Citigroup Reiterates Neutral Rating, $22 PT on Ultra Petroleum Corp.

In a report published Monday, Citigroup reiterated its Neutral rating and $22.00 price target on Ultra Petroleum Corp.

. Citigroup noted, “Overall, we believe that Ultra is following a simple yet effective strategy of truly being a low-cost producer of dry natural gas. The company has built sizable positions in two key producing areas - Wyoming's Green River Basin and Pennsylvania's Marcellus Shale which provide a relatively low risk and attractive drilling inventory of more than 10 years. Its core Rockies region provides a stable cash flow base with UPL benefiting from a secular improvement in Rockies price realizations following the completion of the REX-East pipeline. The newer Marcellus position had been growing rapidly and is poised to account for close to one-third of total production next year. However, given that 97% of Ultra's production is U.S. natural gas, our concerns about the outlook for the commodity, our production forecasts over the next two years, and UPL's leveraged balance sheet, we believe that its current valuation is appropriate. Therefore, we assign a Neutral rating.” Ultra Petroleum Corp. closed on Friday at $19.75.