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Ultra Petroleum Corp. Message Board

  • ahande ahande Mar 28, 2013 9:26 PM Flag

    Historical Storage Drawdown / Injection comparison

    The table below plugs in the projected storage draw / injection data from the Powerburn site into the data from the EIA site

    You can see that next week we will go below the 5-year average by 27 bcf. Two weeks later we should be below the 5-year average by almost 100. Next week's reading should be more or less at around 80 bcf. This can be projected with reasonable accuracy as we are now into the sixth day of the week and it has been a fairly cold week with temps below average by almost 15-20 degrees.

    Accuweather is predicting cold weather for the first week of April with temps below average by 10-15 degrees. So, the current projected drawdown of 35bcf may be off by at least 15-20 if the temperatures are indeed 10-15 degrees below normal.

    Now with Gas rigs down at 14 year lows , I doubt that we will see injections larger than last year after the second week of April even if we don't have the same amount of electricity production from Natural gas as last year. So, I don't anticipate Natural Gas sliding below 3.75 at the lowest in spring.

    Report 2012 5-Yr avg 5-Yr * 2013 2013
    Date DRAW storage Draw DRAW storage
    04-Jan-13 2,996
    11-Jan-13 -89 2,852
    18-Jan-13 -162 2,676
    25-Jan-13 -149 2,498 -178 -194 2,802
    01-Feb-13 -94 2,333 -163 -118 2,684
    08-Feb-13 -113 2,179 -154 -157 2,527
    15-Feb-13 -155 2,039 -140 -127 2,400
    22-Feb-13 -106 1,921 -118 -171 2,229
    01-Mar-13 -92 1,814 -107 -146 2,083
    08-Mar-13 -66 1,740 -74 -145 1,938
    15-Mar-13 0 1,714 -26 -62 1,876
    22-Mar-13 45 1,720 6 -95 1,781

    Projected for the next 4 weeks
    29-Mar-13 43 1,724 4 -84 1,697
    05-Apr-13 11 1,739 15 -35 1,662
    12-Apr-13 21 1,778 39 20 1,682
    19-Apr-13 43 1,828 50 56 1,738

    Sentiment: Strong Buy

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    • I think we are at a turning point. Last January's Dry production is less than same month of the previous year production, for first time in almost three years. Also, the annual production per day has decreased last two months in row. Total production is begining to decrease.

    • The only problems I see with your analysis,are:

      1. The 5 year average is a large number, due to recent warm winters, so being "below average" is relative.. There is no lack of supply.

      2. "Fewest number of rigs in 14 years". Do you know how many wells, (horizontal holes) can be drilled and tapped by 1 rig today, VS 1 rig 14 years ago? Was there fracking 14 years ago? It is a new game.

      I am asking, because I would like to know. Anybody with the answer please respond.

      Thanks in advance.

      • 3 Replies to sdsuaztec89
      • What do you care...

      • Sure, I can answer this for you. Yes, you are correct. The amount of rigs out there are plentiful and the supply is plentiful - HOWEVER here is the reality. For the vast majority of producers the price of NG needs to be a minimum of 4.5 to even 5 to make it profitable. That is a MINIMUM. Nobody in their right mind is going to start any new wells unless NG is well into the 5's. Some producers can make money with NG under 4, but the margins are slim and not really worth it. So yes you are correct- but the producers have been greatly scaling back their production because it just has not been worth their while to produce NG. So what we will see is a slow shifting of the market prices higher and the average will again satisfy both the producers and consumers. But below 4 is just too low.. It needs to be higher for everyones sake.. JMHO D

      • The answer to the reduced drilling rig count, that drilling rigs no longer matter is just a method of dismissing an obvious issue - natural gas producers have dramatically decreased drilling budgets in the last 12 months continuing into 2013.

        The UPL CEO discussed this issue in the Feb 2013 conference call saying that industry wide drilling budgets will not be restored until gas reaches $5 mmBTU.

        There is a simple issue with drilling budgets - the natural gas producers need $5 gas for full cost profitability (less for UPL as a low cost producer).

        Also, the depletion rates of shale wells is 30 - 50% annually so reduced drilling budgets will have an impact on supply as fewer new wells are drilled.

        I expect that the combination of reduced drilling budgets and depletion rates on existing wells to show a production decline for the US sometime in 2013 probably this summer.

        As natural gas prices rise, then the value of the UPL reserves increases and the entire UPL balance sheet is improved.

        What is the stock price of UPL at $4 - $5 - $6 mmBTU natural gas.?

        This is the investor opportunity now.

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