With the Green River Basin of southwestern Wyoming providing the fuel, Ultra Petroleum Corp. Friday reported its largest three-month production numbers in history, with 1Q2007 output soaring 42% to a record 28.5 Bcfe from a year ago. Production on the Wyoming acreage alone increased more than 50%.
Domestic gas rose to 24.82 Bcf from 16.53 Bcf in 1Q2006. Total production, which includes some shallow wells in Bohai Bay, China, totaled 28.49 Bcfe, well ahead of the 20.1 Bcfe reported for the same period a year earlier. Additionally, Ultra increased its calendar 2008 natural gas hedges. It currently has 100,000 MMBtu/d hedged at $7.41/Mcf or $6.83/MMBtu. The sales point for the hedges is the Opal, WY, hub.
On Thursday, the Federal Energy Regulatory Commission (FERC) approved the westernmost end of the Rockies Express Pipeline (REX), which will move Ultra's and other producers' gas east from the Rockies beginning in 2008 (see Daily GPI, April 20).
"We continue to set company production records at the industry's lowest cost structure," said CEO Michael D. Watford. "Our attractive margins will only improve with construction of Rockies Express and the reduction of basis differentials already being priced into the forward market for natural gas. With Wyoming natural gas prices near $7.50/Mcf for 2008 and our 27-year drilling inventory, we are well positioned."
Industry experts earlier this month noted that the REX pipe could muscle in on supplies from other regions in the market. Earlier this month, Bentek Energy said that when REX-West goes into service in early 2008, it could put pipelines transporting natural gas from the Anadarko and Permian basins at a distinct disadvantage (see Daily GPI, April 12).
Ultra controls more than 148,000 gross (78,688 net) acres in and around the prolific 30-square-mile Jonah natural gas field and the 80-square-mile Pinedale Anticline area, where it is the largest leaseholder. Ultra estimates these two areas hold at least 34 Tcfe of gross recoverable reserves between them. Currently, Ultra has an inventory of more than 2,800 undrilled locations averaging more than 5.1 Bcfe recoverable on a mix of 10-, 20- and 40-acre spacing.
Ultra currently has several pilot projects at Pinedale that are evaluating the feasibility of increased density drilling (see Daily GPI, July 12, 2006). Ultra and other producers now operating in the Pinedale are pushing for expanded drilling, and a draft supplemental environmental impact statement is under review until June 18 (see related story).
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