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Ultra Petroleum Corp. Message Board

  • kollmnh kollmnh Feb 19, 2013 10:28 AM Flag

    Goldman rates UPL Nuetral.............

    Less attractive growth/returns, better upside elsewhere; Neutral
    What's changed
    UPL reported adjusted 4Q 2012 EPS/EBITDA of $0.51/$189 mn, in line with GS and consensus. 2013 capex guidance of $415 mn implies UPL aims to cut spending by 50% yoy. UPL resumed limited Pinedale Anticline drilling activity during 4Q after stopping in April. In the Marcellus Shale, UPL said partner Anadarko Petroleum will not run any rigs in 2013 and partner Shell will be down to one rig by March. UPL concluded its 140K acres in the DJ Basin were not commercial and does not plan to drill any more exploration wells. We revise 2013E-15E EPS to $1.75/$1.40/$1.40 from $0.74/$1.30/$1.21 on changes to volumes, production costs and DD&A.
    Implications
    We reiterate our Neutral rating for UPL. We believe UPL and its partners are being prudent by significantly reducing dry gas drilling activity until gas prices materially improve. Further success targeting the Geneseo zone in Appalachia could drive resource upside, though UPL indicated it would not be able to develop the zone independent from the Marcellus. While UPL is among the most levered to our view that natural gas prices will recover during 2013, we do not expect UPL to outperform due to more attractive combinations of lower-cost Marcellus assets, liquids exposure and exploration upside for other gassy peers under coverage. To become more positive we would need to expect gas prices to rise to a greater extent, see much better economics in the Pinedale or Shell’s Marcellus acreage or see UPL have greater success entering new resource plays.
    Valuation 23
    Investment Profile
    Low
    Growth
    Returns *
    Multiple
    Volatility
    High
    Growth
    Returns *
    Multiple
    Volatility
    100th
    20th Ultra Petroleum (UPL)
    40th
    60th
    80th
    Percentile
    Americas Energy Peer Group Average
    * Returns = Return on Capital
    Key data
    Price ($)
    12 month price target ($) Market cap ($ mn)
    Revenue ($ mn) New
    Revenue ($ mn) Old
    EPS ($) New
    EPS ($) Old P/E (X) EV/EBITDA (X) ROE (%)
    EPS ($)
    Price performance chart
    26 25 24
    For a complete description of the investment profile measures please refer to the disclosure section of this document.
    12/12
    1,113.9
    1,119.1
    1.83
    1.84 8.7 6.3 NM
    12/12
    0.51
    12/13E
    925.3
    940.7
    1.75
    0.74 9.2 6.7 NM
    3/13E
    0.26
    12/14E
    1,031.3
    1,152.8
    1.40
    1.30 11.4 6.1 NM
    6/13E
    0.44
    Current
    16.00
    18.00 2,446.9
    12/15E
    1,141.7
    1,186.7
    1.40
    1.21 11.4 5.7 504.8
    9/13E
    0.45
    1,750 1,700 1,650 1,600 1,550 1,500 1,450 1,400 1,350 1,300 1,250
    UPL trades at 7.0X/5.9X 2013/14 EV/EBITDA vs. 9.4X/7.4X for SMID-cap
    gassy peers. We lower our 12-month DCF- and multiples-based target to
    22 21 20 19
    $18 from $24 to reflect negative adjustments to our NAV – mostly a slower 18
    pace of drilling and less favorable type curve for UPL’s Marcellus assets.
    Key risks
    Gas prices, drilling results, well costs and government pronouncements.
    17 16

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    • I have made a ton in the market by frankly ignoring all the "expert" opinions. Not saying I am smarter- its just that had I listened to many of these firms including Goldman I wont no have done well at all. Most of them if not all are great manipulators and really not to be trusted. At the end of the day you have to use your own good judgement, and gut common sense. We all know that NG prices are terrible, we all know that UPL has debt, and we all know that the share price is correlated to the future of NG prices. So net net Goldman did not tell me a thing I didnt know. I listened to the CC and am very confident that this management team knows the story full well. Analysts are notorious for telling people to sell when its way too late and to buy when the share prices are very high. UPL at these levels is a great risk vs reward play for those who believe that NG prices will return to normal levels. If you think NG will stay well below 4 or 5 for a long time, then dont buy any pure NG producers. JMHO D

 
UPL
0.31220.0000(0.00%)Apr 29 4:02 PMEDT