Wells Fargo Downgrades Ultra Petroleum (UPL) to Market Perform, Expenses Are Beginning to be Expensive
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Price: $22.12 --0%
Rating Summary:
3 Buy, 12 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 9 | Down: 14 | New: 19
Rating Summary:
3 Buy, 12 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 9 | Down: 14 | New: 19
Trade UPL Now!
Wells Fargo downgraded shares of Ultra Petroleum (NYSE: UPL) to a Market Perform rating from its previous rating of Outperform and cut its valuation on range on the shares from $52-$56 to $38-$42.
The firm reports that non-operating status in Marcellus is weighing heavily on the company's earnings.
The company recently increased its 2011 capex guidance by 23 percent due to higher-than-expected non-operating expenses at Marcellus. Wells Fargo is forecasting that Anadarko Petroleum Corp. (NYSE: APC) and Rowan Companies Inc. (NYSE: RDC) acceleration in 2012 will be much slower than it was in 2011, which will place more pressure on UPL to increase its capex.
Wells Fargo is estimating that Ultra Petroleum will spend $420 million more than it has in cash in 2011 and $200 million more in 2012.
An analyst at Wells Fargo comments, "Ultra Petroleum has a core position in the highly prolific Pinedale/Jonah field and a large acreage position in the Marcellus. UPL has continually delivered industry leading metrics in per unit costs, ROE, and ROCE, but we believe these returns could be at risk as non-operated program grows. We believe that high gas exposure and capital outspend coupled with uncertainty from the non-operated Marcellus program will drive shares to perform in line with peers."
The firm is lowering its FY11 and FY12 EPS estimates from $2.70 and $3.37 to $2.69 and $3.17.
For more ratings news on Ultra Petroleum click here and for the rating history of Ultra Petroleum click here.
Shares of Ultra Petroleum closed at $37.42 yesterday, with a 52 week range of $36.58-$50.97.
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The firm reports that non-operating status in Marcellus is weighing heavily on the company's earnings.
The company recently increased its 2011 capex guidance by 23 percent due to higher-than-expected non-operating expenses at Marcellus. Wells Fargo is forecasting that Anadarko Petroleum Corp. (NYSE: APC) and Rowan Companies Inc. (NYSE: RDC) acceleration in 2012 will be much slower than it was in 2011, which will place more pressure on UPL to increase its capex.
Wells Fargo is estimating that Ultra Petroleum will spend $420 million more than it has in cash in 2011 and $200 million more in 2012.
An analyst at Wells Fargo comments, "Ultra Petroleum has a core position in the highly prolific Pinedale/Jonah field and a large acreage position in the Marcellus. UPL has continually delivered industry leading metrics in per unit costs, ROE, and ROCE, but we believe these returns could be at risk as non-operated program grows. We believe that high gas exposure and capital outspend coupled with uncertainty from the non-operated Marcellus program will drive shares to perform in line with peers."
The firm is lowering its FY11 and FY12 EPS estimates from $2.70 and $3.37 to $2.69 and $3.17.
For more ratings news on Ultra Petroleum click here and for the rating history of Ultra Petroleum click here.
Shares of Ultra Petroleum closed at $37.42 yesterday, with a 52 week range of $36.58-$50.97.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
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