Graham Gullans

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Ultra Petroleum Stock Pitch

• Graham Gullans
• 10.17.05

UPL
Wyoming Drilling Site
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EP Sector Outlook

• As we enter the 3Q05 earnings season, we
  reiterate our view that the EP sector represents
  an attractive investment for the long term.
  Strong industry fundamentals, along with
  attractive valuations especially after last
  weeks pullback provide an excellent outlook
  for EP stocks in our view.
• Raymond James Equity Research 10.10.05

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3 Month Growth
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UPL Quick Facts

• 1 Year Revenue Growth 122
• 258 million
• Market Cap 7.75B - mid cap
• P/E 34.12 PEG - 1.56
• 2004 EPS .97 - 2005 Projected EPS 1.47
• - 2006 Projected
  EPS 2.06

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Quick Facts cont

• Gross margin is 81
• Every 1 of revenue generates .81 cents of profit
• 56 for the industry 46 for SP
• 93 of production from 240 wells in Wyoming
• Ownership of 260 square miles of land.
• Bohai Bay, China to produce gt 1.7 million Bbls in
  2005

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Unhedged Natural Gas Success

• NG accounts for more than 80 of Ultras
  production and reserves.
• Price of NG up 100 in 6 months to 13.78
• NG is used in 55 of homes for heating
• Currently UPL is selling their unhedged gas for
  approximately 10-11/mcf.
• They have 45 hedged through the end of the year
  and starting in 2006 hedged gas drops to 25
  which will allow UPL to take advantage of the
  higher pricing we are currently seeing.

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Short Term Growth Potential

• Strong concern for colder than normal winter
• Tropical Storm Wilma
• 10/13 Analysts Buy Rating
• Lowest Debt in the industry. New drilling sites
  are financed by cash.

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A Big POP

• "Ultra has a working interest in 21 of Questars
  (STR) wells
• STR is in the process of 15-29 (deep well) test
  across Pinedale Anticline area
• Process is in its third week. Probably expect a
  6-8 week completion
• Brian Singer, Goldman Sachs said 12 pop for UPL
  and STR if 15-29 comes in big
• It isn't the percentage though that is important.
  This blair/rock springs formation is prevalent
  over the entire PDA. What would be excellent for
  STR would be immaculate for Ultra with all their
  acreage up there on the PDA.

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Industry Best Cost Structure
Mcfe Thousand cubic feet of NG
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Industry Lowest FD Costs
Mcfe Thousand cubic feet of NG
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Annual Production Growth
MMcfe Million cubic feet of NG
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Long Term Growth Potential

• UPL has gt 2,200 drillable sites left in Wyoming
• NG supplies in US are decreasing expected winter
  shortage.
• There is the impending downsizing of drill
  spacing (to 10 acres).
• There is the possibility of doubling reserves
  with deep drilling

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Cramer for what hes worth

• UPLs CEO Michael Waterford is the best in the
  industry
• UPL has the largest reserve potential
• 98 drilling success

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2 Highest-Rated Stock IBD
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5 Year Growth
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Questions?

• gullans_at_bc.edu