Ultra Petroleum Corp. (NYSE:UPL)

CAPS Rating: 3 out of 5

An independent oil and gas company engaged in the development, production, operation, exploration and acquisition of oil and natural gas properties.

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Member Avatar christophphersen (< 20) Submitted: 2/2/2015 6:22:38 AM : Outperform Start Price: $12.96 UPL Score: +10.74

It is undervalued. Morningstar fair value is $32 per share. They recently diversified into oil and then saw oil price drop by half. In hindsight an unfortunate timing, but they still make money on the deal. Cost of production is < $15 per barrel and they have some new production techniques that could cut that value significantly. Natural Gas is stil more than 90% of revenue. They are a low-cost producer.

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Member Avatar MKArch (99.75) Submitted: 1/15/2015 5:02:30 PM : Outperform Start Price: $13.95 UPL Score: +2.47

I screwed this one up. I originally green thumbed UPL at ~$18.5. I still think I would
have eventually done well at that price and normally I'd just ride out the downturn out,
however I decided UPL was so cheap recently I'd game CAPS and do the close out and re-
up, locking in a tiny accuracy loss in exchange for some potentially serious extra points. I
closed at ~$12.5 and forgot about it until this morning when I re-upped at ~$14.00. I
still expect to do well but not quite as well as I could have done.

Investment thesis: I'm a fan of "Reversion to the Mean" type investments and I see UPL
fitting that bill. Natural gas spot prices were trading near recent historical lows probably due
to a warm winter early on in addition over production that will eventually correct. A
plunge in oil is taking the whole energy sector down and unfairly adding to UPL's
downturn as they trade on different dynamics but Mr. Market doesn’t care.

I'm no expert on energy stocks in general or natural gas in particular, so I'm
not going to get into the weeds on the technical factors affecting UPL's value however I
know the last few years have been hard on the industry in general as new supply has
outpaced demand driving the average spot price down compared to the historical average over
the last decade or so. Just eyeballing a chart of nat gas prices it looks like it's
averaged ~$4/mmbtu over the last 5 years and closer to $6/ mmbtu in the five or so
years prior. From what I understand gas as a bi-product of the shale oil boom, so that could be part of the over supply issue. If the recent correction in oil prices holds, I assume this will help gas prices as less oil is drilled.

As noted above the correction in oil prices may help gas. In addition to this I have
seen discussion that new power plants powered by nat gas are due to start coming online
which will help demand. Suppliers can cut back production, and with Nat gas trading at
$3+ there's about 33% upside just getting back to recent historical average. Add to this
UPL is hedged at $4.00/ mmbtu for the next half year or so.

Currently UPL is trading at a ridiculously low forward P/E of just 3.7. While I don't
know enough about nat gas to start predicting short term earnings, I think looking at recent earnings levels and share prices can be instructive to ball parking valuation.
They've earned between $1.50 and $3.00 over the last few years fluctuating due to the
volatility of pricing I'm sure, although the hedges should help flatten out some of the volatility. Since this is a cyclical type stock I think taking the average at $2.25 and giving it an average multiple of 15X we get a fair value of ~$34/ share which is close to M*'s fair value. That’s a near triple from the current price.

I also understand there is some substantial volume growth coming and as I noted to start this discussion IMO there could be a reversion to the mean in nat gas pricing providing substantial upside to the spot pricing. volume growth and better pricing would warrant an even higher multiple. UPL traded up to $50/ share before the recent industry downturn. You can see how volume growth and better pricing could get them there and higher. I screwed up my very short term tactical re-up, however I believe it will be a blip on the long term appreciation of UPL. On the bright side I managed to add to my real life stake.

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Member Avatar rbitrage (76.36) Submitted: 1/5/2015 7:33:51 PM : Underperform Start Price: $12.51 UPL Score: -15.86

When you are the high-cost producer and price of your commodity halves, then you start having problems.

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Member Avatar ABigelow (60.85) Submitted: 1/1/2015 1:58:13 AM : Outperform Start Price: $13.08 UPL Score: +12.85

Getting in low in this gas price dive. Once the price of gas and natgas turn around all these depressed oil and gas companies will return to pre-plunge prices. Think you could be a winner with just about any gas company at this point so long as they are structured to weather the storm. UPL is a low cost producer and in great position to bounce right back.

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Member Avatar TMFInnovator (75.97) Submitted: 12/20/2014 6:53:53 PM : Outperform Start Price: $15.08 UPL Score: -1.90

In the energy industry, the moat goes to the low-cost producer.

UPL has very low production costs and still has plenty of undeveloped assets. Both should serve it well, once oil and natgas prices turn around.

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Member Avatar JCLscapXperiment (42.53) Submitted: 12/14/2014 7:15:03 PM : Underperform Start Price: $14.91 UPL Score: +3.14

Jan 17 Put $2.05, $10

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Member Avatar kannankeril (63.94) Submitted: 12/14/2014 2:00:36 PM : Outperform Start Price: $14.47 UPL Score: -0.13

Ultra Petroleum Corp. has been one of my favorite stocks in recent years. This company is one of the lowest-cost producers of natural gas and it price was rising until the oil prices crashed.

I have owned these shares for a while. The recent oil price dive has pulled the price of UPL along with it. But, the point that puzzles me is that UPL is mostly a natural gas company (90% gas, 10% oil) and natural gas prices are not falling. On the contrary, they have been rising.

So I am wondering why UPL stock has been down nearly 50% in value from a high of $31 to below $15 currently.

If you compare the price change relative to the price of a basket of oil & gas firms held in Vanguard Energy ETF. Logic would state that UPL's price would fall by a lesser margin that the average price of oil companies in general. In actuality, UPL has fallen about 40% while VDE has fallen by 20%.

The dip in prices for both started the same time as oil prices started their down trend, strongly suggesting that the cause for both are the same.

I am jumping in at this point and surfing the bear wave all the way to the bottom.

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Member Avatar Cabzx (57.84) Submitted: 8/17/2014 12:32:17 PM : Underperform Start Price: $24.59 UPL Score: +44.68

Negative equity, run away from this.

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Member Avatar FTownBryan (< 20) Submitted: 7/23/2014 12:45:35 PM : Outperform Start Price: $24.63 UPL Score: -43.91

Recent pullback a good buying opportunity. Continuned low rig counts in gas rich plays should temper supply growth. Growth through export markets and continued closures of coal fired demand should make gas the marginal fuel on many grids in the next 3-4 years. This secular trend will serve to amplify the coming cyclical rebound. This will be sustain a high market price for three-four years. Must be patient if the stock moves sideways for a couple years while it plays out.

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Member Avatar tequiejoe (31.44) Submitted: 6/25/2014 2:04:20 PM : Outperform Start Price: $29.35 UPL Score: -55.15

GOOD MEASURE ; BY FOOL !

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Member Avatar bob282 (< 20) Submitted: 6/12/2014 2:52:47 PM : Outperform Start Price: $28.58 UPL Score: -54.86

best metrics in the industry

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Member Avatar swowens2008 (28.70) Submitted: 5/22/2014 12:45:15 AM : Outperform Start Price: $27.29 UPL Score: -54.90

upgrade

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Member Avatar rmaiya (< 20) Submitted: 10/24/2013 7:03:52 AM : Outperform Start Price: $21.14 UPL Score: -54.62

Added few more position, right timing

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Member Avatar llturner103 (59.37) Submitted: 9/4/2013 2:05:48 PM : Outperform Start Price: $20.63 UPL Score: -52.75

Natural gas will boost stock long term. Will benefit from demand for domestic energy use.

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Member Avatar FullonTilt (< 20) Submitted: 8/6/2013 10:35:38 AM : Outperform Start Price: $22.31 UPL Score: -55.32

88% institiutional investors. Over the 2 days 8/2 - 8/5 traded ~ 14.3M shares (about 10% of Float) on a rising price. This is one of the few Nat Gas producers making money at $3.5 /TCF. If Gas holds stead or goes up this stock will take off.

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Member Avatar Googlespooch (< 20) Submitted: 6/14/2013 3:19:23 PM : Outperform Start Price: $20.96 UPL Score: -55.52

Moats and competitive advantages are hard to build; however, I would argue that Ultra Petroleum (UPL) has a decent advantage: the ability to drill for liquids at very low cost. In considering Ultra's ability to drill at some of the cheapest rates in the industry, it seems to be only a matter of time before they start turning around as the commodity pricing of liquids begins to increase again (which it will unless everyone actually believes that the recessionary global economic climate will last forever).

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Member Avatar Ulenspiegel101 (< 20) Submitted: 4/25/2013 8:48:33 AM : Outperform Start Price: $20.73 UPL Score: -58.93

Low cost producer. Will rise as nat gas consumption rises.

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Member Avatar EmmyKaye (55.42) Submitted: 4/24/2013 5:03:50 PM : Outperform Start Price: $20.73 UPL Score: -58.93

With the price of natural gas rising, UPL should see a significant increaswe to income and revenues.

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Member Avatar azinsd (< 20) Submitted: 3/30/2013 11:47:29 AM : Outperform Start Price: $20.06 UPL Score: -58.01

Already bouncing back - dry gas yes future need yes best in business yes

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