SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _________
Commission file number 0-29370
ULTRA PETROLEUM CORP.
(Exact name of registrant as specified in its charter)
Yukon Territory, Canada N/A
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
16801 Greenspoint Park Drive, Suite 370, Houston, Texas 77060
(Address of Principal Executive Offices) (Zip Code)
(281) 876-0120
(Registrant's Telephone Number,
Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
The number of common shares, without par value, of Ultra Petroleum Corp.,
outstanding as of November 7, 2001 was 73,306,918.
PART 1 -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
ULTRA PETROLEUM CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- --------------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenues
Natural gas sales $ 6,077,854 $ 3,473,469 $31,351,991 $ 8,071,940
Oil sales 859,181 448,394 2,380,021 858,466
----------- ----------- ----------- -----------
6,937,035 3,921,863 33,732,012 8,930,406
Expenses
Production expenses and taxes 1,722,796 844,921 6,797,124 2,131,137
Depletion and depreciation 1,690,540 704,835 5,044,785 1,733,179
General and administrative 1,266,476 379,832 3,379,297 1,777,443
Interest 471,052 200,643 1,138,992 517,123
----------- ----------- ----------- -----------
5,150,864 2,130,231 16,360,198 6,158,882
Operating income 1,786,171 1,791,632 17,371,814 2,771,524
Other income:
Interest 14,201 8,525 102,903 14,780
Other 45,719 -- 176,057 --
----------- ----------- ----------- -----------
59,920 8,525 278,960 14,780
Income for the period 1,846,091 1,800,157 17,650,774 2,786,304
Income per common share -- basic $ 0.03 $ 0.03 $ 0.25 $ 0.05
=========== =========== =========== ===========
Income per common share -- fully diluted $ 0.02 $ 0.03 $ 0.24 $ 0.05
=========== =========== =========== ===========
Weighted average common shares outstanding -- basic 73,223,070 56,843,446 72,059,299 56,782,123
=========== =========== =========== ===========
Weighted average common shares outstanding --
fully diluted 76,548,369 58,969,195 75,416,668 58,907,872
=========== =========== =========== ===========
2
ULTRA PETROLEUM CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Expressed in U.S. Dollars)
Nine Months Ended
September 30,
-------------------------
2001 2000
-------- --------
Cash provided by (used in):
Operating activities:
Income for the period $ 17,650,774 $ 2,786,304
Add (deduct)
Items not involving cash:
Depletion and depreciation 5,044,785 1,733,179
Stock compensation 848,447 --
Net changes in non-cash working capital:
Restricted cash (5,890) 392,585
Accounts receivable 1,588,392 (1,548,904)
Prepaid expenses and other current assets (285,562) (375,118)
Note receivable (683,137) --
Accounts payable and accrued liabilities 7,233,753 2,172,694
Deferred revenue (75,000) (75,000)
------------ ------------
31,315,562 5,085,740
Investing activities:
Oil and gas property expenditures (36,409,693) (12,760,525)
Purchase of capital assets (177,415) (197,326)
Proceeds from sale of oil and gas properties -- 359,764
Cash received from Pendaries Merger 312,365 --
------------ ------------
(36,274,743) (12,598,087)
Financing activities:
Long-term debt 4,404,060 8,050,800
Issuance of shares 574,014 172,032
------------ ------------
4,978,074 8,222,832
Increase in cash during the period 18,893 710,485
Cash and cash equivalents, beginning of period 1,143,591 401,691
------------ ------------
Cash and cash equivalents, end of period $ 1,162,484 $ 1,112,176
============ ============
Supplemental statements of cash flows
information
Supplemental schedule of non-cash investing
activities:
Acquisitions
Fair value of assets acquired $ 43,950,263 $ --
Less: liabilities assumed (4,225,978) --
Cash acquired 312,365 --
------------ ------------
Fair value of stock issued $ 40,036,650 $ --
============ ============
3
ULTRA PETROLEUM CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Expressed in U.S. Dollars)
September 30, December 31,
2001 2000
------------- ------------
Assets
Current assets
Cash and cash equivalents $ 1,162,484 $ 1,143,591
Restricted cash 206,016 200,126
Accounts receivable 6,690,146 8,278,538
Prepaid expenses and other current assets 1,126,454 839,892
Note receivable -- 2,530,976
------------ ------------
9,185,100 12,993,123
Oil and gas properties, net, using the full cost method
of Accounting 131,022,395 59,728,715
Capital assets, net 513,076 455,448
------------ ------------
Total assets $140,720,571 $ 73,177,286
============ ============
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued liabilities $ 16,606,823 $ 12,752,483
Long-term debt 28,934,672 24,530,612
Deferred revenue 125,000 200,000
Shareholders' equity
Share capital 92,547,774 50,838,663
Retained earnings 2,506,302 (15,144,472)
------------ ------------
95,054,076 35,694,191
------------ ------------
Total liabilities and shareholders' equity $140,720,571 $ 73,177,286
============ ============
ULTRA PETROLEUM CORP.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
(Expressed in U.S. Dollars)
Period Ended September 30, 2001 Period Ended September 30, 2000
------------------------------- -------------------------------
Number Amount Number Amount
---------- ---------- ---------- ----------
Shares Capital
Authorized
10,000,000 preferred shares
100,000,000 common shares
Issued
Common shares
Balance, beginning of year 56,939,762 $ 50,838,663 56,751,125 $ 50,666,631
Employee stock option plan 652,000 574,013 5,000 4,032
Stock Compensation 682,198 1,098,448 119,403 80,000
Acreage option purchase -- -- 64,234 88,000
Merger with Pendaries Petroleum Ltd. 14,994,958 40,036,650 -- --
---------- ------------ ---------- ------------
Balance, end of period 73,268,918 $ 92,547,774 56,939,762 $ 50,838,663
---------- ------------ ---------- ------------
Retained earnings (deficit)
Balance, beginning of year (15,144,472) (25,034,398)
Earnings for period 17,650,774 2,786,304
------------ ------------
Balance, end of period $ 2,506,302 $(22,248,094)
============ ============
4
ULTRA PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars unless otherwise noted)
Three months ended September 30, 2001 and 2000 and nine months ended
September 30, 2001 and 2000
1. INCORPORATION AND NATURE OF OPERATIONS:
Ultra Petroleum Corp. (the "Corporation") was originally incorporated under the
laws of British Columbia, Canada. At March 1, 2000 the Corporation was continued
under the laws of the Yukon Territory, Canada. Its principal business activity
is the exploration and development of oil and gas properties located in the
United States. The Corporation also owns interests in Petroleum Contracts
covering exploration blocks in China.
2. SIGNIFICANT ACCOUNTING POLICIES:
The financial statements are prepared using Canadian generally accepted
accounting principles ("Canadian GAAP"), which differ from U.S. generally
accepted accounting principles ("US GAAP"). We have described these differences
in Note 6.
The accompanying consolidated financial statements are unaudited, but reflect
all adjustments which are, in the opinion of management, necessary for a fair
presentation of the financial information for the interim period. We prepared
these statements on a basis consistent with our annual audited statements and
Regulation S-X. Regulation S-X allows us to omit some of the footnote and policy
disclosures required by generally accepted accounting principles and normally
included in annual reports on Form 10-K. These interim financial statements
should be read in conjunction with the financial statements, summary of
significant accounting policies and notes to our most recent annual report on
Form 20-F for the year ended December 31, 2000. Certain prior year amounts have
been reclassified to conform to the current year presentation. The results for
the interim period are not necessarily indicative of results to be expected for
the calendar year.
(a) Basis of presentation:
The consolidated financial statements include the accounts of the Corporation
and its wholly owned subsidiaries, Ultra Petroleum (USA) Inc., Ultra Resources,
Inc. and Pendaries Petroleum, Ltd. and its wholly owned subsidiary, Sino
American Energy Corporation (see item 4 below).
All material intercompany transactions and balances have been eliminated upon
consolidation.
(b) Accounting principles:
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in Canada.
(c) Revenue recognition and deferred revenue:
Revenues from oil and gas operations are recognized at the time the oil is sold
or natural gas is delivered. The cash received upon dedicating certain
production volumes to a gas pipeline is deferred and is being included in
natural gas sales on a straight line basis over the term of the five year
dedication.
(d) Restricted cash:
Restricted cash represents cash received by the Corporation from production sold
where the final division of ownership of the production is unknown or in
dispute. Wyoming law states that these funds must reside in a federally insured
bank in Wyoming.
(e) Capital assets:
Capital assets are recorded at cost and depreciated using the declining-balance
method based on a seven-year useful life.
(f) Oil and gas properties:
The Corporation follows the full cost method of accounting for oil and gas
operations whereby all costs associated with the exploration for and development
of oil and gas reserves are capitalized. Such costs include land acquisition
costs, geological and geophysical expenses, carrying charges on non-producing
properties, costs of drilling both productive and non-productive wells and
overhead charges directly related to acquisition, exploration and development
activities.
The capitalized cost, together with the costs of production equipment, are
depleted and depreciated on the units-of-production method based on the
estimated gross proved reserves as determined by independent petroleum
engineers. Oil and gas reserves and production are converted into equivalent
units at a 6:1 ratio based upon relative energy content.
Costs of acquiring and evaluating unproved properties are initially excluded
from the costs subject to depletion and depreciation. These unproved properties
are assessed periodically to ascertain whether impairment has occurred. When
proved reserves are assigned or the property is considered to be impaired, the
cost of the property or the amount of the impairment is added to the costs
subject to depletion and depreciation.
The total capitalized cost of oil and gas properties less accumulated depletion
and depreciation is limited to an amount equal to the estimated future net
revenue from proved reserves, using current prices, plus the cost (net of
impairment) of unproven properties, less estimated future site restoration
costs, general and administrative expenses, financing costs and income taxes.
5
Proceeds from the sale of oil and gas properties are applied against capitalized
costs, with no gain or loss recognized, unless such a sale would significantly
alter the rate of depletion.
Substantially all of the Corporation's exploration, development and production
activities are conducted jointly with others and, accordingly, these financial
statements reflect only the Corporation's proportionate interest in such
activities.
(g) Income taxes:
The Corporation follows the asset and liability method for accounting for income
taxes. Under the asset and liability method, the change in the net deferred tax
asset or liability is included in income. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which temporary differences are expected to be recovered or settled.
The Company recorded no tax provision in the three and nine months ended
September 30, 2001. The deferred tax asset will be recognized in the financial
statements when its realization is more likely than not.
(h) Foreign currency translation:
The Corporation has adopted the United States dollar as its reporting currency,
which is also its functional currency. The Corporation and its subsidiaries are
considered to be integrated operations and accounts in Canadian dollars are
translated using the temporal method. Under this method, monetary assets and
liabilities are translated at the rates of exchange in effect at the balance
sheet date; non-monetary assets at historical rates and revenue and expense
items at the average rates for the period other than depletion and depreciation
which are translated at the same rates of exchange as the related assets. The
net effect of the foreign currency translation is included in current
operations.
(i) Change in accounting policies
For 2001, the Corporation adopted the new Canadian Institute of Chartered
Accountants (CICA) accounting standards, Section 1751, "Interim Financial
Statements", and Section 3500, "Earnings per Share" ("EPS"). Section 3500
requires the use of treasury stock method to compute the dilutive effect of
stock options. The changes to EPS standard do not have a material impact on the
calculated earnings per share.
(i) Use of estimates:
Preparation of consolidated financial statements in accordance with generally
accepted accounting principles in Canada requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. OIL AND GAS PROPERTIES:
September 30, December 31,
2001 2000
------------- ------------
Developed Properties:
Acquisition, equipment, exploration drilling
and environmental costs $130,283,036 $54,362,982
Less accumulated depletion, depreciation and
Amortization (12,537,318) (7,047,605)
------------ -----------
117,745,718 47,315,377
Unproven Properties:
Acquisition and exploration costs 13,276,677 12,413,338
------------ -----------
$131,022,395 $59,728,715
============ ===========
During January 2001, the Corporation issued 14,995,000 common shares to acquire
Pendaries Petroleum. The purchase price for Pendaries was $40 million. This
transaction did not effect the Corporation's liquidity.
4. LONG-TERM DEBT:
September 30, December 31,
2001 2000
------------- ------------
Bank indebtedness $25,650,000 $17,650,000
Note payable, including accrued interest -- --
Short term obligations to be refinanced $ 3,284,672 6,880,612
----------- -----------
$28,934,672 $24,530,612
=========== ===========
Bank indebtedness:
On November 7, 1997, the Corporation entered into a credit facility (Initial
Facility) with Wells Fargo with an initial borrowing base of $2,650,000. The
borrowing base at December 31, 1999 was amended to $12,000,000 with a final
maturity date of April 1, 2000. The outstanding balance of the Initial Facility
bears interest at prime rate plus two percent and is secured by all of the
Corporation's oil and gas properties.
6
On March 22, 2000, the Corporation entered into a new senior revolving credit
facility (New Facility) with Bank One, Texas N.A. Proceeds from the New Facility
were used to pay off the outstanding balance of the Initial Facility at March
22, 2000 and to fund the Corporation's drilling programs. This facility provides
for a maximum line of credit of $40 million with an initial borrowing base of
$18 million. The borrowing base was increased on January 19, 2001 to $28 million
based on increased reserves. The outstanding balance on the line bears interest
at the bank's Prime Rate or LIBOR plus two and one half percent and is secured
by all of the Corporation's Wyoming oil and gas properties. Effective July 19,
2001 the revolving credit line was increased to $43 million. The New Facility
expires on March 1, 2003. The credit facility requires the Corporation to
maintain certain financial ratios. At September 30, 2001, the Corporation was in
compliance with the required ratios.
Short term obligations to be refinanced:
These costs relate to drilling obligations, which will be funded on a long term
basis through the use of the available borrowing base of bank indebtedness.
5. NOTE RECEIVABLE:
In conjunction with the arrangement pursuant to which the Corporation acquired
all of the issued and outstanding shares of Pendaries Petroleum Ltd (Pendaries),
the Corporation provided a U.S. $5.0 million line of credit to Pendaries'
subsidiary, Sino-American Energy Corporation (Sino-American). The line of credit
bears interest at the prime rate of Bank One Texas, N.A (9.3% at December 31,
2000). The credit facility was fully guaranteed by Pendaries and secured by all
of the stock of Sino-American. The outstanding balance at December 31, 2000 was
$2,530,976. On January 16, 2001, the Pendaries acquisition was closed and the
note was converted to an inter-company receivable.
6. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND
THE UNITED STATES:
The consolidated financial statements have been prepared in accordance with
Canadian GAAP. There were no material differences between Canadian GAAP and US
GAAP.
In July 2001, the Financial Accounting Standards Board approved for issuance
SFAS No. 143, "Accounting for Asset Retirement Allocations." SFAS No. 143
requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred and a corresponding
increase in the carrying amount of the related long-lived asset and is effective
for the fiscal years beginning after June 15, 2002. The Corporation is in the
process of determining the impact of this statement on the calendar 2001
financial statements.
ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2001 VS. THREE MONTHS ENDED SEPTEMBER 30, 2000
OPERATING REVENUES
Oil and gas revenues increased to $6,937,035 for the three months ended
September 30, 2001 from $3,921,863 for the same three months in 2000. This
increase was primarily attributable to an increase in the Corporation's
production. During this period the Corporation's production increased to 2.8 Bcf
of gas, and 29 thousand barrels of condensate, up from 1.2 Bcf of gas and 13
thousand barrels of condensate for the same three months in 2000. During the
three months ended September 30, 2001, the average product prices decreased to
$2.15 per Mcf and $29.38 per barrel, compared to $2.84 per Mcf and $33.41 per
barrel for the same three months in 2000.
PRODUCTION EXPENSES
During the three months ended September 30, 2001, production expenses and
production taxes increased to $1,722,796 from $844,921 in 2000. Direct lease
operating expenses increased to $364,902 in 2001 from $173,717 in 2000. On a
unit of production basis, direct operating expenses decreased to $0.12 per Mcfe
in 2001, as compared to $0.13 per Mcfe in 2000. Production taxes in 2001 were
$683,823, compared to $382,259 in 2000 or $0.23 per Mcfe in 2001, compared to
$0.29 per Mcfe in 2000. The increase in production taxes was attributable to
higher revenue for the period as production taxes are based on a percentage of
revenue from production. Gathering fees for the period increased in 2001 to
$674,071 from $288,845 in 2000. This increase was also attributable to higher
production volumes.
DEPLETION AND DEPRECIATION
Depletion and depreciation expense increased to $1,690,540 during the three
months ended September 30, 2001 from $704,835 for the same three months in 2000.
On a unit basis, DD&A increased to $0.56 per Mcfe, from $0.54 in 2000 primarily
as a result of increases in current and future costs applicable to the full cost
pool during the period.
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased to $1,266,476 during the three
months ended September 30, 2001 from $379,832 for the same three months in 2000.
The increase was primarily attributable to increase in personnel and overhead
expenses associated with the Pendaries merger that took place in January of
2001. Also, in August of 2001 there were 62,500 shares of stock compensation
granted that were valued at $299,375.00 US.
INTEREST
Interest expense for the three months increased to $471,052 in 2001 from
$200,643 in 2000. This increase was attributable to the increase in borrowings
under the senior credit facility.
7
NINE MONTHS ENDED SEPTEMBER 30, 2001 VS. NINE MONTHS ENDED SEPTEMBER 30, 2000
OPERATING REVENUES
Oil and gas revenues increased to $33,732,012 for the nine-month period ending
September 30, 2001 from $8,930,406 for the same period in 2000. This increase
was attributable to an increase in both the Corporation's production and the
increase in prices received for that production. During this period, the
Corporation's production increased to 8.2 Bcf of gas, and 86 thousand barrels of
condensate, up from 2.9 Bcf of gas and 28 thousand barrels of condensate for the
same period in 2000. During the nine-month period ending September 30, 2001, the
average product prices were $3.84 per Mcf and $27.56 per barrel, compared to
$2.80 per Mcf and $30.94 per barrel for the same period in 2000.
PRODUCTION EXPENSES
During the nine-month period ending September 30, 2001, production expenses and
production taxes increased to $6,797,124 from $2,131,137 in 2000. Direct lease
operating expenses increased to $972,125 in 2001 from $489,731 in 2000. On a
unit of production basis, direct lease operating expenses decreased 31% to $0.11
per Mcfe in 2001, from $0.16 per Mcfe in 2000. Production taxes for this period
in 2001 were $3,683,425, compared to $889,346 in 2000. Production taxes are
calculated based on a percentage of revenue from production. Higher production
and higher prices contributed to the increases. Gathering fees for the period
increased in 2001 to $2,141,574 from $752,060 in 2000, which was attributable to
higher production volumes.
DEPLETION AND DEPRECIATION
Depletion and depreciation expenses increased to $5,044,785 during the nine-
month period ending September 30, 2001 from $1,733,179 for the same period in
2000. On a unit basis, DD&A increased to $0.58 per Mcf, from $0.57 in 2000
primarily as a result of increases in proved reserves and costs realized to the
full cost pool during the period.
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased to $3,379,297 during the nine-
month period ending September 30, 2001 from $1,777,443 for the same period in
2000. The increase was attributable primarily to increase in personnel and
overhead expenses associated with the Pendaries merger that took place in
January of 2001, along with stock compensation booked in the third quarter as
described above.
INTEREST
Net interest expense for the period increased to $1,138,992 in 2001 from
$517,123 in 2000. This increase was attributable to both the increase in
borrowings under the senior credit facility and reduction in cash balances
earning interest.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's primary sources of cash during the first nine months of 2001
were cash flows from operations and borrowings under its credit facility.
Additionally, the Corporation realized cash from the issuance of its common
shares related to the exercise of options. During the first nine months of 2001,
cash provided by operating activities before changes in non-cash working capital
was $23,544,006, compared to $4,519,483 for the same period in 2000.
The Corporation has a $100 million revolving credit facility with BankOne, Texas
N.A., which allows the Corporation to borrow, repay and re-borrow amounts up to
a borrowing base. The borrowing base is currently $43 million. The borrowing
base is reset periodically by the lenders under the credit facility based on the
Corporation's proved reserves and other factors deemed relevant to the lenders,
at their discretion. The credit facility matures on March 1, 2003. Borrowings
under the credit facility currently bear interest at the BankOne's prime rate or
the London Inter-Bank Offered Rate plus 2.5%. During the first nine months of
2001, the weighted average interest rate on outstanding borrowings under the
credit facility was 7.5%. As of November 7, 2001, the Corporation had
$36,650,000 borrowed under the facility. The borrowing base is currently being
reviewed and the Corporation expects that it will increase.
During the first nine months of 2001, the Corporation's principal capital
expenditures were to develop its properties and to acquire Pendaries. During
this period, the Corporation spent $37 million to drill exploration and
development wells, $30 million of which was spent to drill 23 wells in the
United States and $7 million of which was spent to drill 13 wells in China.
During January 2001, the Corporation issued 14,995,000 common shares to acquire
Pendaries Petroleum. The purchase price for Pendaries was $40 million. This
transaction did not effect the Corporation's liquidity.
The Corporation believes that cash flows from operations and borrowings under
its credit facility will be sufficient to finance its anticipated 2001 capital
budget of $59 million. The Corporation may, however, seek to arrange for other
sources of capital depending on market conditions to assure sufficient capital
availability.
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISION OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This report contains "forward looking statements" within the meaning of the
federal securities laws. These forward-looking statements include the
Corporation's outlook for the remainder of 2001 with regard to plans for funding
operations and capital expenditures; however, future cash flows and continued
availability of financing are subject to a number of uncertainties beyond the
Corporation's control. There can be no assurances that adequate funding will be
available to execute the Corporation's planned future capital program.
These risks and uncertainties include, but are not limited to, fluctuations in
the price we receive for oil and gas production, reductions in the quantity of
oil and gas sold due to increased industry-wide demand and/or curtailments in
production from specific properties due to mechanical, marketing or other
problems, operating and capital expenditures that are either significantly
higher or lower than anticipated because the actual cost of identified projects
varied from original estimates and/or from the number of exploration and
development opportunities being greater or fewer than currently anticipated and
increased financing costs due to a significant increase in interest rates.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Corporation's revenues are derived from the sale of its crude oil and
natural gas production. The prices for oil and gas have decreased from the
prices prevailing on January 1, 2001; however, they remain extremely volatile
and sometimes experience large fluctuations as a result of relatively small
changes in supplies, weather conditions, economic conditions and government
actions. At this time the Corporation has not entered into any derivative
financial instruments or forward sales longer than to hedge oil and gas price
risks for the production volumes to which the hedge relates. However, the
Corporation may enter into hedges in the future that would reduce the
Corporation's exposure on the hedged volumes to decreases in commodity prices
and limit the benefit the Corporation
8
might otherwise receive from any increases in commodity prices on the hedged
volumes. There have been no significant changes in market risks faced by the
Corporation since the end of 2000.
PART 2 - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
None
ITEM 4. OTHER INFORMATION
Effective July 16, 2001, the Corporation effected a restructuring of its
subsidiaries. Under this restructuring, Pendaries Petroleum, Ltd., a wholly
owned subsidiary of the Corporation since the merger in January 2001, was
dissolved into Ultra Petroleum Corp. A new wholly owned subsidiary of the
Corporation, UP Energy Corporation, a Nevada Corporation was formed. Ultra
Petroleum (USA) Inc. was merged into Ultra Resources, Inc., therefore the final
restructuring resulted in Ultra Resources Inc. and Sino-American Energy
Corporation becoming wholly owned subsidiaries of UP Energy Corporation, itself
a wholly owned subsidiary of Ultra Petroleum Corp.
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
(a.) Exhibits
2. Plan of acquisition, reorganization, arrangement, liquidation or
succession*
3. Articles of Incorporation and By-Laws
3.1 Articles of Incorporation of Ultra Petroleum Corp. - (incorporated
by reference from Exhibit 3.1 of the Corporation's Quarterly Report
on Form 10-Q for the period ended June 30, 2001)
3.2 By-Laws of Ultra Petroleum Corp. - (incorporated by reference from
Exhibit 3.2 of the Corporation's Quarterly Report on Form 10-Q for
the period ended June 30, 2001)
4. Instruments defining the rights of security holders, including
indentures
4.1 Specimen common share certificate - (incorporated by reference from
Exhibit 4.1 of the Corporation's Quarterly Report on Form 10-Q for
the period ended June 30, 2001)
10. Material contracts
10.1 First Amendment to Credit Agreement dated July 19, 2001
10.2 Articles of Merger dated July 16, 2001
10.3 Plan of Merger and Reorganization dated July 16, 2001
11. Statement re computation of per share earnings*
15. Letter re unaudited interim financial information*
18. Letter re change in accounting principles*
19. Report furnished to security holders*
22. Published report regarding matters submitted to vote of security
holders*
23. Consents of experts and counsel*
24. Power of attorney*
99. Additional exhibits*
- ----------
*Inapplicable to this filing
(b) Reports on Form 8-K
None
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ULTRA PETROLEUM CORP.
Date November 7, 2001 By: /s/ Michael D. Watford
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Name: Michael D. Watford
Title: Chief Executive Officer
By: /s/ Kristen J. Miller
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Name: Kristen J. Miller
Title: Financial Reporting Manager
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