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Ultra Petroleum Corp. Message Board

  • cmontx cmontx Nov 1, 2012 4:31 PM Flag

    UPL Unhedged for 2014

    I am with them. As of the end of the 3rd Q, Watford stated that they were unhedged into 2014, and gave his reasons why. I didn't buy this stock to cap my upside at 4.30 dry gas, and we have a CEO who sees it my way. Let's go to 6, then hedge. That would get us to 40 in my opinion. No need to donate assets to the utilities at 4 bucks.

    Sentiment: Buy

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    • georgespelvin Nov 7, 2012 10:04 PM Flag

      They have been smart about hedging. They also know all the predictable factors and events on the ground and the timing of the impact on price.

      Nat gas is their business. Not just part of their business.

      If you look at the commodity prices of capital intensive fuel commodities they swing insanely below the cost of production to many times the cost if production. Texaco was bought at $14 per barrel. Not too long ago.

      As nat gas prices double as they will the idiots that buy all stock will drive this stock up a great deal more than makes sense. The retail idiots and the professional idiots.

      This is not a stock to buy and hold. You trade it. The trade may be two years or more if you get in too soon if you are long.

      A stock to own (a company to own) is EPD. Buy it and put it away. It pays tax free dividends in the form of principal return which works your basis down to zero at which time if you sell you have a capital gain on the total sell price. Even if the share price and the dividend go nowhere you wind up paying long term capital gains on the dividend and get back your principal.

      But it is mid market and if nat gas price goes up it is because of demand which means that business is brisk and if nat gas price is low it presages well for the further adoption of nat gas.

      Sentiment: Strong Buy

    • Are they hedged for 2013? The earnings call transcript doesn't make it clear. The Wells Fargo analyst asks if they are still unhedged for 2013 and then asks why not lock in some hedges for 2014. Why did he not ask about hedging for 2013 then?

      David R. Tameron - Wells Fargo Securities, LLC, Research Division
      Okay. Let me -- Mike, let me jump over to some of the pricing commentary that you had. For 2013, you guys are still unhedged?

      Michael D. Watford - Chairman, Chief Executive Officer and President

      David R. Tameron - Wells Fargo Securities, LLC, Research Division
      If you got what you're looking for as far as the $4. And as you have been consistent about that and saying how much better the economics are, with the uplift, why not go ahead and lock in some hedges for '14 today and secure that CapEx budget?

      Michael D. Watford - Chairman, Chief Executive Officer and President
      Well, because I think the upside is greater. I think it's limited the downside -- upside. I don't think people are properly forecasting gas supply reductions.

      David R. Tameron - Wells Fargo Securities, LLC, Research Division
      All right. But no -- I guess, I'm looking at -- obviously, you're running the company, you're making decisions, but why double down at this point? You've got the gas price rebound you're looking for and why not take some that risk off the table?

      Michael D. Watford - Chairman, Chief Executive Officer and President
      Again, because the upside looks greater. I mean, we still have bottom, but we're nowhere near bouncing back up to where we need to be. There's just not going to be any significant investment in dry natural gas wells at $4 gas, not going happen. So I think we're probably in a 2-year window here before we get gas prices back at $5 plus to where you growth and investment I think you're going to continue to see industry-wide investment decrease in 2013 and '14.

      Sentiment: Strong Buy

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