The natural gas glut that took place a few years ago hurt many producers, including Ultra Petroleum (UPL). However, with natural gas prices beginning to rise after a series of extra cold and snowy weather conditions in the Northeast, UPL stock is on the move.
And those gains could continue into 2014.
That’s because UPL is a focused natural gas driller. As of the end of 2012, UPL’s mix of production included about 96% dry natural gas. The key for Ultra is also that most of that production doesn’t come from hard-to-crack shale rock. The majority of its assets lie within Wyoming’s Pinedale gas fields. These more “traditional” vertical wells feature longer producing lives and much cheaper drilling costs to complete.
As more of a traditional natural gas play, UPL has managed to have some of the cheapest drilling costs out there and should benefit the most from rising natural gas prices.
While UPL has recently made moves to diversify its product mix to include more oil, the truth is it will still be a prime natural gas play. For investors, UPL stock is one of the best “pure-plays” for the next rise in natural gas.