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No. of Recommendations: 2
With the announcement that UPL is to slash it's drilling budget in half with no new capex at Pinedale or Marcellus, low nat gas prices, and production and earnings growth for 2012 truncated,the stock is hitting multi-year lows. Low cost prodution and significant hedging have us protected until nat gas prices recover.

A buyout is highly likely. Remember Petrohawk/BHP last July. Remember Atlas/Chevron in November 2010. Remember XTO/Exxon in December 2009.

Shell is in the catbird seat for a sweatheart deal if they buy UPL at $40! When XTO was bought by Exxon it was at an EV/Proved Reserves figure of $2.77 and XTO acreage was 70% developed. If we sell our Ultra at $40 we’d be selling in the neighborhood of $1.75 EV/Proved Reserves, and UPL acreage is only 6% developed – yes, that’s 94% undeveloped.

My most recent add to Ultra was on January 30 at $24.50 and I fully understand the saw about pigs getting slaughtered. But believe me, $40 is too low for UPL and if it gets taken out the pigs will be on the buying end.
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