Anticline – and one of Wyoming’s most
prolific natural gas producers – Ultra Petroleum
Corp., filed for a joint Chapter 11
bankruptcy on May 14 in a Texas court following
months of financial instability.
As a top taxpayer in Wyoming, the
firm’s insolvency could place the energydependent
state’s traditional revenue
streams in further jeopardy.
However, “all of our taxes were paid
early in advance of filing,” Ultra’s Kelly
Bott said in an email Friday.
“Ultra paid in excess of $50 million to
our county,” Sublette County Treasurer
Emily Paravicini said Monday of Ultra’s
2019 tax bill. “All our taxes were paid in
full and on time.”
The company hopes to erase debts of
$1.97 billion and another $500 million in
liabilities and emerge with little debt. Its
subsidiaries Ultra Resources, Keystone
Gas Gathering, Ultra Wyoming, Ultra
Wyoming LGS, UPL Pinedale, UP Energy
Corp. and UPL Three Rivers Holding are
jointly named in the filing.
In 2016, some shareholders opted for
diluted stock that on May 18 is worth 1.1
This time around, most shareholders
will receive no recovery if Texas Judge
Marv Isgur accepts its leaner recovery
Ultra proposes its unsecured noteholders
will receive “a pro-rata share of $250,000”
if their claim group accepts the new plan.
They receive nothing if they don’t accept
this plan as laid out by Ultra.
Also, Ultra proposes its unsecured
noteholders receive “a pro-rata share of
$250,000” if their group votes to accept the
new plan. Further, they receive nothing if
they don’t accept this plan as laid out by
Ultra Petroleum issued statements on its
website about its current restructuring period
for the media, investors and vendors.
Ultra’s position is that managers “believe
they have sufficient liquidity to support
the business through the restructuring
process. We intend to continue working
closely with our suppliers and paying for
goods and services under normal terms and
conditions on or after the filing date.”
During the Chapter 11 bankruptcy process,
vendors will be paid for goods and
services provided during that period, it
In February, Ultra Resources announced
a credit agreement that its “borrowing base
will be reduced to $1.075 billion,” with
$100-million payment paid and $120 million
due Feb. 29 and again April 1.
On April 14, Ultra reported its 2019
fourth-quarter and full-year results included
“cash flow from operating activities
of $19.8 million and generated positive
free-cash flow of $56.4 million.”
On May 14, the company reported: “The
Company has secured a commitment for financing
of up to $25 million from certain
holders of the company’s first lien term
loan, which combined with cash on hand
and its normal operating cash flow, is expected
to allow Ultra to maintain normal
operations and meet ongoing financial
commitments throughout the Chapter 11
restructuring period. Additionally, all of the
company’s existing lenders under its first
lien RBL credit facility have executed commitment
letters to provide exit financing in
the form of a revolving credit facility with
an initial borrowing base of $100 million
and total commitments of $60 million.”
“We continue to execute on our plan of
focusing on free-cash flow generation and
reducing our debt levels,” Ultra CEO Brad
Johnson said that day.
“After careful consideration, we took
this action to create a sustainable capital
structure and make us a stronger business
partner going forward. The entire petroleum
industry has been affected by the
severe and protracted downturn in oil and
natural gas prices, and general uncertainty
in the market, and Ultra is no exception.”
Ultra pulled its drilling rigs from the
Pinedale Anticline last September, as did
others there, after natural gas prices continued
to bottom out. The last time Ultra
entered the bankruptcy court in early 2016,
prices were also at all-time lows.
Legal issues arising from that process
remain unresolved including Make Whole
litigation with a May 19 hearing in the
Texas bankruptcy court.
For more about Ultra Petroleum’s proposed
reorganization, go to https://www.
Ultra Petroleum arrived early in Wyoming’s
natural gas boom and began production
in November 1997, according to
Supervisor Mark Watson of the Wyoming
Oil and Gas Conservation Commission.
Among the hundreds of energy companies
with operations in Wyoming, Ultra Petroleum
made the largest tax contribution to
the state last year.
“But Ultra stopped drilling last September,
so they’re just basically living on the
production they have,” Watson explained.
“And that production is dropping. I’m sure
they won’t be the biggest energy producer
as far as tax base for the state this year.”
For months, natural gas prices have been
brutally low for producers and competition
tight amidst a glutted market, especially for
producers in Wyoming.
Henry Hub natural gas spot prices, a
U.S. benchmark for the commodity, have
hovered between $1.50 and $2.50 per million
British thermal units for months on
end. The pandemic has exacerbated already
tough market conditions for natural
gas, with Henry Hub at $1.59 per million
British thermal units on May 14. Opal Hub
hovered below 1.50 on Monday, May 18.
Natural gas production in Wyoming
has declined by 37 percent in one decade,
between 2009 and 2019, according to the
U.S. Energy Information Administration.
The agency forecasts natural gas production
falling 5 percent this year.
For Wyoming, future economic conditions
are far from certain. Several revenue
scenarios published by the Legislative
Service Office in April estimated a loss of
$40.8 million in revenue this fiscal year, if
natural gas production declines by 6 percent
and prices hover around $2.10 per million
British thermal units.
Meanwhile, Sublette County’s and Wyoming’s
other leading natural gas producer
Jonah Energy has weathered the tough market
conditions. The company made layoffs
early and production continues since the
pandemic struck Wyoming, according to
Jonah Energy’s Paul Ulrich.
“We’re still fully producing in the Jonah
field,” Ulrich said. “We obviously laid
down our last two rigs in March; however,
we’re also pleased to report that we’re
looking at bringing back a rig in July and
that is very promising for us.”
But he cautioned that without some
meaningful relief from the state, the energy
sector could be looking at a complete “economic
“The foundation of our entire economy
in Wyoming is natural resources – oil, gas
and coal – and we have an obligation as a
state for an ‘all hands approach,’” he added.