SAN FRANCISCO, Sept 30 Ultra Petroleum Corp said on Monday it will devote as much of its capital spending as possible to Wyoming, where the state's gas is drawing good prices on the West Coast, while gas from the Marcellus region in Pennsylvania had fewer places to go.
Wyoming gas now has a ready market thanks to expanded pipeline capacity to Oregon and California, Chief Executive Mike Watford said.
"We have seen good things happen with nukes shutting out here on the West Coast," Watford told the Oil and Gas Investment Symposium in San Francisco, hosted by the Independent Petroleum Association of America.
One of California's two nuclear plants closed permanently this summer, increasing power producers' need for gas in the most populous U.S. state.
Ultra's Wyoming properties account for more than half its 17 trillion cubic feet-equivalent of reserves, and the stronger economics are clear from Ultra's long-term plans: Wyoming will account for 63 percent of its 4,600 future wells, but swallow only 55 percent of the future capital deployed, it said.
The rest of the wells will be in the Marcellus basin in Pennsylvania, which accounts for the balance of the gas-focused company's reserves.
Ultra shares have lost half their value in the past two years, and Watford said on Monday he did underestimate how much over-investment had taken place in the natural gas industry.
While he cited figures showing the Ultra remained the lowest-cost U.S. gas producer, he also acknowledged that costs had to be kept down given the persistently low prices for gas in North America - whereas crude oil trades at over $100 per barrel.
"We're in a commodity business, and we're in the wrong commodity right now," he said.