Citigroup Reiterates Neutral, $40 PT on Ultra Petroleum

Citigroup maintains its Neutral rating and $40 target price on Ultra Petroleum UPL as Marcellus is to drive 20% growth in 2012 on expected debottlenecking. Citi says, “Ultra's preliminary growth guidance calls for output to grow by 20%-38%, up from 20%-25% previously. The surge in output projected for 2012 is premised on the assumption that the inventory of wells awaiting completion or pipeline hook-up in the Marcellus, which has continued to swell throughout this year, will be worked off starting early next year. … We are conservatively modeling a 20% company-wide uptick next year, given the recent history of the Marcellus bottlenecks persisting and actually continuing to worsen long after the company originally projected that they would be resolved.” UPL closed at $34.42 per share on Friday.