Ultra Petroleum Announces Pinedale Acquisition
Ultra Petroleum Corp. (UPL) announced that the company has signed a purchase and sale agreement to acquire all Pinedale field properties from SWEPI, LP, an affiliate of Royal Dutch Shell, plc in exchange for a portion of Ultra's Marcellus Shale properties and cash consideration of $925 million. Ultra Petroleum expects to finance the acquisition through the issuance of new debt at the subsidiary and parent level. The transaction is expected to close in the third quarter with an effective date of April 1, 2014.
Opportunity highlights expected from the trade:
- Increases net proved reserves by 1.8 Tcfe
- Increases proved reserve value (PV-10) by $1.8 billion
- Shifts corporate percentage of natural gas production sold in higher priced western markets to 92 percent from 76 percent
- Expands company operated production to 82 percent from 62 percent
- Improves control of capital allocation to higher returning Pinedale assets
Ultra Petroleum is acquiring Shell's interest in the Pinedale field, which is currently producing approximately 189 million cubic feet equivalent (MMcfe) per day of natural gas and condensate. As a result of the transaction, Ultra Petroleum will operate approximately 1,577 gross wells, or about 68 percent of the Pinedale field.
In exchange, Shell will receive $925 million and approximately 155,000 net acres in the Marcellus Shale which is primarily located in Tioga and Potter counties. Shell will obtain approximately 100 MMcfe per day of natural gas production.
"This transaction is a strategic repositioning of our portfolio for improved returns, increased reserves, higher value markets, increased operatorship and increased control of capital allocation," stated Michael D. Watford, Chairman, President and Chief Executive Officer.
ultrapetroleum.com
