During 2003 Ultra produced 27.6 Mcf of natural gas and 212 thousand barrels of oil, or 28.9 Bcfe, a 66% increase over 2002 production. During the 4th quarter of 2003 Ultra produced 9.4 Bcf of gas and 64 thousand barrels of oil, or 9.7 Bcfe, a 59% increase over 4th quarter production in 2002 and the highest quarterly production in the history of the Company. Ultra's production replacement ratio was 1,291% for the year ended 2003.
On February 6th, 2004 the Board of Directors of Ultra Petroleum Corp. approved the 2004 capital budget of $190 million, with $160 million targeted for continued exploration and development in Wyoming, a 45% increase over 2003 Wyoming expenditures. The plan anticipates participating in approximately 80 gross wells in Wyoming and 3-5 exploration/appraisal wells in China, as well as continued development of the already discovered fields, of which the first two are anticipated to begin production in the 2nd half of 2004.
Based on the approved budget, Ultra expects annual production from Wyoming to reach 40 Bcfe for 2004, a 38% increase over 2003 levels. Guidance relating to Bohai Bay will be provided once the date of first production becomes more certain. Currently, Ultra has hedges in place covering approximately 17.5 Bcf of 2004 production at an average price of $4.25 per MMBTU, or approximately $4.50 per Mcf, basis Opal, Wyoming. Additionally Ultra has hedged approximately 12 Bcf of 2005 production at an average price of $4.23 per MMBTU ($4.49 per Mcf) and approximately 4 Bcf of 2006 production at an average price of $4.07 per MMBTU ($4.31 per Mcf), basis Opal, Wyoming.
"This year's extraordinary reserve and production growth reflects our continuing success in the delineation of the world-class Pinedale Anticline field. In fact, on average our 2003 wells came in approximately 25% better than Netherland, Sewell's pre-drill estimates. The 2003 program wells averaged over 10 Bcfe per well of reserves with some exceeding 20 Bcfe. Additionally, we believe the risk profile of our reserve base has been reduced. In accordance with Ultra's three year planning and budgeting cycle, proved undeveloped reserves include only economic locations that are direct 40-acre offsets to producing wells and are forecast to be drilled and on production during the next three years.
"Over 97% of our 2003 wells include completions in the Mesaverde, significantly enhancing the per well reserves and giving us confidence that this section will be a major contributor to overall well productivity. As we continue to add penetrations at Pinedale, our ability to accurately predict what we'll find has increased. Since acquiring the 3-D seismic, we've yet to drill a well at Pinedale that doesn't have commercial quantities of gas.
"Our 2004 budget allows us to pursue the most aggressive drilling program in Ultra's history while our hedge position and availability under our credit facility assures that we can conservatively fund this growth. With our 2004 Activity, we will continue to test the east, west and vertical boundaries of production at Pinedale as well as execute our pilot program to gather the data needed to assess the appropriateness of 20-acre, or tighter, spacing for the field.
"With over two Tcfe of net proved and probable reserves on 40 acre spacing as identified by Netherland, Sewell, we are positioned to easily deliver industry leading organic reserve and production growth over the next several years. And as we gather the necessary data from the 20 acre pilot programs at Pinedale over the course of this year, we'll have a much clearer picture of how large the reserves from the currently identified fairway may become," stated Michael D. Watford, Chairman, President and CEO.
Ultra Petroleum is an independent, exploration and production company focused on developing its long life natural gas reserves in the Green River Basin of Wyoming, and oil reserves in Bohai Bay, offshore China. Ultra is listed on the American Stock Exchange under the ticker "UPL" and on the Toronto Stock Exchange under the ticker "UP" with 74,711,168 shares outstanding.
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