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An Update On Ultra Petroleum Corp (OTCMKTS:UPLMQ)

An Update On Ultra Petroleum Corp (OTCMKTS:UPLMQ)
Written by
Alex Carlson
Published on
August 5, 2016
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Ultra Petroleum Corp (OTCMKTS:UPLMQ) has proven that comebacks are possible on the OTC Markets. While some companies eventually get a short covering bounce or a relief rally, UPLMQ has gone on a powerful bull run since hitting lows of $.16 a share earlier this year. Investors are now asking how much further can shares keep running and what's the latest with the company's Chapter 11 bankruptcy?First a little background on Ultra Petroleum. UPLMQ is an independent exploration and production company focused on developing its long-life natural gas reserves in the Green River Basin of Wyoming – the Pinedale and Jonah Fields. In addition, Ultra Petroleum currently has an oily exploration effort underway in the Uinta Basin, Three Rivers area in Utah. Maintaining natural gas optionality, Ultra has a position in the heart of the Marcellus shale in the Appalachian Basin of Pennsylvania.Ultra controls more than 103,000 gross (67,000 net) acres in and around the prolific 90 square mile Pinedale Field and the 36 square mile Jonah Field. Ultra’s small yet relatively unique oily opportunity in the Uinta Basin is 9,000 gross (9,000 net) acres in the Three Rivers area of north east Utah. Ultra is the sole operator with 100 percent working interest. The property is in the early stages of development with the real value creation coming from the waterflood potential. Still maintaining natural gas optionality in the heart of Pennsylvania’s Marcellus Shale, the company holds a position of 184,000 gross (91,000 net) acres.On April 29, 2016 Ultra Petroleum voluntarily chose to financially restructure itself through a court-supervised process under Chapter 11 of the U.S. Bankruptcy Code. The company listed assets in the range of $1 billion to $10 billion, and liabilities of $1 billion to $10 billion, according to the court filing. Ultra’s total debt stood at about $3.9 billion as of March 31, according to its quarterly filing. The company had 167 employees at the end of December. The company entered into a waiver period extending until April 30 over $100 million in payments that were due March 1. Ultra also deferred making a $26 million interest payment due April 1, beginning a 30 day-grace period.So what's the latest from the Bankruptcy court? Well, the most important thing for common shareholders is getting an equity committee formed. Here, there's good news. The Ad Hoc Equity Committee is being represented by Attorney Edward Weisfelner from Brown Rudnick LLP in New York. His bio states:

Ed Weisfelner is the head of Brown Rudnick’s Bankruptcy and Corporate Restructuring Practice Group. He is also a member of the Firm’s Management Committee. He has over 30 years of experience representing official and ad hoc creditors’ and equity holders’ committees, individual creditors, indenture trustees, equity holders, and other parties in many of the nation’s largest in-court and out-of-court restructurings. Ed also regularly represents buyers of assets and claims in chapter 11 proceedings and has served as a court appointed mediator and examiner.

Why is he important? Ed Weisfelner is perhaps the top bankruptcy litigator in the United States. He's the go-to guy Carl Icahn calls when he needs to be represented in Bankruptcy Court. Weisfelner has been involved with nearly every major bankruptcy of the last 30 years including Energy Future Holdings, Trump Casinos, Global Crossing, MCI/Worldcom, XO Communications, Adelphia Communications, AMR Corp (parent of American Airlines), TWA, and many others. Having him represent the Ad Hoc Equity Committee is a huge win for common shareholders.Furthermore, Ultra Petroleum filed with the U.S. Bankruptcy Court a motion to extend the exclusive period during which the Company can file a Chapter 11 plan. The motion said:

“The Debtors already have demonstrated that they can obtain consensus in these cases, including with respect to resolving substantially all disputes related to their first- and second-day motions and their employee compensation programs before trial. Furthermore, an extension of the Exclusivity Periods will not prejudice any party in interest: the Debtors are not using cash collateral, do not require DIP financing at this time, and have already increased their cash position by nearly $50 million since the Petition Date (an increase from approximately $221.5 million as of the Petition Date, to approximately $269.5 million as of June 30, 2016….The Debtors submit that an extension of the Exclusivity Periods will not prejudice any party in interest and will allow the stakeholders in these chapter 11 cases to work collaboratively toward a value-maximizing restructuring.”

Currently trading with a market cap of $421 million, UPLMQ is making substantial progress and will continue rewarding shareholders. The company has a lot of assets and has been able to increase its cash position without any DIP financing. This is unheard of. When you consider that billionaire David Tepper has staked his protege Eric Cole with the capital to buy 17 million shares and an Ad Hoc Equity Committee represented by one of the top Bankruptcy Attorneys in the US, it's easy to see why shares have been rising and will, in our opinion, continue to rise. We will follow the Bankruptcy process so you don't have to. Sign up for our latest updates on UPLMQ!Disclosure: We are LONG shares of UPLMQ. We have not been compensated for this article.

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