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Author: nonzerosum One star, 50 posts Old School Fool CAPS All Star Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 17  
Subject: UPL question/comment Date: 1/2/2012 3:18 PM
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Hi guys,
Thanks for the rising star articles. Not sure where you want comments/questions, so I've copied the article comment here too.

On UPL: if they have such good cash flow, why the enormous issuance of debt? Long term debt is up about 5x over the last 5 years, while revenue and reserves are up only ~2x. So all that capex seems poorly allocated.

They spent $5.6B in capex over the last 5 years or so. Looking at PV10 below, that means that they increase PV10 by $0.50 for every $1 capex they spend. Of course, the low gas price takes much of the blame, but still... looks like they're on a hamster wheel.

Also, the PV10 in the last annual report is $3.5B based on a $4 price of natural gas. Using the current $3 value gives a PV10 of $2.6B which means the company is trading at a 73% premium to its proven 2010 value (do you have the 2011 number?). How come you feel they will go up?

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