Ultra Petroleum Corp. Proactively Enters into Amended Credit Facility to Remove Maintenance Covenants, Suspends Drilling Program, Substantially Increase Free Cash Flow Generation and Announces a Fall Borrowing Base Redetermination of $1.175 Billion and Commitment Amount to the Credit Facility of $200 Million
“The decision to suspend drilling demonstrates our commitment to financial discipline. In the current price environment, it is difficult to support investment in new well development in Pinedale. Fortunately, we have a significant production profile coupled with a low-cost structure that can generate strong cash margins. We believe that our proved developed producing reserves and the low base decline of Pinedale will generate substantial free cash flow for the foreseeable future and will provide the Company sufficient liquidity to implement the reduction in capital investment. In the near term we will direct our free cash flow to the repayment of the Credit Facility, building flexibility for the Company as we continue to focus on improvement of the overall capital structure,” said
The Fifth Amendment to the Credit Facility dated effective
- Elimination of all financial maintenance covenants;
- Established the fall borrowing base at
- Set the Credit Facility commitment at
$200 millionin this redetermination, stepping down to $120 millionin February 2020when the Credit Facility balance nears full repayment;
- Reduces the tenor of future hedging requirements;
- Establishes maximum capital expenditures of
$65 million, $10 millionand $5 million, for the quarters ended September 30, 2019, December 31, 2019, and quarterly thereafter, with the ability to carryforward unused amounts up to $5 millionin aggregate;
Further, the Fifth Amendment provides the ability for the Company to repurchase junior indebtedness, including borrowings under the Company’s Term Loan, Second Lien Notes and Unsecured Notes following the occurrence of certain events. These events and conditions include having no outstanding borrowings on the Credit Facility, the Company having established adequate cash reserves, satisfaction of a first lien incurrence test, each as set forth in the Fifth Amendment, and compliance with the Company’s other debt documents.
“The successful renegotiation of our Credit Facility is a significant and meaningful accomplishment for the Company and highlights the strength and durability of our assets and the commitment to our business plan. The elimination of the financial maintenance covenants in the Credit Facility coupled with our commitment to reduce capital expenditures, provides a prudent path forward that is designed to reduce debt in this commodity price environment. This is an important step in the ongoing efforts to strengthen the balance sheet as well as conserve valuable future inventory for a more constructive natural gas price market,” said
2019 Guidance Update
The Company will be suspending drilling activity by the end of September. Given the timing of this decision, there will be minimal impact to our 3rd quarter capital or production results. As a result, the Company is maintaining its previous guidance for the 3rd quarter.
The reduction of drilling and completion capital in the 4th quarter is estimated at approximately
Preliminary Outlook for 2020
Based on this updated plan, the Company is providing a preliminary outlook for 2020 assuming no additional drilling next year. Accordingly, production next year is expected to be from proved-developed producing wells, resulting in a full-year 2020 production estimate of 180 to 195 Bcfe.
Additional information on the Company is available at www.ultrapetroleum.com. In addition, our filings with the
This news release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statement, including any opinions, forecasts, projections or other statements, other than statements of historical fact, are or may be forward-looking statements. Although the Company believes the expectations reflected in any forward-looking statements herein are reasonable, we can give no assurance that such expectations will prove to have been correct and actual results may differ materially from those projected or reflected in such statements. There are numerous uncertainties inherent in estimating production, cash operating margins, proved reserves, including projecting future rates of production and timing of development, and costs. In addition, certain risks and uncertainties inherent in our business as well as risks and uncertainties related to our operational and financial results are set forth in our filings with the
For further information contact:
303-708-9740, ext. 9898
Source: Ultra Petroleum Corp.