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Driven by the strategy to position itself as the top gas producer in Wyoming’s Pinedale Field, Ultra Petroleum Corp. (NASDAQ: UPL) said Oct. 17 it closed the $75 million sale of its Utah asset and relocated its headquarters to the Denver area.
Ultra also launched a debt restructuring on Oct. 17 that the company projects will lower its leverage, push out maturities and reduce cash interest expense.
Since exiting bankruptcy in 2017, Ultra worked to streamline its portfolio in order to optimize the value of its assets in the Pinedale Field in Wyoming’s Green River Basin. As a result, the company has exited several positions and, in early October, relocated its headquarters from Houston to Englewood, Colo., a suburb of Denver.
Ultra now has 71 employees based in Colorado and 84 employees in Wyoming.
“With the completion of the Utah asset sale process and the consolidation of two offices into its long-time operational hub in Denver, Ultra is even more focused on its strategy to further reduce debt and optimize the value of its assets in Pinedale,” said Ultra Petroleum Interim CEO Brad Johnson in a statement.
Ultra completed the sale of its Utah asset to an undisclosed company with most of the proceeds used to pay down debt on its revolver. As of Sept. 30, the company had liquidity of about $338 million, according to the Ultra press release.
Ultra’s Utah asset consisted of 8,000 acres across the Three Rivers Field in northeast Uintah County within the Uinta Basin, where the company was the sole operator with 100% working interest.
The company had entered the Uinta Basin in late 2013 through its acquisition of the Three Rivers Field for roughly $650 million.
At the time of the acquisition, the field had 38 wells producing 4,000 barrels per day of oil from the Lower Green River Formation. In addition, the company had identified more than 100 million barrels of oil equivalent (boe) of total net resource from the properties.
During 2014, Ultra ramped up development in the field, bringing the well count up to 122 and growing production to 11,000 boe/d. However, by early 2015, the company began to slow its activity in the field due to falling oil prices.
As a result of the Utah sale, Ultra’s portfolio now consists only of its Pinedale Field asset in Sublette County, Wyo., where the company holds the largest acreage position with about 78,000 net acres, according to the company website.
In 2014, Ultra bought part of its Pinedale position from Royal Dutch Shell Plc (NYSE: RDS.A) for $925 million. As part of the deal, the company traded a portion of its Marcellus Shale properties to Shell.
The company’s strategy to focus on its Pinedale assets ultimately led Ultra to also exit its remaining 73,000-net-acre Marcellus Shale position in late 2017. An affiliate of Alta Resources LLC acquired the Marcellus assets in Centre and Clinton counties, Pa., for $115 million.
Ultra operates 90% of its Pinedale acreage position with an average working interest of 83.7%. The company owns an interest in more than 2,500 producing wells in the field, a vast majority of which is HBP, the company’s website said.
In 2018, Ultra began to ramp up the company’s horizontal program in the Pinedale Field to include 15 to 20 horizontal wells.
During the company’s second-quarter earnings call, Johnson said Ultra is in the beginning stages of developing the Pinedale Field with horizontal wells.
“Like other basins, such as Permian and Eagle Ford, with successful horizontal plays, the effort is no small task, and it requires a systematic and data-driven approach to successfully execute on this objective,” he said, according to a company transcript of the call.
Johnson added he believes Ultra is positioned to lead this effort but that it will take “time and patience” as the company optimizes its learnings.
On Oct. 17, Ultra reported the company’s production during the third quarter averaged 734 million cubic feet equivalent per day, which is above the mid-point of guidance.
“I am pleased with our team’s execution and production coming in above the mid-point of guidance,” Johnson said in the Oct. 17 release. “The combination of premier assets, a focused team, an improved capital structure after the exchange agreement, and stronger commodity prices are all contributing to a significantly improving outlook for the company.”
Emily Patsy can be reached at email@example.com.
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