##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION  FORM 10-Q x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
 OR o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
________________
 Commission file number 0-29370 ULTRA PETROLEUM CORP.  Yukon Territory, Canada
    
    N/A(State or other jurisdiction of
    
    (I.R.S. employerincorporation or organization)
    
    identification number)
 363 North Sam Houston Parkway, Suite 1200, Houston, Texas
(Address of principal executive offices)
    
    77060
(Zip code)
 (281) 876-0120
(Registrants telephone number,
including area code) Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES x NO o Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
YES x NO o The number of common shares, without par value, of Ultra Petroleum Corp.,
outstanding as of October 25, 2004 was 75,137,968.




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TABLE OF CONTENTS  PART 1  FINANCIAL INFORMATIONITEM 1  FINANCIAL STATEMENTSCONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF CASH FLOWSCONSOLIDATED BALANCE SHEETSNOTES TO CONSOLIDATED FINANCIAL STATEMENTSITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4  CONTROLS AND PROCEDURESPART 2  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSITEM 3. DEFAULTS UPON SENIOR SECURITIESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURES 
 PART 1  FINANCIAL INFORMATION 
 ITEM 1  FINANCIAL STATEMENTS (Expressed in U.S. Dollars) ULTRA PETROLEUM CORP. 
 
 For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,2004
    
    2003
    
    2004
    
    2003Revenues:Natural gas sales
    
    $
    54,786,316
    
    
    $
    27,711,651
    
    
    $
    144,037,747
    
    
    $
    72,835,464Oil sales
    
    
    11,655,129
    
    
    
    1,578,976
    
    
    
    17,132,761
    
    
    
    4,591,912Total operating revenues
    
    
    66,441,445
    
    
    
    29,290,627
    
    
    
    161,170,508
    
    
    
    77,427,376Expenses:Production expenses and taxes
    
    
    12,598,587
    
    
    
    6,179,424
    
    
    
    31,747,884
    
    
    
    16,354,828Depletion and depreciation
    
    
    7,708,282
    
    
    
    4,033,606
    
    
    
    18,604,987
    
    
    
    11,091,346General and administrative
    
    
    1,562,379
    
    
    
    1,468,553
    
    
    
    4,306,767
    
    
    
    4,210,029General and administrative  stock compensation
    
    
    150,050
    
    
    
    
    
    
    
    773,573
    
    
    
    1,018,220Total operating expenses

    
    
    22,019,298
    
    
    
    11,681,583
    
    
    
    55,433,211
    
    
    
    32,674,423Operating income
    
    
    44,422,147
    
    
    
    17,609,044
    
    
    
    105,737,297
    
    
    
    44,752,953Other income:Interest expense
    
    
    (853,469
    )
    
    
    (747,125
    )
    
    
    (2,802,381
    )
    
    
    (2,151,559
    )Interest income
    
    
    20,054
    
    
    
    6,668
    
    
    
    42,698
    
    
    
    26,431Total other income (expense)
    
    
    (833,415
    )
    
    
    (740,457
    )
    
    
    (2,759,683
    )
    
    
    (2,125,128
    )Income for the period, before income tax provision
    
    
    43,588,732
    
    
    
    16,868,587
    
    
    
    102,977,614
    
    
    
    42,627,825Income tax provision  deferred
    
    
    15,713,358
    
    
    
    6,540,600
    
    
    
    36,796,518
    
    
    
    16,458,292Net income for the period
    
    
    27,875,374
    
    
    
    10,327,987
    
    
    
    66,181,096
    
    
    
    26,169,533Retained earnings, beginning of period
    
    
    94,444,238
    
    
    
    26,657,423
    
    
    
    56,138,516
    
    
    
    10,815,877Retained earnings, end of period
    
    $
    122,319,612
    
    
    $
    36,985,410
    
    
    $
    122,319,612
    
    
    $
    36,985,410Income per common share  basic
    
    $
    0.37
    
    
    $
    0.14
    
    
    $
    0.88
    
    
    $
    0.35Income per common share  fully diluted
    
    $
    0.35
    
    
    $
    0.13
    
    
    $
    0.83
    
    
    $
    0.33Weighted average common shares outstanding  basic
    
    
    75,063,934
    
    
    
    74,279,516
    
    
    
    74,929,196
    
    
    
    74,170,485Weighted average common shares outstanding  fully diluted
    
    
    80,090,907
    
    
    
    78,537,895
    
    
    
    79,957,440
    
    
    
    78,335,831
 2




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ULTRA PETROLEUM CORP. 
 
 (Expressed in U.S. Dollars) Nine Months EndedSeptember 30,2004
    
    2003Cash provided by (used in):Operating activities:Net income for the period
    
    $
    66,181,096
    
    
    $
    26,169,533Add (deduct)Items not involving cash:Depletion and depreciation
    
    
    18,604,987
    
    
    
    11,091,346Deferred income taxes
    
    
    36,796,518
    
    
    
    16,458,291Stock compensation
    
    
    773,573
    
    
    
    1,018,220Net changes in non-cash working capital:Restricted cash
    
    
    (948
    )
    
    
    (1,044
    )Accounts receivable
    
    
    (11,882,168
    )
    
    
    (3,313,559
    )Inventory
    
    
    5,823,273Prepaid expenses and other current assets
    
    
    (2,795,440
    )
    
    
    (3,373,345
    )Accounts payable and accrued liabilities
    
    
    1,783,174
    
    
    
    3,341,399Deferred revenue
    
    
    3,436,624
    
    
    
    Other long-term obligations
    
    
    7,318,786
    
    
    
    970,569Cash provided by operating activities
    
    
    126,039,475
    
    
    
    52,361,410Investing activities:Oil and gas property expenditures
    
    
    (130,371,223
    )
    
    
    (68,499,293
    )Oil and gas property expenditures in accounts payable
    
    
    11,331,477
    
    
    
    24,288,871Purchase of capital assets
    
    
    (672,524
    )
    
    
    (553,212
    )Cash provided by (used in) investing activities
    
    
    (119,712,270
    )
    
    
    (44,763,634
    )Financing activities:Borrowings on long-term debt, gross
    
    
    32,000,000
    
    
    
    19,000,000Payments on long-term debt, gross
    
    
    (29,000,000
    )
    
    
    (26,000,000
    )Proceeds from exercise of options
    
    
    1,333,683
    
    
    
    569,657Cash provided by (used in) financing activities
    
    
    4,333,683
    
    
    
    (6,430,343
    )Increase in cash during the period
    
    
    10,660,888
    
    
    
    1,167,433Cash and cash equivalents, beginning of period
    
    
    1,834,112
    
    
    
    1,417,711Cash and cash equivalents, end of period
    
    $
    12,495,000
    
    
    $
    2,585,144
 3




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ULTRA PETROLEUM CORP. 
 
 (Expressed in U.S. Dollars) September 30,
    
    December 31,2004
    
    2003AssetsCurrent assetsCash and cash equivalents
    
    $
    12,495,000
    
    
    $
    1,834,112Restricted cash
    
    
    211,617
    
    
    
    210,669Accounts receivable
    
    
    31,231,029
    
    
    
    19,348,861Current deferred tax asset
    
    
    2,871,048
    
    
    
    Inventory
    
    
    7,765,997
    
    
    
    13,589,270Prepaid expenses and other current assets
    
    
    4,507,177
    
    
    
    1,711,737Total current assets
    
    
    59,081,868
    
    
    
    36,694,649Oil and gas properties, using the full cost method of
accounting
    
    
    420,434,807
    
    
    
    307,863,722Capital assets
    
    
    1,366,956
    
    
    
    1,212,006Total assets
    
    $
    480,883,631
    
    
    $
    345,770,377Liabilities and shareholders equityCurrent liabilitiesAccounts payable and accrued liabilities
    
    $
    31,783,034
    
    
    $
    23,353,323Deferred revenue
    
    
    3,436,624
    
    
    
    Fair value of derivative instrument liability
    
    
    3,306,387
    
    
    
    4,781,068Capital costs accrual
    
    
    42,135,577
    
    
    
    30,616,912Total current liabilities
    
    
    80,661,622
    
    
    
    58,751,303Long-term debt
    
    
    102,000,000
    
    
    
    99,000,000Deferred income taxes
    
    
    66,490,392
    
    
    
    33,446,131Other long-term obligations
    
    
    12,438,999
    
    
    
    5,120,213Shareholders equityShare capital
    
    
    104,448,948
    
    
    
    97,448,221Treasury stock
    
    
    (1,193,650
    )
    
    
    (1,193,650
    )Other comprehensive loss  fair value of derivative instruments
    
    
    (6,282,292
    )
    
    
    (2,940,357
    )Retained earnings
    
    
    122,319,612
    
    
    
    56,138,516Total shareholders equity
    
    
    219,292,618
    
    
    
    149,452,730Total liabilities and shareholders equity
    
    $
    480,883,631
    
    
    $
    345,770,377
 4




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ULTRA PETROLEUM CORP. 
  (All dollar amounts in this Quarterly Report on Form 10-Q are expressed in U.S.
dollars unless otherwise noted) DESCRIPTION OF THE BUSINESS: Ultra Petroleum Corp. (the Company) is an independent oil and gas company
engaged in the acquisition, exploration, development, and production of oil and
gas properties. The Company was originally incorporated under the laws of
British Columbia, Canada. On March 1, 2000, the Company was continued under
the laws of the Yukon Territory, Canada. The Companys principal business
activities are in the Green River Basin of southwest Wyoming and Bohai Bay,
China. 1. SIGNIFICANT ACCOUNTING POLICIES: The accompanying financial statements, other than the balance sheet data as of
December 31, 2003, are unaudited and were prepared from the Companys records.
Balance sheet data as of December 31, 2003 was derived from the Companys
audited financial statements, but does not include all disclosures required by
U.S. generally accepted accounting principles. The Companys management
believes that these financial statements include all adjustments necessary for
a fair presentation of the Companys financial position and results of
operations. All adjustments are of a normal and recurring nature unless
specifically noted. The Company prepared these financial statements on a basis
consistent with the Companys annual audited financial statements and
Regulation S-X. Regulation S-X allows the Company to omit some of the footnote
and policy disclosures required by generally accepted accounting principles and
normally included in annual reports on Form 10-K. You should read these
interim financial statements together with the financial statements, summary of
significant accounting policies and related notes included in the Companys
most recent annual report on Form 10-K. (a) Basis of presentation and principles of consolidation: The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, UP Energy Corporation, Ultra Resources, Inc.,
and Sino-American Energy Corporation. The Company presents its financial
statements in accordance with accounting principles generally accepted in the
United States (US GAAP). All material inter-company transactions and
balances have been eliminated upon consolidation. (b) Accounting principles: The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States. (c) Cash and cash equivalents: The Company considers all highly liquid investments with an original maturity
of three months or less to be cash equivalents. (d) Restricted cash: Restricted cash represents cash received by the Company from production sold
where the final division of ownership of the production is unknown or in
dispute. Wyoming law requires that these funds be held in a federally insured
bank in Wyoming. (e) Capital assets: Capital assets are recorded at cost and depreciated using the declining-balance
method based on a seven-year useful life. (f) Oil and gas properties: The Company uses the full cost method of accounting for oil and gas operations
whereby all costs associated with the exploration for and development of oil
and gas reserves are capitalized to the Companys cost centers. Such costs
include land acquisition costs, geological and geophysical expenses, carrying
charges on non-producing properties, costs of drilling both productive and
non-productive wells and overhead charges directly related to acquisition,
exploration and development activities. The Company conducts operations in
both the United States and China. Separate cost centers are maintained for
each country in which the Company has operations. The capitalized costs, together with the costs of production equipment, are
depleted using the units-of-production method based on the proven reserves as
determined by independent petroleum engineers. Oil and gas reserves and
production are converted into equivalent units based upon relative energy
content. Costs of acquiring and evaluating unproved properties are initially excluded
from the costs subject to depletion. These unproved properties are assessed
periodically to ascertain whether impairment has occurred. When proved
reserves are assigned or the property is considered to be impaired, the cost of
the property or the amount of the impairment is added to the costs subject to
depletion. The total capitalized cost of oil and gas properties less accumulated depletion
is limited to an amount equal to the estimated future net cash flows from
proved reserves, discounted at 10%, using year-end prices, plus the cost (net
of impairment) of unproved properties as adjusted for related tax effects (the
full cost ceiling test limitation). Proceeds from the sale of oil and gas properties are applied against
capitalized costs, with no gain or loss recognized, unless such a sale would
significantly alter the rate of depletion. Substantially all of the Companys exploration, development and production
activities are conducted jointly with others and, accordingly, these financial
statements reflect only the Companys proportionate interest in such
activities. 5




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(g) Derivative transactions: The Company has entered into commodity price risk management transactions to
manage its exposure to gas price volatility. These transactions are in the
form of price swaps with financial institutions or other credit worthy
counter parties. These transactions have been designated by the Company as
cash flow hedges. As such, unrealized gains and losses related to the
change in fair market value of the derivative contracts are recorded in
other comprehensive income in the balance sheet. The Company also enters
into forward sales of physical gas volumes to credit worthy purchasers which
are not reflected on the balance sheet. (h) Income taxes: The Company uses the asset and liability method of accounting for income
taxes under which deferred tax assets and liabilities are recognized for
future tax consequences. Accordingly, deferred tax liabilities and assets
are determined based on the temporary differences between the financial
statement and tax basis of assets and liabilities, using the enacted tax
rates in effect for the year in which the differences are expected to
reverse. (i) Earnings per share: Basic earnings per share is computed by dividing net earnings attributable
to common stock by the weighted average number of common shares outstanding
during each period. Diluted earnings per share is computed by adjusting the
average number of common shares outstanding for the dilutive effect, if any,
of stock options. The Company uses the treasury stock method to determine
the dilutive effect. The following table provides a reconciliation of the components of basic and
diluted net income per common share: Three Months Ended
    
    Nine Months EndedSeptember 30, 2004
    
    September 30, 2003
    
    September 30, 2004
    
    September 30, 2003Net income
    
    $
    27,875,374
    
    
    $
    10,327,987
    
    
    $
    66,181,096
    
    
    $
    26,169,533Weighted average common shares outstanding
during the period
    
    
    75,063,934
    
    
    
    74,279,516
    
    
    
    74,929,196
    
    
    
    74,170,485Effect of dilutive instruments
    
    
    5,026,973
    
    
    
    4,258,319
    
    
    
    5,028,244
    
    
    
    4,165,346Weighted average common shares outstanding
during the period including the effects of dilutive
instruments
    
    
    80,090,907
    
    
    
    78,537,895
    
    
    
    79,957,440
    
    
    
    78,335,831Basic earnings per share
    
    $
    0.37
    
    
    $
    0.14
    
    
    $
    0.88
    
    
    $
    0.35Diluted earnings per share
    
    $
    0.35
    
    
    $
    0.13
    
    
    $
    0.83
    
    
    $
    0.33
 (j) Use of estimates: Preparation of consolidated financial statements in accordance with US GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. (k) Reclassifications: Certain amounts in the financial statements of the prior years have been
reclassified to conform to the current year financial statement
presentation. (l) Accounting for stock-based compensation: Statement of Financial Accounting Standards No. 123, Accounting for
StockBased Compensation (SFAS No. 123), defines a fair value method of
accounting for employee stock options and similar equity instruments. SFAS
No. 123 allows for the continued measurement of compensation cost for such
plans using the intrinsic value based method prescribed by APB Opinion No.
25, Accounting for Stock Issued to Employees (APB No. 25), provided that
pro forma results of operations are disclosed for those options granted.
The Company accounts for stock options granted to employees and directors of
the Company under the intrinsic value method. Had the Company reported
compensation costs as determined by the fair value method of accounting for
option grants to employees and directors, net income and net income per
common share would approximate the following pro forma amounts: 6




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Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2004
    
    2003
    
    2004
    
    2003Net income:As reported
    
    $
    27,875,374
    
    
    $
    10,327,987
    
    
    $
    66,181,096
    
    
    $
    26,169,533Pro forma
    
    $
    25,213,922
    
    
    $
    9,587,818
    
    
    $
    61,763,087
    
    
    $
    25,429,364Basic earnings per share:As reported
    
    $
    0.37
    
    
    $
    0.14
    
    
    $
    0.88
    
    
    $
    0.35Pro forma
    
    $
    0.34
    
    
    $
    0.13
    
    
    $
    0.82
    
    
    $
    0.34Diluted earnings per share:As reported
    
    $
    0.35
    
    
    $
    0.13
    
    
    $
    0.83
    
    
    $
    0.33Pro forma
    
    $
    0.32
    
    
    $
    0.12
    
    
    $
    0.77
    
    
    $
    0.32
 For purposes of pro forma disclosures, the estimated fair value of options is
amortized to expense over the options vesting period. The weighted-average
fair value of each option granted is estimated on the date of grant using the
Black Scholes option pricing model with an assumed expected volatility of
38.35%. All options have expected lives of 6.5 years. 2. OIL AND GAS PROPERTIES: September 30,
    
    December 31,2004
    
    2003Developed Properties:Acquisition, equipment, exploration, drilling and environmental
costs  Domestic
    
    $
    368,422,964
    
    
    $
    249,784,562Acquisition, equipment, exploration, drilling and environmental
costs  China
    
    
    31,638,079
    
    
    
    Less accumulated depletion, depreciation and amortization  Domestic
    
    
    (55,551,605
    )
    
    
    (38,495,605
    )Less accumulated depletion, depreciation and amortization  China
    
    
    (1,489,069
    )
    
    
    343,020,369
    
    
    
    211,288,957Unproven Properties:Acquisition and exploration costs  Domestic
    
    
    16,728,367
    
    
    
    15,604,521Acquisition and exploration costs  China
    
    
    60,686,071
    
    
    
    80,970,244$
    420,434,807
    
    
    $
    307,863,722
 3. LONG-TERM DEBT: September 30,
    
    December 31,2004
    
    2003Bank indebtedness
    
    $
    102,000,000
    
    
    $
    99,000,000Other long term obligations
    
    
    12,438,999
    
    
    
    5,120,213$
    114,438,999
    
    
    $
    104,120,213
 The Company (through its subsidiary) participates in a long-term credit
facility with a group of banks led by Bank One N.A. The agreement specifies a
maximum loan amount of $500 million and an aggregate borrowing base of $315
million and a commitment amount of $200 million at June 9, 2004. The
commitment amount may be increased up to the lesser of the borrowing base
amount or $500 million at any time at the request of the Company. Each bank
shall have the right, but not the obligation, to increase the amount of their
commitment as requested by the Company. In the event that the existing banks
increase their commitment to an amount less than the requested commitment
amount, then it would be necessary to bring additional banks into the facility.
At September 30, 2004, the Company had $102 million outstanding and $98
million unused and available under the current committed amount. The credit facility matures on May 1, 2008. The note bears interest at either
the banks prime rate plus a margin of one-quarter of one percent (0.25%) to
seven-eighths of one percent (0.875%) based on the percentage of available
credit drawn or at LIBOR plus a margin of one and one-quarter percent (1.25%)
to one and seven-eighths of one percent (1.875%) based on the percentage of
available credit drawn. For the purposes of calculating interest, the
available credit is equal to the borrowing base. An average annual commitment
fee of 0.30% to 0.50%, depending on the percentage of available credit drawn,
is charged quarterly for any unused portion of the commitment amount. The borrowing base is subject to periodic (at least semi-annual) review and
re-determination by the banks and may be decreased or increased depending on a
number of factors, including the Companys proved reserves and the banks
forecast of future oil and gas prices. If the borrowing base is reduced to an
amount less than the balance outstanding, the Company has sixty days from the
date of written notice of the reduction in the borrowing base to pay the
difference. Additionally, the Company is subject to quarterly reviews of
compliance with the covenants under the bank facility including minimum
coverage ratios relating to interest, working capital and advances to
Sino-American Energy Corporation. In the event of a default under the
covenants, the Company may not be able to access funds otherwise available
under the facility. As of September 30, 2004, the Company was in compliance
with required ratios of the bank facility. The debt outstanding under the credit facility is secured by a majority of the
Companys proved domestic oil and gas properties. 7




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##### 



4. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES: In September 2003, the AcSB (Accounting Standards Board) released revised
transitional provisions for Stock-Based Compensation and Other Stock-Based
Payments, Section 3870, to provide the same alternative methods of
transition as is provided in the US for voluntary adoption of the fair value
based method of accounting. These provisions permit either retroactive (with
or without restatement) or prospective application of the recognition
provisions to awards not previously accounted for at fair value. Prospective
application is only available to enterprises that elect to apply the fair
value based method of accounting to that type of award for fiscal years
beginning before January 1, 2004. The AcSB has also amended Section 3870 to require that all transactions
whereby goods and services are received in exchange for stock-based
compensation and other payments result in expenses that should be recognized
in financial statements, and that this requirement would be applicable for
financial periods beginning on or after January 1, 2004. Section 3870
requires that share-based transactions be measured on a fair value basis. As described in Note 1, had the Company expensed the fair value of options
vested during the period, net income would have been reported as $25,213,922
for the quarter ended September 30, 2004 and $61,763,087 for the nine months
ended September 30, 2004. Recorded in other comprehensive loss in the equity section of the Companys
balance sheet is an offset of $6,282,292 to a liability that measures a
future effect of the fixed price to index price swap agreements that the
Company currently has in place. The Company has recorded this in compliance
with FASB No. 133 which addresses accounting impacts of derivative
instruments. The AcSB issued a new Accounting Guideline (Guideline), AcG-13, Hedging
Relationships, in December 2001 in connection with amendments to CICA
Handbook Section 1650, Foreign Currency Translation. The Guideline is
applicable to hedging relationships in effect in fiscal years beginning on
or after July 1, 2003 (the AcSB changed the original effective date of
January 1, 2002 in its December 2001 meeting, and further deferred the
effective date in its September 2002 meeting). The Guideline is not
applicable to prior periods, but requires the discontinuance of hedge
accounting for hedging relationships established in prior periods that do
not meet the conditions for hedge accounting at the date it is first
applied. The Guideline supplements some of the requirements on accounting for hedges
of foreign currency items in Section 1650, but is equally applicable to
accounting for hedges of other types of risk exposure. The Guideline deals
with the identification, documentation, designation and effectiveness of
hedges and also the discontinuance of hedge accounting, but does not specify
hedge accounting methods. The Guideline is intended to improve the quality and consistency of hedge
accounting under Canadian GAAP. The Guideline incorporates certain features
of the U.S. hedge accounting standards as requirements. The AcSB has
attempted to avoid creating any additional GAAP differences, i.e.,
requirements that prevent an entity from adopting a U.S. requirement.
However, Canadian hedge accounting remains inconsistent with U.S. GAAP in
some fundamental ways. 5. SEGMENT INFORMATION The Company has two reportable operating segments, one domestic and one
foreign, which are in the business of natural gas and crude oil exploration
and production. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies. The
Company evaluates performance based on profit or loss from oil and gas
operations before price-risk management and other, general and
administrative expenses and interest expense. The Companys reportable
operating segments are managed separately based on their geographic
locations. Financial information by operating segment is presented below: Three Months Ended September 30,2004
    
    2003Domestic
    
    China
    
    Total
    
    Domestic
    
    China
    
    TotalProduction:Crude oil (Bbl)
    
    
    
    
    
    
    210,923
    
    
    
    210,923
    
    
    
    
    
    
    
    
    
    
    
    Liquids (Bbl)
    
    
    92,820
    
    
    
    
    
    
    
    92,820
    
    
    
    50,327
    
    
    
    
    
    
    
    50,327Natural gas (Mcf)
    
    
    11,160,300
    
    
    
    
    
    
    
    11,160,300
    
    
    
    6,642,972
    
    
    
    
    
    
    
    6,642,972Oil and gas sales
    
    $
    58,696,352
    
    
    $
    7,745,093
    
    
    $
    66,441,445
    
    
    $
    29,290,627
    
    
    
    
    
    
    $
    29,290,627Costs and Expenses:Depletion and depreciation
    
    
    6,676,869
    
    
    
    1,031,413
    
    
    
    7,708,282
    
    
    
    4,033,606
    
    
    
    
    
    
    
    4,033,606Lease operating expenses
    
    
    1,574,589
    
    
    
    889,000
    
    
    
    2,463,589
    
    
    
    872,364
    
    
    
    
    
    
    
    872,364Production taxes
    
    
    6,875,586
    
    
    
    
    
    
    
    6,875,586
    
    
    
    3,407,541
    
    
    
    
    
    
    
    3,407,541Gathering
    
    
    3,259,412
    
    
    
    
    
    
    
    3,259,412
    
    
    
    1,899,519
    
    
    
    
    
    
    
    1,899,519Operating margin
    
    
    40,309,896
    
    
    
    5,824,680
    
    
    
    46,134,576
    
    
    
    19,077,597
    
    
    
    
    
    
    
    19,077,597General and administrative
    
    
    
    
    
    
    
    
    
    
    1,712,429
    
    
    
    
    
    
    
    
    
    
    
    1,468,553Other expense
    
    
    
    
    
    
    
    
    
    
    833,415
    
    
    
    
    
    
    
    
    
    
    
    740,457Income before income taxes
    
    
    
    
    
    
    
    
    
    $
    43,588,732
    
    
    
    
    
    
    
    
    
    
    $
    16,868,587
 8




---



##### 



Nine Months Ended September 30,2004
    
    2003Domestic
    
    China
    
    Total
    
    Domestic
    
    China
    
    TotalProduction:Crude oil (Bbl)
    
    
    
    
    
    
    210,923
    
    
    
    210,923
    
    
    
    
    
    
    
    
    
    
    
    Liquids (Bbl)
    
    
    241,787
    
    
    
    
    
    
    
    241,787
    
    
    
    147,919
    
    
    
    
    
    
    
    147,919Natural gas (Mcf)
    
    
    29,596,982
    
    
    
    
    
    
    
    29,596,982
    
    
    
    18,255,839
    
    
    
    
    
    
    
    18,255,839Oil and gas sales
    
    $
    153,425,415
    
    
    $
    7,745,093
    
    
    $
    161,170,508
    
    
    $
    77,427,376
    
    
    
    
    
    
    $
    77,427,376Costs and Expenses:Depletion and depreciation
    
    
    17,573,574
    
    
    
    1,031,413
    
    
    
    18,604,987
    
    
    
    11,091,346
    
    
    
    
    
    
    
    11,091,346Lease operating expenses
    
    
    4,104,257
    
    
    
    889,000
    
    
    
    4,993,257
    
    
    
    2,484,784
    
    
    
    
    
    
    
    2,484,784Production taxes
    
    
    17,976,082
    
    
    
    
    
    
    
    17,976,082
    
    
    
    8,674,351
    
    
    
    
    
    
    
    8,674,351Gathering
    
    
    8,778,545
    
    
    
    
    
    
    
    8,778,545
    
    
    
    5,195,693
    
    
    
    
    
    
    
    5,195,693Operating margin
    
    
    104,992,957
    
    
    
    5,824,680
    
    
    
    110,817,637
    
    
    
    49,981,202
    
    
    
    
    
    
    
    49,981,202General and administrative
    
    
    
    
    
    
    
    
    
    
    5,080,340
    
    
    
    
    
    
    
    
    
    
    
    5,228,249Other expense
    
    
    
    
    
    
    
    
    
    
    2,759,683
    
    
    
    
    
    
    
    
    
    
    
    2,125,128Income before income taxes
    
    
    
    
    
    
    
    
    
    $
    102,977,614
    
    
    
    
    
    
    
    
    
    
    $
    42,627,825
 6. ASSET RETIREMENT OBLIGATIONS: In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires the Company to record the fair value of an
asset retirement obligation as a liability in the period in which it incurs a
legal obligation associated with the retirement of tangible long-lived assets
that result from the acquisition, construction, development and/or normal use
of the assets. The Company has recorded a liability of $692,387 to account for
future obligations associated with its assets both domestic and in China. 
 ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS The following discussion of the financial condition and operating results of
the Company should be read in conjunction with the consolidated financial
statements and related notes of the Company. Except as otherwise indicated all
amounts are expressed in U.S. dollars. We operate in one segment, natural gas
and oil exploration and development with two geographical segments; the United
States and China. The Company currently generates the majority of its revenue, earnings and cash
from the production and sales of natural gas and oil from its property in
southwestern Wyoming. The price of natural gas in the southwest Wyoming region
is a critical factor to the Companys business. The price of gas in southwest
Wyoming historically has been volatile. The average annual realizations for
the period 2001-2003 have ranged from $2.33 to $4.16 per Mcf. This volatility
could be very detrimental to the Companys financial performance. The Company
seeks to limit the impact of this volatility on its results by entering into
derivative and forward sales contracts for gas in southwest Wyoming. The
average realization for the Companys gas during the third quarter of 2004 was
$4.91 per Mcf, basis Opal, Wyoming, including the effect of hedges. For the
nine-month period ended September 30, 2004, the average realization for the
Companys gas was $4.87 per Mcf, basis Opal, Wyoming, including the effect of
hedges. On July 18, 2004 the Company initiated production at the first two fields of
the nine fields discovered on its oil properties offshore Bohai Bay, China.
Production from these fields is characterized as a Heavy, Sweet Crude. The
Company sold its first cargos of oil in September, 2004. At that time, the
price of oil in east Asia became much more relevant to the Company. The Company
sold approximately 300,000 barrels of its Chinese oil production at a price
based on the Official ICP (Indonesian Crude oil Price) posting for Duri field
crude, less a discount for location and quality differences. These cargos were
sold to CNOOC, Ltd., the Companys Chinese partner, at a price of $36.72 USD
per barrel. There can and will be differences in timing between the sale of
the Companys crude oil cargos and the Companys pro-rata share of production.
As of October 15, 2004, the Duri price was approximately $40.65 USD per barrel. The Company expects to sell at least one additional cargo of its Chinese crude
oil production prior to the end of 2004. The Company has the right to export
and sell its crude at market prices into the international markets, and is
evaluating options to do so in the future. Other markets for the Companys
Chinese oil may be potentially developed in South Korea, Japan, Singapore or
other countries. The Company has grown its natural gas and oil production significantly over the
past three years and management believes it has the ability to continue growing
production by drilling already identified locations on its leases in Wyoming
and by bringing into production the already discovered oilfields in China. The
Company delivered 87% production growth on an Mcfe basis during the quarter
ended September 30, 2004 as compared to the same quarter in 2003 and 69% for
the nine-month period ended September 30, 2004 compared to the same period in
2003. Management expects to deliver additional production growth during the
balance of 2004 to reach an anticipated annual production of 47 Bcfe in 2004, a
63% growth in annual production over 2003 levels. This increase in production
is expected to be achieved by drilling and bringing into production additional
wells in Wyoming. The Company uses the full cost method of accounting for oil and gas operations
whereby all costs associated with the exploration for and development of oil
and gas reserves are capitalized to the Companys cost centers. Such costs
include land acquisition costs, geological and geophysical expenses, carrying
charges on non-producing properties, costs of drilling both productive and
non-productive wells and overhead charges directly related to acquisition,
exploration and development activities. The Company conducts operations in
both the United States and China. Separate cost centers are maintained for
each country in which the Company has operations. Substantially all of the oil
and gas activities are conducted jointly with others and, accordingly, the
amounts in these financial statements reflect only the Companys proportionate
interest in such activities. Inflation has not had a material impact on the
Companys results of operations and is not expected to have a material impact
on the Companys results of operations in the future. 9




---



##### 



RESULTS OF OPERATIONS QUARTER ENDED SEPTEMBER 30, 2004 VS. QUARTER ENDED SEPTEMBER 30, 2003 During the quarter ended September 30, 2004, production increased 87% on an
equivalent basis to 13 Bcfe from 6.9 Bcfe for the same quarter in 2003
primarily because of the additional wells drilled and completed in Wyoming
during 2003 and the first half of 2004 coupled with initial crude oil
production beginning this quarter in China. Average realized price for
natural gas and condensate increased 21% on an equivalent basis to $5.12 per
Mcfe during the quarter ended September 30, 2004 from $4.22 per Mcfe for the
same quarter in 2003 resulting in a 127% increase in revenues to $66.4
million. Production costs increased 104% to $12.6 million primarily due to the 87%
increase in production and higher production taxes driven by the 127%
increase in revenues. Production taxes are calculated as a percentage of
revenue, which percentage increased slightly to 12% from 11% in the same
quarter last year, due primarily to the phasing out of certain tax benefits.
On a unit of production basis, production costs increased 9% to $0.97 per
Mcfe. The increase in production costs was attributable almost wholly to the
increase in production taxes arising from higher revenues which were $0.53
per Mcfe. Net income before income taxes increased 158% to $43.6 million and income
tax provision-deferred increased by 140% to $15.7 million at a rate of
35.5%. Net income increased 170% to $27.9 million or $0.35 per diluted
share. NINE-MONTHS ENDED SEPTEMBER 30, 2004 VS. NINE-MONTHS ENDED SEPTEMBER 30,
2003 During the nine-months ended September 30, 2004, production increased 69% on
an equivalent basis to 32.3 Bcfe from 19.1 Bcfe for the same nine-months in
2003 primarily because of the additional wells drilled and completed during
2003, the increased drilling and completion during the first nine-months of
the year along with initial production in China beginning in July of 2004.
Average realized price for natural gas and condensate increased 23% on an
equivalent basis to $4.99 per Mcfe during the nine-month period ended
September 30, 2004 from $4.04 per Mcfe for the same period in 2003 resulting
in a 108% increase in revenues to $161.2 million. Production costs increased 94% to $31.7 million primarily due to the 69%
increase in production and higher production taxes driven by the 108%
increase in revenues. The production taxes which are paid on the Companys
Wyoming properties, are calculated as a percentage of revenue, which
percentage increased slightly to 12% during the nine-month period ended
September 30, 2004 from 11% in the same nine-months last year, due primarily
to the phasing out of certain tax benefits. On a unit of production basis,
production costs increased 15% to $0.98 per Mcfe. The increase in production
costs was attributable almost wholly to the increase in production taxes
arising from higher revenues. Production taxes were $0.56 per Mcfe for the
nine-month period. Net income before income taxes increased 142% to $103.0 million and income
tax provision-deferred increased by 124% to $36.8 million at a rate of
35.5%. Net income increased 153% to $66.2 million, or $0.83 per diluted
share. The discussion and analysis of the Companys financial condition and results
of operations is based upon consolidated financial statements, which have
been prepared in accordance with US GAAP. In addition, application of
generally accepted accounting principles requires the use of estimates,
judgments and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements as well as the
revenues and expenses reported during the period. Changes in these
estimates, judgments and assumptions will occur as a result of future
events, and, accordingly, actual results could differ from amounts
estimated. LIQUIDITY AND CAPITAL RESOURCES During the nine month period ended September 30, 2004, the Company relied on
cash provided by operations and borrowings under its senior credit facility
to finance its capital expenditures. The Company participated in the
drilling of 66 wells in Wyoming and continued to participate in the
development process in the China blocks, including the ongoing drilling of
development wells. Due to this continued development in China, the Company
saw first production from these properties in July of 2004. For the
nine-month period ended September 30, 2004 net capital expenditures were
$130.4 million. At September 30, 2004, the Company reported a cash position
of $12.5 million compared to $2.6 million at September 30, 2003. Working
capital deficit at September 30, 2004 was $(21.6) million as compared to
$(26.3) million at September 30, 2003. As of September 30, 2004, the
Company had incurred bank indebtedness of $102.0 million and other long-term
obligations of $12.4 million comprised of items payable in more than one
year, primarily related to production taxes. The Companys positive cash provided by operating activities, along with the
availability under the senior credit facility, are projected to be
sufficient to fund the Companys budgeted capital expenditures for 2004,
which are currently projected to be $190.0 million. Of the $190.0 million
budget, the Company plans to spend approximately $162.0 million of its 2004
budget in Wyoming and approximately $25.0 million in China with the balance
allocated to evaluating other areas. To date the Company has spent $130
million of the $190.0 million capital budget, $119.2 million in Wyoming and
$10.8 million in China. Of the $162.0 million for Wyoming, the Company plans
to drill or participate in an estimated 80 gross wells in 2004, of which
approximately 40% will be for exploration wells and the remaining will be
for development wells. Of the $25.0 million budgeted for China,
approximately 12% will be for exploratory/appraisal activity and the balance
will be for development activity. The Company currently has no budget for
acquisitions in 2004. The Company (through its subsidiary) participates in a long-term credit
facility with a group of banks led by Bank One N.A. The agreement specifies
a maximum loan amount of $500 million and an aggregate borrowing base of
$315 million and a commitment amount of $200 million at June 9, 2004. The
commitment amount may be increased up to the lesser of the borrowing base
amount or $500 million at any time at the request of the Company. Each bank
shall have the right, but not the obligation, to increase the amount of
their commitment as requested by the Company. In the event that the
existing banks increase their commitment to an amount less than the
requested commitment amount, then it would be necessary to bring additional
banks into the facility. At September 30, 2004, the Company had $102
million outstanding and $98 million unused and available under the current
committed amount. The credit facility matures on May 1, 2008. The note bears interest at
either the banks prime rate plus a margin of one-quarter of one percent
(0.25%) to seven-eighths of one percent (0.875%) based on the percentage of
available credit drawn or at LIBOR plus a margin of one and 10




---



##### 



one-quarter percent (1.25%) to one and seven-eighths of one percent (1.875%)
based on the percentage of available credit drawn. For the purposes of
calculating interest, the available credit is equal to the borrowing base. An
average annual commitment fee of 0.30% to 0.50%, depending on the percentage of
available credit drawn, is charged quarterly for any unused portion of the
commitment amount. The borrowing base is subject to periodic (at least semi-annual) review and
re-determination by the banks and may be decreased or increased depending on a
number of factors, including the Companys proved reserves and the banks
forecast of future oil and gas prices. If the borrowing base is reduced to an
amount less than the balance outstanding, the Company has sixty days from the
date of written notice of the reduction in the borrowing base to pay the
difference. Additionally, the Company is subject to quarterly reviews of
compliance with the covenants under the bank facility including minimum
coverage ratios relating to interest, working capital and advances to
Sino-American Energy Corporation. In the event of a default under the
covenants, the Company may not be able to access funds otherwise available
under the facility. As of September 30, 2004, the Company was in compliance
with required ratios of the bank facility. The debt outstanding under the credit facility is secured by a majority of the
Companys proved domestic oil and gas properties. During the nine-months ended September 30, 2004, net cash provided by operating
activities was $126.0 million as compared to $52.4 million for the nine-months
ended September 30, 2003. The increase in cash provided by operating
activities was primarily attributable to the increase in earnings. During the nine-months ended September 30, 2004, cash used in investing
activities was $119.7 million as compared to $44.8 million for the nine-months
ended September 30, 2003. The change is primarily attributable to increased
activity for drilling and completion activity in Wyoming and China. The
$119.7 million used in investing activities consists of $130.4 million incurred
for drilling and completion activities in 2004, offset by $(11.3) million
attributable to capital expenditures incurred but not yet paid. During the nine-months ended September 30, 2004, cash provided by (used in)
financing activities was $4.3 million as compared to $(6.4) million for the
nine-months ended September 30, 2003. The change is primarily attributable to
drawing down additional debt under the senior credit facility. OFF-BALANCE SHEET ARRANGEMENTS The Company did not have any off-balance sheet arrangements as of September 30,
2004. CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISION OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 This report contains or incorporates by reference forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
Section 21E of the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical facts included in this document, including without limitation,
statements in Managements Discussion and Analysis of Financial Condition and
Results of Operations regarding our financial position, estimated quantities
and net present values of reserves, business strategy, plans and objectives of
the Companys management for future operations, covenant compliance and those
statements preceded by, followed by or that otherwise include the words
believe, expects, anticipates, intends, estimates, projects,
target, goal, plans, objective, should, or similar expressions or
variations on such expressions are forward-looking statements. The Company can
give no assurances that the assumptions upon which such forward-looking
statements are based will prove to be correct nor can the Company assure
adequate funding will be available to execute the Companys planned future
capital program. Other risks and uncertainties include, but are not limited to, fluctuations in
the price the Company receives for oil and gas production, reductions in the
quantity of oil and gas sold due to increased industry-wide demand and/or
curtailments in production from specific properties due to mechanical,
marketing or other problems, operating and capital expenditures that are either
significantly higher or lower than anticipated because the actual cost of
identified projects varied from original estimates and/or from the number of
exploration and development opportunities being greater or fewer than currently
anticipated and increased financing costs due to a significant increase in
interest rates. See the Companys annual report on Form 10-K for the year
ended December 31, 2003 for additional risks related to the Companys business. 
 ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Companys major market risk exposure is in the pricing applicable to its
gas and oil production. Realized pricing is primarily driven by the prevailing
price for crude oil and spot prices applicable to the Companys U.S. natural
gas production, which contributed 89% of the Companys oil and gas revenue for
the nine months ended September 30, 2004. Historically, prices received for
gas production have been volatile and unpredictable. Pricing volatility is
expected to continue. Gas price realizations averaged $4.87 per Mcf during the
nine months ended September 30, 2004. This average price includes the effects
of hedging and gas balancing between working interest owners. The Company periodically enters into commodity derivative contracts and
fixed-price physical contracts to manage its exposure to oil and natural gas
price volatility. The Company primarily utilizes fixed price physical
contracts as well as price swaps, which are placed with major financial
institutions or with counter-parties of high credit quality that it believes
are minimal credit risks. The oil and natural gas reference prices of these
commodity derivatives contracts are based upon crude oil and natural gas
futures, which have a high degree of historical correlation with actual prices
the Company receives. Under SFAS No. 133 all derivative instruments are
recorded on the balance sheet at fair value. Changes in the
derivatives fair value are recognized currently in earnings unless specific
hedge accounting criteria are met. For qualifying cash flow hedges, the gain
or loss on the derivative is deferred in accumulated other comprehensive income
(loss) to the extent the hedge is effective. For qualifying fair value hedges,
the gain or loss on the derivative is offset by related results of the hedged
item in the income statement. Gains and losses on hedging instruments included
in accumulated other comprehensive income (loss) are reclassified to oil and
natural gas sales revenue in the period that the related production is
delivered. Derivative contracts that do not qualify for hedge accounting
treatment are recorded as derivative assets and liabilities at market value in
the consolidated balance sheet, and the associated unrealized gains and losses
are recorded as current expense or income in the consolidated statement of
operations. The Company currently does not have any derivative contracts in
place that do not qualify as a cash flow hedge. 11




---



##### 



During the first nine months of 2004, the total impact of the Companys
price swaps was a reduction in gas revenues of $5.2 million. The effect of
fixed price physical contracts is not included in this amount. The Company
does not currently hedge its oil production. At September 30, 2004, the Company had the following open derivative
contracts to manage price risk on a portion of its natural gas production
whereby the Company receives the fixed price and pays the variable price
(all prices southwest Wyoming basis). (The Companys gas contains
approximately 1.06 MMBtu per Mcf upon delivery at the sales point.) DERIVATIVE CONTRACTS RemainingContract
    
    Volume-
    
    AverageType
    
    Period
    
    MMBTU / day
    
    Price / MMBTUSwap
    
    Oct-Dec 2004
    
    
    20,000
    
    
    $
    4.09Swap
    
    Oct 2004
    
    
    5,000
    
    
    $
    4.76Swap
    
    Calendar 2005
    
    
    10,000
    
    
    $
    4.42
 The Company also utilizes fixed price forward gas sales contracts at
southwest Wyoming delivery points to hedge its commodity exposure. In
addition to the derivative contracts discussed above, the Company had the
following fixed price physical delivery contracts in place on behalf of its
interest and those of other parties at September 30, 2004. (The Companys
approximate average net interest in physical gas sales is 80%.) FIXED PRICE FORWARD SALES CONTRACTS Remaining
    
    Gross Volume
    
    Approximate Net Volume
    
    AverageContract Period
    
    MMBTU / day
    
    MMBTU / day
    
    Price / MMBTUOct 2004
    
    
    25,000
    
    
    
    20,000
    
    
    $
    4.72Oct-Dec 2004
    
    
    30,000
    
    
    
    24,000
    
    
    $
    4.21Calendar 2005
    
    
    55,000
    
    
    
    44,000
    
    
    $
    4.73Calendar 2006
    
    
    25,000
    
    
    
    20,000
    
    
    $
    4.58
 The above derivative and forward gas sales contracts represent approximately
34% of the Companys currently forecasted gas production for the balance of
2004, 34% for calendar year 2005 and 9% for calendar year 2006. 
 ITEM 4  CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures. The Companys
management, including the Companys principal executive officer and
principal financial officer, has evaluated the effectiveness of the
Companys disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15(d)-15(e) under the Securities Exchange Act of 1934) as of the end of
the period covered by this Quarterly Report on Form 10-Q. Based upon that
evaluation, the Companys principal executive officer and principal
financial officer have concluded that the disclosure controls and procedures
were effective to ensure that information required to be disclosed by the
Company in reports that it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission as of the end of the period covered by this Quarterly Report on
Form 10-Q. (b) Changes in Internal Controls. There were no changes in the Companys
internal control over financial reporting that occurred during the Companys
last fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Companys internal control over financial reporting. 
 PART 2  OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS The Company is currently involved in various routine disputes and
allegations incidental to its business operations. While it is not possible
to determine the ultimate disposition of these matters, the Company believes
that the resolution of all such pending or threatened litigation is not
likely to have a material adverse effect on the Companys financial
position, or results of operations. 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS None 
 ITEM 5. OTHER INFORMATION None 12




---



##### 



ITEM 6. EXHIBITS Exhibits 3.1
    
    Articles of Incorporation of Ultra Petroleum Corp.  (incorporated by
reference to Exhibit 3.1 of the Companys Quarterly Report on Form 10-Q for
the period ended June 30, 2001)3.2
    
    By-Laws of Ultra Petroleum Corp.  (incorporated by reference to
Exhibit 3.2 of the Companys Quarterly Report on Form 10-Q for the period
ended June 30, 2001)4.1
    
    Specimen Common Share Certificate  (incorporated by reference to
Exhibit 4.1 of the Companys Quarterly Report on Form 10-Q for the period
ended June 30, 2001)31.1
    
    Certification Pursuant to Rule 13a-14(a)31.2
    
    Certification Pursuant to Rule 13a-14(a)32.1
    
    Certification Pursuant to Rule 13a-14(b)32.2
    
    Certification Pursuant to Rule 13a-14(b)
 
 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. ULTRA PETROLEUM CORP.Date October 26, 2004
    
    By:
    

-s- Michael D. WatfordName:
    
    Michael D. WatfordTitle:
    
    Chief Executive OfficerBy:
    
    -s- F. Fox Benton IIIName:
    
    F. Fox Benton IIITitle:
    
    Chief Financial Officer
 13




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##### 



Index to Exhibits ExhibitNumber
    
    Description3.1
    
    Articles of Incorporation of Ultra Petroleum Corp.  (incorporated by
reference to Exhibit 3.1 of the Companys Quarterly Report on Form 10-Q for
the period ended June 30, 2001)3.2
    
    By-Laws of Ultra Petroleum Corp.  (incorporated by reference to
Exhibit 3.2 of the Companys Quarterly Report on Form 10-Q for the period
ended June 30, 2001)4.1
    
    Specimen Common Share Certificate  (incorporated by reference to
Exhibit 4.1 of the Companys Quarterly Report on Form 10-Q for the period
ended June 30, 2001)31.1
    
    Certification Pursuant to Rule 13a-14(a)31.2
    
    Certification Pursuant to Rule 13a-14(a)32.1
    
    Certification Pursuant to Rule 13a-14(b)32.2
    
    Certification Pursuant to Rule 13a-14(b)