYMEX Condensate: 7.00 discount to NYMEX Q4 2013 expense guidance Assumes 3.62 per Mmbtu and 98.00…
  42. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 42
    Providing Certainty to Cash Flow Detailed Hedge Profile Total Total NYMEX Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2013 2014 Volume (Bcf) 33.4 35.9 12.1 81.4 - 34.6 35.0 11.8 81.3 /Mmbtu 3.51 3.54 3.54 3.53 - 3.83…
  43. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 43
    Marcellus Technical Review Updates High-grading acreage to optimize returns Utilizing seismic attributes to delineate resource sweet spots Sweet spot EURs 2.5 times better than non-sweet spot 944 sq-mi of UPL and partner 3D data (70%…
  44. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 44
    Production Lags Capital Spend Capital Budget vs. Production 450 90 400 80 Cap-Ex (MM) 350 70 Production (Bcfe) 300 60 250 50 Capex Production (MM) (Bcfe) 200 40 150 30 100 20 50 10 0 0 Ultra Petroleum Corp.…
  45. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 45
    Expanding Rockies Capacity 12.0 10.0 Excess takeaway capacity 4.8 Bcf/d 8.0 Average 6.0 Daily Volume (Bcf/D) 4.0 2.0 0.0 Source: Bentek Energy Actual Forecast Pipeline Capacity Ultra Petroleum Corp. NYSE:…
  46. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 46
    New Ventures Strategy Objectives: Identify best geologic provinces and plays in North America Develop detailed in-house familiarity with attractive plays Identify entry points to plays of interest Focus on strategic /…
  47. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 47
    Benefits of Using Natural Gas Domestic: Greater use of this clean, abundant, madein- America energy source will create U.S. jobs and boost local economies, while advancing our national security Abundant: 2,543 Tcf of natural gas…
  48. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 48
    Innovative Employees We value the multi-faceted skills and performance our talented employees have to offer We have a unique, entrepreneurial, value-driven business culture We operate in a highly decentralized work environment…
  49. Capital One Southcoast 8th Annual Energy Conference – Ultra Petroleum Corp. – slide 49
    Safety and Environmental We are committed to safe operations, and maintain high standards of ethical conduct by employees, contractors and service providers We pursue our work with integrity and respect for the environment where we…

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