KLR Group Downgrades Ultra Petroleum (UPL) to Sell; No Intrinsic Equity Value

KLR Group downgraded Ultra Petroleum (NYSE: UPL) from Buy to Sell with a price target of $0.00 (from $6.00), saying the company debt capitalization is no longer viable and implies no intrinsic equity value.

Analyst John Gerdes commented, "We are downgrading UPL from Buy to Sell and decreasing our target price $6 to $0 per share as the company’s debt capitalization is no longer viable. Our ’16 production expectation of ~280 Bcfe is at the high end of company guidance (265-280 Bcfe).

As of YE’15, the debt to TTM EBITDA covenant governing $2.459 billion of subsidiary debt (Ultra Resource, Inc.) was ~3.4x, which was just below the 3.5x threshold. As of the next covenant measurement date, March 31st, the company likely breaches the net debt to TTM EBITDA covenant and as of Ultra’s first quarter 10-Q filing date in May would be out of compliance with the current terms governing the subsidiary debt."

For an analyst ratings summary and ratings history on Ultra Petroleum click here. For more ratings news on Ultra Petroleum click here.

Shares of Ultra Petroleum closed at $0.39 yesterday.

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