Ultra Petroleum reviewing options in light of maturities, covenants

By Caroline Salls

Pittsburgh, Feb. 18 – Ultra Petroleum Corp. is evaluating strategic alternatives related to its capital structure in light of near-term maturities and covenant requirements, according to a news release.

Ultra Petroleum said the level of its debt and the current commodity price environment has presented significant challenges related to its ability to comply with the financial and non-financial covenants in the agreements, as well as the company’s ability to amend, replace or refinance any or all of the agreements and otherwise raise significant additional capital.

The company said these factors may significantly impact the operation of its business.

Ultra Petroleum has hired Kirkland & Ellis LLP as legal adviser and Rothschild and Petrie Partners as financial advisers in connection with the review of its strategic alternatives.

According to the release, the company’s total outstanding debt was $3.39 billion as of Dec. 31.

The company said the covenant for the outstanding debt at Ultra Resources, Inc., consisting of a senior unsecured revolving credit facility and senior notes, is based on a debt to trailing 12 month EBITDA ratio that is not to exceed 3.5 times. At Dec. 31, the consolidated leverage ratio was 3.4 times.

In addition, the debt at Ultra Petroleum is subject to an interest coverage ratio of a minimum of 2.25 times. At the end of the fourth quarter, the interest coverage was 3.3 times.

Ultra Petroleum said it recently borrowed $266 million under its credit agreement, which represented substantially all of the remaining undrawn amount. As a result, no material further extensions of credit are available under the credit agreement.

As of Feb. 18, the company said its cash on hand exceeded the amount recently borrowed under the credit agreement. Also as of Feb. 18, the total outstanding principal amount of Ultra Petroleum’s debt obligations was $3.76 billion, consisting of $450 million of unsecured senior notes due 2018, $850 million of unsecured senior notes due 2024, $999 million under the senior unsecured Ultra Resources credit agreement and $1.46 billion in unsecured senior notes issued by Ultra Resources.

Ultra Petroleum said it generated operating cash flow of $437.1 million during 2015 and earnings of $46.8 million for the year ended Dec. 31, or $0.31 per diluted share. The company reported operating cash flow of $78.4 million, or $0.51 per diluted share, during the fourth quarter.

The adjusted net loss for the quarter was $39 million, or a $0.25 loss per diluted share.

Ultra Petroleum is a Houston-based independent exploration and production company.

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