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1Q 2018 Earnings Presentation – Ultra Petroleum Corp.

Ultra Petroleum Corp. · May 10, 2018 · 29 slides

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Slides

  1. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 1
    1Q18 Earnings Conference Call May 10, 2018
  2. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 2
    Company Overview Market Snapshot NASDAQ Symbol UPL Market Capitalization, million (May 9) 483 Net Debt 03/31/18, million 2,157 Enterprise Value, million (May 9) 2,640 Production & Reserves 1Q18 Production, Bcfe 72.3 SEC Proved Developed…
  3. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 3
    Year to Date Highlights 1Q18 Production averaged 803 MMcfe/d: above midpoint of guidance Reduced operated rig fleet from 7 to 4: all rigs equipped for horizontal development Ramped up horizontal well activity with decreasing costs:…
  4. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 4
    1Q18 Results 1Q18 Results 1Q18 EBITDA Guidance Actual Actual Production, MMcfe/d 790 810 803 Revenue, incl. hedges, /Mcfe 3.10 Lease Operating Expense 0.32 0.35 0.30 Facility Lease Expense 0.08 0.08 0.09 EBITDA Cash Costs, /Mcfe…
  5. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 5
    Increased Hedges for 2018 Volumes Gas Volumes Hedged for 2018 As Of: Oil Volumes Hedged for 2018 As Of: Prices: /MMBtu Prices: /Bbl 225 2.00 200 Bcf MMBbls 1.75 175 1.50 150 1.25 125 1.00 100 0.75 75 50 Avg = 0.50 Avg = 2.89 0.25…
  6. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 6
    2018 Capital Plan and Guidance - Updated 2018 Plan Capital Program = 400 MM Capital Efficiency: Pinedale Operated (Vert + HZ) 360 Pinedale Non. Op. Verticals 30 Disciplined deployment of capital Corporate Other 10 Relentless…
  7. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 7
    2018 Capital Spending by Quarter MM Rig Count 160 16 Capital spend rate per rig is similar for verticals and horizontals: quarterly capex is proportionate to rig count 140 14 131.5 120 12 100 10 80-100 million per quarter with 4…
  8. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 8
    Improved Vertical Well Performance 900 800 Cumulative Production (MMCF) 4 Bcfe type curve 700 600 1Q18: Avg IP = 7.7 MMcfe/d 500 400 1Q17: Avg IP = 6.1 MMcfe/d 300 2Q17: Avg IP = 7.4 MMcfe/d 200 3Q17: Avg IP = 6.8…
  9. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 9
    Transition to Horizontal Program Ramp Up in HZ Wells Per Year Currently running 3 HZ rigs 36+ 40 25-30 30 2nd HZ Well Drilled: 4th HZ Well Drilled: 2-mile lateral on east flank 2-mile lateral on east flank 20 Lower Lance A Lower…
  10. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 10
    Lower Lance Horizontal Well Costs Through April 2018 Budget Case: 9.0 MM/well YE18 Target Case: 7.5 MM/well MM/well MM/1,000 lateral 12 1.50 10 1.25 10.0 9.0 8 8.3 8.4 1.00 7.5 6 0.75 5.8 4 0.50 2 0.25 0 0.00 BR 10-33 WB…
  11. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 11
    Lower Lance Horizontal Well Summary 2-mile laterals in Lower Lance WB 9-23 WB 9-23 WB 8-25 WB 9-23 A-1H A-2H A-1H A-3H Lateral Length 10,400 11,000 9,900 10,900 Lateral Net to Gross 78% 82% 54% 47% Lateral Net Sand 8,112 9,020 5,346…
  12. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 12
    Horizontal Well Economics Horizontal wells can deliver compelling returns at prices materially lower than current strip Laterals with lower net pay counts require less completion stages and result in lower costs Smaller wells with…
  13. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 13
    HZ Production Performance vs. Budget 9 Cumulative Production, Bcfe 8 Lower Lance A 7 3-Well Average (1) 6 5 4 3 2 1 Vertical: 4 Bcfe 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Months Ultra Petroleum Corp.…
  14. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 14
    2Q18 & Full-Year Guidance Update Expenses & Cash Costs, /Mcfe EBITDA Guidance 2Q18(1) FY18 FY18 Lease Operating Expense 0.30 0.34 0.28 0.31 Revenue, incl. hedges(5), /Mcfe 2.80 Facility Lease Expense 0.08 0.09 0.07 0.09 Production…
  15. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 15
    1Q18 Earnings Conference Call May 10, 2018
  16. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 16
    Appendix 17
  17. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 17
    Hedge Positions: NYMEX Gas MMBtu/d Period Type /MMBtu 770,000 Apr18 to Oct18 NYMEX Swaps 2.88 760,000 Nov18 to Dec18 NYMEX Swaps 2.91 820,000 Jan19 to Mar19 NYMEX Swaps 2.94 220,000 Apr19 to Dec19 NYMEX Swaps 2.79 MMBtu /d…
  18. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 18
    Hedge Positions: NYMEX Oil Bbls/d Period Type /Bbl 6,467 Apr18 to Jun18 NYMEX Swaps 60.59 6,500 Jul18 to Dec18 NYMEX Swaps 60.53 6,000 Jan19 to Mar19 NYMEX Swaps 58.46 6,000 Apr19 to Jun19 NYMEX Swaps 59.16 4,000 Jul19 to Sep19…
  19. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 19
    Hedge Positions: ROX Basis Differentials MMBtu/d Period Type /MMBtu 260,000 Apr18 ROX basis swaps (financial) (0.671) 400,000 May18 to Oct18 ROX basis swaps (financial) (0.708) 170,000 Apr18 to Oct18 ROX basis swaps (physical)…
  20. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 20
    2018 Development Program 2017 Activity Summary: Drilling on east flank IPs lower than average 3 horizontals drilled 2018 Program: Disciplined capital approach Grow within cash flow Reduce operated rigs from 7 to 4 Vertical…
  21. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 21
    Horizontal Flank Upside 2018 HZ activity focused on east flank of Pinedale 1600 HZ flank locations (700 net): 280 net wells with WI 75% 235 net wells with WI 50-75% 185 net wells with WI < 50% 25-30 high WI HZ wells in 2018…
  22. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 22
    Significant Stacked Pay Horizontal Potential 50 pads x 8 targets/pad x 4 locations/target = 1,600 potential locations (700 net) Upper Lance Lower Lance Mesaverde Ultra Petroleum Corp. NASDAQ: UPL 23
  23. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 23
    New UPL Strategic Focus and Unique Strengths Disciplined approach Operating Accelerate horizontal program and Financial Fundamentals Capital efficient growth Free cash flow generation Balance sheet flexibility Capital…
  24. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 24
    Natural Gas Export Capacity Export Capacity for Pinedale Production AECO Kingsgate Large take-away capacity to multiple destinations 2 to 3 Bcf/d of excess capacity Stanfield Pipeline Capacity Serving the Opal Complex (MMcf/d)…
  25. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 25
    Flexible Balance Sheet Millions 1,200 Capital Structure, millions Term Loan due 2024 (LIBOR+3%) 975 Undrawn revolver 1,000 6.875% Unsecured Bonds due 2022 700 7.125% Unsecured Bonds due 2025 500 800 425 million Credit Facility…
  26. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 26
    Horizontal Program Potential Horizontal Well Assumptions Resulting Economics(1) EUR = 20 Bcfe (2.0 Bcfe / 1000) IRR 100% IP (24-hr) = 30.4 MMcfd / 32.2 MMcfed NPV10 = 14.3MM IP (30-day) = 25 MMcfd/ 26.7 MMcfed Discounted Payout = 12…
  27. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 27
    UPL Horizontal Well Data Well First Lateral Interval Well Design and Cost Performance Name Production Length 100% drilled in zone; possible completion issue in toe Boulder Lower Aug 22, 2016 5,200 Total DC&E Costs = 5.8 MM Set…
  28. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 28
    Horizontal Well Data (Other Operators) Well First Lateral Operator Interval Well Design Performance Name Production Length Low IP: 3 MMcf/d Low decline rate Antelope Jonah Energy Jan 30, 2014 Lower Lance A 3,800 15 frac stages Long…
  29. 1Q 2018 Earnings Presentation – Ultra Petroleum Corp. – slide 29
    Pinedale Vertical Well Economics Parameter Value IRR Sensitivity: DC&E Costs & EUR EUR, Bcfe 4.0 DC&E Capital / Well IP30, MMcf/d 3.8 2.6MM 2.9MM Average Condensate Yield, Bbls/MMcf 11 3.0 19% 14% Decline Curve Parameters B-factor…

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