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Tuesday, October 14,
2008
(Cont'd from
above)...
A great
wildcatter... one of
the lowest-cost
producers of natural
gas in the country.
It cost this company
just 2.51 per
million cubic feet,
compared to 5.44 per
million cubic feet
for its peers... Why
does that matter?...
Because this stuff
is about 6.7 right
now, so you just
have to do the math,
okay...
Ultra Petroleum (UPL) has come down
from $102 to $46.
That is not a split.
If you look at the
recent natural gas
acquisitions... how
they were valued,
based on the
reserves... I mean,
UPL would be worth
$57.79 (a share)
right now. That's an
11-point premium to
the current price on
acquisition, but
it's worth a lot
more, if we just
give it some time.
Regardless of its
attractiveness to
others, it should be
attractive to you...
Listen to these
growth numbers...
Tell me if you're
getting this from
other companies...
It's been growing
reserves at 29% a
year... growing
production at 43% a
year. It plans on
maintaining a 33%
production growth
through 2010. This
company is not
entirely dependent
on the price of the
commodity for its
growth. It has
production growth
and reserve growth.
I got this from
Investor's Business
Daily years ago.
That's what put me
onto the stock...
UPL's average
reserve life of 20
years is seven years
above the median for
the group, and it
has a pretty good
balance sheet for an
independent
exploration and
production
company... with a
debt-to-capitalization
ratio of 22%. It's
pretty conservative,
compared to the
group average of
40%. I like that.
UPL's debt doesn't
mature for a while.
Some comes due in
2015. We're focused
on that too because
of
Chesapeake (CHK)... and the
rest in 2018... so
it's got a lot of
time where it
doesn't need
financing. That's
really important. A
lot of these guys
keep issuing stock
when they were going
up. I don't expect
that from UPL.
Frankly, you
shouldn't be able to
buy UPL this
cheaply, given the
cleanliness of
natural gas, the
possibility it will
be the bridge fuel
to other even
cleaner fuels... and
the need for
American energy
independence.
The decline in
natural gas prices
has taken its toll
on the stock, and I
think, perhaps, too
much of a toll...
And, now, if it
doesn't go higher on
its own, I believe
that the market's
just not making any
sense.
But, before you
agree with me, let's
hear from UPL's CEO,
Mike Watford...
friend of Mad
Money... about the
state of his company
and the business.
Mr. Watford, welcome
to Mad Money...
Jim's comments
AFTER the interview:
Mike Watford...
thank you for
telling it
straight... you've
done a great job
with your company.
Good to have you on
Mad Money...
Alright, guys, you
know, with the
"Moguls Gone
Wild"... it's dinged
XTO Energy Inc. (XTO) and it's dinged
Ultra Petroleum (UPL). You just
heard... there's a
man that owns a lot
of stock, and not a
penny of it on
margin... and
doesn't have any
debt. I say
hallelujah... I say
buy UPL!
Read Jim's next Segment
here
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