##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year ended
    December 31, 2008o

TRANSITION REPORT PURSUANT TO SECTION 13  OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission File Number:
    001-33614
 Ultra Petroleum Corp.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Yukon Territory, Canada(Jurisdiction of
    Incorporation or Organization)

N/A(I.R.S. Employer
    Identification No.)   363 North Sam Houston Parkway East, Suite 1200
    Houston, Texas(Address of Principal
    Executive Offices)

77060(Zip Code)   281-876-0120
 (Registrants Telephone
    Number, Including Area Code)
 Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Shares, without par value

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      Form 10-K.




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##### 





TABLE OF
    CONTENTS
   PagePART ICertain Definitions


3Item 1.

Business


6Item 1A.

Risk Factors


15Item 1B.

Unresolved Staff Comments


21Item 2.

Properties


21Item 3.

Legal Proceedings


28Item 4.

Submission of Matters to a Vote of Security
    Holders


28PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


29Item 6.

Selected Financial Data


31Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


32Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


41Item 8.

Financial Statements and Supplementary Data


44Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosures


79Item 9A.

Controls and Procedures


79Item 9B.

Other Information


79PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


79Item 11.

Executive Compensation


79Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


79Item 13.

Certain Relationships, Related Transactions and
    Director Independence


80Item 14.

Principal Accounting Fees and Services


80PART IVItem 15.

Exhibits, Financial Statement Schedules


80Signatures


82EX-10.10EX-10.11EX-23.1EX-23.2EX-23.3EX-31.1EX-31.2EX-32.1EX-32.2INSTANCE DOCUMENTSCHEMA DOCUMENTCALCULATION LINKBASE DOCUMENTLABELS LINKBASE DOCUMENTPRESENTATION LINKBASE DOCUMENTDEFINITION LINKBASE DOCUMENT   2




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Certain
    Definitions  Terms
    used to describe quantities of oil and natural gas and
    marketing
  
    Bbl One stock tank barrel, or 42
    U.S. gallons liquid volume, of crude oil or other liquid
    hydrocarbons.
    Bcf One billion cubic feet of natural gas.
    Bcfe One billion cubic feet of natural gas
    equivalent.
    BOE One barrel of oil equivalent, converting
    natural gas to oil at the ratio of 6 Mcf of natural gas to
    1 Bbl of oil.
    BTU British Thermal Unit.
    Condensate An oil-like liquid produced in
    association with natural gas production that condenses from
    natural gas as it is produced and delivered into a separator or
    similar equipment and collected in tanks at each well prior to
    the delivery of such natural gas to the natural gas gathering
    pipeline system.
    MBbl One thousand barrels.
    Mcf One thousand cubic feet of natural gas.
    Mcfe One thousand cubic feet of natural gas
    equivalent, converting oil or condensate to natural gas at the
    ratio of 1 Bbl of oil or condensate to 6 Mcf of
    natural gas.
    MMBbl One million barrels of oil or other
    liquid hydrocarbons.
    MMcf One million cubic feet of natural gas.
    MBOE One thousand BOE.
    MMBOE One million BOE.
    MMBTU One million British Thermal Units.  Terms
    used to describe the Companys interests in wells and
    acreage
  
    Gross oil and natural gas wells or acres The
    Companys gross wells or gross acres represent the total
    number of wells or acres in which the Company owns a working
    interest.
    Net oil and natural gas wells or acres Determined by multiplying gross oil
    and natural gas wells or acres by the working interest that the
    Company owns in such wells or acres represented by the
    underlying properties.
    Prospect A location where hydrocarbons such
    as oil and gas are believed to be present in quantities which
    are economically feasible to produce.  Terms
    used to assign a present value to the Companys
    reserves
  
    Standardized measure of discounted future net cash flows,
    after income taxes The present value, discounted
    at 10%, of the pre-tax future net cash flows attributable to
    estimated net proved reserves. The Company calculates this
    amount by assuming that it will sell the oil and natural gas
    production attributable to the proved reserves estimated in its
    independent engineers reserve report for the oil and
    natural gas spot prices on the last day of the year, adjusted
    for quality and transportation. The Company also assumes that
    the cost to produce the reserves will remain constant at the
    costs prevailing on the date of the report. The assumed costs
    are subtracted from the assumed revenues resulting in a stream
    of future net cash flows. Estimated future income taxes, using
    rates in effect on the date of the report, are deducted from the
    net cash flow stream. The after-tax cash flows are discounted at
    10% to result in the standardized measure of the Companys
    proved reserves.
    Standardized measure of discounted future net cash flows
    before income taxes The discounted present value
    of proved reserves is identical to the standardized measure
    described above, except that estimated 3




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future income taxes are not deducted in calculating future net
    cash flows. The Company discloses the discounted present value
    without deducting estimated income taxes to provide what it
    believes is a better basis for comparison of its reserves to the
    producers who may have different income tax rates.  Terms
    used to classify the Companys reserve
    quantities
  Regulation S-X,
  Proved oil and natural gas reserves. Rule 4-10(a)(2).
  and/or
      Proved developed reserves Rule 4-10(a)(3).
  Proved undeveloped reserves Rule 4-10(a)(4).
  Terms
    used to describe the legal ownership of the Companys oil
    and natural gas properties
  
    Working interest A real property interest
    entitling the owner to receive a specified percentage of the
    proceeds of the sale of oil and natural gas production or a
    percentage of the production, but requiring the owner of the
    working interest to bear the cost to explore for, develop and
    produce such oil and natural gas. A working interest owner who
    owns a portion of the working interest may participate either as
    operator or by voting his percentage interest to approve or
    disapprove the appointment of an operator and drilling and other
    major activities in connection with the development and
    operation of a property.  Terms
    used to describe seismic operations
  
    Seismic data Oil and natural gas companies
    use seismic data as their principal source of information to
    locate oil and natural gas deposits, both to aid in exploration
    for new deposits and to manage or enhance production from known
    reservoirs. To gather seismic data, an energy source is used to
    send sound waves into 4




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the subsurface strata. These waves are reflected back to the
    surface by underground formations, where they are detected by
    geophones which digitize and record the reflected waves.
    Computers are then used to process the raw data to develop an
    image of underground formations.  
    2-D
    seismic data 2-D
    seismic survey data has been the standard acquisition technique
    used to image geologic formations over a broad area.
    2-D seismic
    data is collected by a single line of energy sources which
    reflect seismic waves to a single line of geophones. When
    processed,
    2-D seismic
    data produces an image of a single vertical plane of sub-surface
    data.
    3-D
    seismic data 3-D
    seismic data is collected using a grid of energy sources, which
    are generally spread over several miles. A
    3-D survey
    produces a three dimensional image of the subsurface geology by
    collecting seismic data along parallel lines and creating a cube
    of information that can be divided into various planes, thus
    improving visualization. Consequently,
    3-D seismic
    data is generally considered a more reliable indicator of
    potential oil and natural gas reservoirs in the area evaluated. 5




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PART I  Item 1.
    Business.  Business Corporations Act
    Sino-American
    Form 10-K, Form 10-Q, Form 8-K, (281) 876-0120.
  and/or 1-800-SEC-0330.
  Business
    Strategy
  Green
    River Basin, Wyoming
   6




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160-acre (10-acre (5-acre 80-acre (10-acre 80-acre (5-acre
  Pennsylvania
    Marketing
    and Pricing
      Natural
    Gas Marketing
       7




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8




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Oil
    Marketing
    Environmental
    Matters
   9




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80-acre 80-acre 80-acre 80-acre 80-acre
    (20-acre 160-acre (5-acre (10-acre 40-acre 40-acre (10-acre 5-acre 10-acre 20-acre 40-acre
 10




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and/or
  clean-up
  Regulation
  Oil
    and Gas Regulation
     11




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pipeline-by-pipeline
    on-site and/or
    Environmental
    Regulations
  General.
  Solid and Hazardous Waste.
 12




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Superfund.
  National Environmental Policy Act.
  Oil Pollution Act.
 13




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Air Emissions.
  Clean Water Act.
  Endangered Species Act.
  OSHA and other Regulations. and/or
  Climate Change Legislation. cap-and-trade
   14




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Employees
    Item 1A.
    Risk
    Factors.  There
    are inherent limitations in all control systems and failure of
    our controls and procedures to detect error or fraud could
    seriously harm our business and results of
    operations.
    Our
    reserve estimates may turn out to be incorrect if the
    assumptions upon which these estimates are based are inaccurate.
    Any material inaccuracies in these reserve estimates or
    underlying assumptions will materially affect the quantities and
    present value of our reserves.
    Competitive
    industry conditions may negatively affect our ability to conduct
    operations.
      
    our access to the capital necessary to drill wells and acquire
    properties;
    our ability to acquire and analyze seismic, geological and other
    information relating to a property; 15




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
    our ability to retain the personnel necessary to properly
    evaluate seismic and other information relating to a
    property; and
    our ability to access pipelines, and the locations of facilities
    used to produce and transport oil and natural gas production.  Factors
    beyond our control affect our ability to effectively market
    production and may ultimately affect our financial
    results.
    
    the extent of domestic production and imports of oil and natural
    gas;
    the availability of pipeline capacity;
    the proximity of natural gas production to those natural gas
    pipelines;
    the effects of inclement weather;
    the demand for oil and natural gas by utilities and other end
    users;
    the availability of alternative fuel sources;
    state and federal regulations of oil and natural gas
    marketing; and
    federal regulation of natural gas sold or transported in
    interstate commerce.    We may
    experience a temporary decline in revenues if we lose one of our
    significant customers.
    A
    decrease in oil and natural gas prices may adversely affect our
    results of operations and financial condition.
       16




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A
    price decrease may more adversely affect the price received for
    our Wyoming production than production in other U.S.
    regions.
  and/or
  If the
    United States experiences a sustained economic downturn or
    recession, natural gas prices may fall, which may adversely
    affect our results of operations.
    Compliance
    with environmental and other government regulations could be
    costly and could negatively impact our production.
    
    require that we acquire permits before commencing drilling;
    restrict the substances that can be released into the
    environment in connection with drilling and production
    activities;
    limit or prohibit drilling activities on protected areas such as
    wetlands or wilderness areas; and
    require remedial measures to mitigate pollution from former
    operations, such as plugging abandoned wells.  clean-up
 17




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on-site and/or
  We may
    not be able to obtain funding on acceptable terms or at all
    because of the deterioration of the credit and capital markets.
    This may hinder or prevent us from meeting our future capital
    needs.
    We may
    not be able to replace our reserves or generate cash flows if we
    are unable to raise capital. We will be required to make
    substantial capital expenditures to develop our existing
    reserves and to discover new oil and gas reserves.
     18




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Our
    operations may be interrupted by severe weather or drilling
    restrictions, particularly in the Rocky Mountain
    region.
    Our
    focus on exploration projects increases the risks inherent in
    our oil and gas activities.
    Unless
    we are able to replace reserves which we have produced, our cash
    flows and production will decrease over time.
    We are
    exposed to operating hazards and uninsured risks that could
    adversely impact our results of operations and cash
    flow.
    There
    are risks associated with our drilling activity that could
    impact our results of operations.
   19




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Our
    decision to drill a prospect is subject to a number of factors
    which may alter our drilling schedule or our plans to drill at
    all.
    
    receipt of additional seismic data or reprocessing of existing
    data;
    material changes in oil or natural gas prices;
    the costs and availability of drilling equipment;
    success or failure of wells drilled in similar formations or
    which would use the same production facilities;
    availability and cost of capital;
    changes in the estimates of costs to drill or complete wells;
    the approval of partners to participate in the drilling of
    certain wells;
    our ability to attract other industry partners to acquire a
    portion of the working interest to reduce exposure to costs and
    drilling risks;
    decisions of our joint working interest owners; and
    regulatory requirements, including those based on the BLMs
    interpretation of an EIS and the results of the permitting
    process.    If oil
    and natural gas prices decrease, we may be required to take
    write-downs of the carrying value of our oil and gas
    properties.
  and/or country-by-country
  Forward-Looking
    Statements
      
    our oil and natural gas reserve quantities, and the discounted
    present value of those reserves; 20




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
    the amount and nature of our capital expenditures;
    drilling of wells;
    the timing and amount of future production and operating costs;
    business strategies and plans of management; and
    prospect development and property acquisitions.    
    the current global economic downturn;
    general economic conditions, including the availability of
    credit and access to existing lines of credit;
    the volatility of oil and natural gas prices;
    the uncertainty of estimates of oil and natural gas reserves;
    the impact of competition;
    the availability and cost of seismic, drilling and other
    equipment;
    operating hazards inherent in the exploration for and production
    of oil and natural gas;
    difficulties encountered during the exploration for and
    production of oil and natural gas;
    difficulties encountered in delivering oil and natural gas to
    commercial markets;
    changes in customer demand and producers supply;
    the uncertainty of our ability to attract capital and obtain
    financing on favorable terms;
    compliance with, or the effect of changes in, the extensive
    governmental regulations regarding the oil and natural gas
    business, including those related to climate change and
    greenhouse gases;
    actions of operators of our oil and natural gas
    properties; and
    weather conditions.    Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.  Location
    and Characteristics
  10-year
  Green
    River Basin, Wyoming
   21




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Exploratory Wells.
  Development Wells.
  Pennsylvania
    Exploratory Wells.
 22




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Oil and
    Gas Reserves
    December 31,2008


2007


2006(In thousands)Proved Undeveloped ReservesNatural gas (MMcf)


1,943,225



1,758,431



1,415,132Oil (MBbl)


15,546



14,067



11,321Proved Developed ReservesNatural gas (MMcf)


1,412,562



1,084,224



842,969Oil (MBbl)


11,462



8,764



6,522Total Proved Reserves (MMcfe)


3,517,830



2,979,644



2,365,159Estimated future net cash flows, before income tax

$
10,040,263


$
13,076,921


$
6,590,206Standardized measure of discounted future net cash flows, before
    income taxes(1)

$
4,443,867


$
5,841,194


$
2,690,464Future income tax

$
1,426,181


$
1,971,792


$
905,384Standardized measure of discounted future net cash flows, after
    income tax

$
3,017,686


$
3,869,402


$
1,785,080Calculated weighted average price at December 31,Gas ($/Mcf)

$
4.71


$
6.13


$
4.50Oil ($/Bbl)

$
30.10


$
86.91


$
59.95     (1)
    
    Management believes that the presentation of the standardized
    measure of discounted future net cash flows, before income
    taxes, of estimated proved reserves, discounted at 10% per
    annum, may be considered a non-GAAP financial measure as defined
    in Item 10(e) of
    Regulation S-K,
    therefore the Company has included this reconciliation of the
    measure to the most directly comparable GAAP financial measure
    (Standardized measure of discounted future net cash flows, after
    income taxes). Management believes that the presentation of the
    standardized measure of future net cash flows before income
    taxes, provides useful information to investors because it is
    widely used by professional analysts and sophisticated investors
    in evaluating oil and gas companies. Because many factors that
    are unique to each individual company may impact the amount of
    future income taxes to be paid, the use of the pre-tax measure
    provides greater comparability when evaluating companies. It is
    relevant and useful to investors for evaluating the relative
    monetary significance of the Companys oil and natural gas
    properties. Further, investors may utilize the measure as a
    basis for comparison of the relative size and value of the
    Companys reserves to other companies. The standardized
    measure of discounted future net cash flows, before income
    taxes, is not a measure of financial or operating performance
    under GAAP, nor is it intended to represent the current market
    value of the estimated oil and natural gas reserves owned by the
    Company. Standardized measure of discounted future net cash
    flows, before income taxes, should not be considered in
    isolation or as a substitute for the standardized measure of
    discounted future net cash flows as defined under GAAP. 23




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December 31,2008


2007


2006(In thousands)Proved Undeveloped ReservesNatural gas (MMcf)










Oil (MBbl)










1,301Proved Developed ReservesNatural gas (MMcf)










Oil (MBbl)










2,686Total Proved Reserves (MMcfe)










23,922Estimated future net cash flows, before income tax

$



$



$
111,994Standardized measure of discounted future net cash flows, before
    income taxes(1)

$



$



$
91,984Future Income Tax

$



$



$
5,511Standardized measure of discounted future net cash flows, after
    income tax

$



$



$
86,473Calculated weighted average price at December 31, Oil
    ($/Bbl)

$



$



$
46.57     (1)
    
    Management believes that the presentation of the standardized
    measure of discounted future net cash flows, before income
    taxes, of estimated proved reserves, discounted at 10% per
    annum, may be considered a non-GAAP financial measure as defined
    in Item 10(e) of
    Regulation S-K,
    therefore the Company has included this reconciliation of the
    measure to the most directly comparable GAAP financial measure
    (Standardized measure of discounted future net cash flows, after
    income taxes). Management believes that the presentation of the
    standardized measure of future net cash flows, before income
    taxes, provides useful information to investors because it is
    widely used by professional analysts and sophisticated investors
    in evaluating oil and gas companies. Because many factors that
    are unique to each individual company may impact the amount of
    future income taxes to be paid, the use of the pre-tax measure
    provides greater comparability when evaluating companies. It is
    relevant and useful to investors for evaluating the relative
    monetary significance of the Companys oil and natural gas
    properties. Further, investors may utilize the measure as a
    basis for comparison of the relative size and value of the
    Companys reserves to other companies. The standardized
    measure of discounted future net cash flows, before income
    taxes, is not a measure of financial or operating performance
    under GAAP, nor is it intended to represent the current market
    value of the estimated oil and natural gas reserves owned by the
    Company. Standardized measure of discounted future net cash
    flows, before income taxes, should not be considered in
    isolation or as a substitute for the standardized measure of
    discounted future net cash flows as defined under GAAP. 24




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December 31,2008


2007


2006(In thousands)Proved Undeveloped ReservesNatural gas (MMcf)


1,943,225



1,758,431



1,415,132Oil (MBbl)


15,546



14,067



12,622Proved Developed ReservesNatural gas (MMcf)


1,412,562



1,084,224



842,969Oil (MBbl)


11,462



8,764



9,208Total Proved Reserves (MMcfe)


3,517,830



2,979,644



2,389,081Estimated future net cash flows, before income tax

$
10,040,263


$
13,076,921


$
6,702,200Standardized measure of discounted future net cash flows, before
    income taxes(1)

$
4,443,867


$
5,841,194


$
2,782,448Future income tax

$
1,426,181


$
1,971,792


$
910,895Standardized measure of discounted future net cash flows, after
    income tax

$
3,017,686


$
3,869,402


$
1,871,553     (1)
    
    Management believes that the presentation of the standardized
    measure of discounted future net cash flows, before income
    taxes, of estimated proved reserves, discounted at 10% per
    annum, may be considered a non-GAAP financial measure as defined
    in Item 10(e) of
    Regulation S-K,
    therefore the Company has included this reconciliation of the
    measure to the most directly comparable GAAP financial measure
    (Standardized measure of discounted future net cash flows, after
    income taxes). Management believes that the presentation of the
    standardized measure of future net cash flows, before income
    taxes, provides useful information to investors because it is
    widely used by professional analysts and sophisticated investors
    in evaluating oil and gas companies. Because many factors that
    are unique to each individual company may impact the amount of
    future income taxes to be paid, the use of the pre-tax measure
    provides greater comparability when evaluating companies. It is
    relevant and useful to investors for evaluating the relative
    monetary significance of the Companys oil and natural gas
    properties. Further, investors may utilize the measure as a
    basis for comparison of the relative size and value of the
    Companys reserves to other companies. The standardized
    measure of discounted future net cash flows, before income
    taxes, is not a measure of financial or operating performance
    under GAAP, nor is it intended to represent the current market
    value of the estimated oil and natural gas reserves owned by the
    Company. Standardized measure of discounted future net cash
    flows, before income taxes, should not be considered in
    isolation or as a substitute for the standardized measure of
    discounted future net cash flows as defined under GAAP.   25




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Production
    Volumes, Average Sales Prices and Average Production
    Costs
    Year Ended December 31,2008


2007


2006(In thousands, except per unit data)ProductionNatural gas (Mcf)


138,564



109,178



78,395Oil (Bbl)  US


1,122



870



594Oil (Bbl)  China (See Note 11 on Discontinued
    Operations)






1,153



1,603Total (Mcfe)


145,293



121,316



91,580RevenuesNatural gas sales

$
986,374


$
509,140


$
470,324Oil sales  US


98,026



57,498



38,335Oil sales  China (See Note 11 on Discontinued
    Operations)






64,822



84,008Total revenues

$
1,084,400


$
631,460


$
592,667Lease Operating ExpensesProduction costs  US(a)

$
36,997


$
23,968


$
15,068Production costs  China(a) (See Note 11 on
    Discontinued Operations)






11,419



8,922Severance/production taxes  US


119,502



63,480



57,899Severance/production taxes  China (See Note 11
    on Discontinued Operations)






8,113



8,398Gathering


37,744



27,923



19,721Total lease operating expenses

$
194,243


$
134,903


$
110,008Realized PricesNatural gas ($/Mcf, including cash flow hedges under
    SFAS 133)

$
7.12


$
4.66


$
6.00Natural gas ($/Mcf, excluding financial commodity derivatives)(b)

$
7.11


$
4.65


$
6.00Oil ($/Bbl)  US

$
87.40


$
66.08


$
64.52Oil ($/Bbl)  China (See Note 11 on Discontinued
    Operations)

$



$
56.21


$
52.40Operating Costs per Mcfe  Total ConsolidatedProduction costs

$
0.25


$
0.29


$
0.26Severance/production taxes

$
0.82


$
0.59


$
0.72Gathering

$
0.26


$
0.23


$
0.22Transportation charges

$
0.32


$



$
DD&A

$
1.27


$
1.24


$
1.02Interest

$
0.15


$
0.15


$
0.04Total operating costs per Mcfe

$
3.07


$
2.50


$
2.26     (a)
    
    Production costs include lifting costs and remedial workover
    expenses.(b)
    
    In addition to our financial hedges and to a larger extent, we
    sell a portion of our production pursuant to fixed price forward
    natural gas sales contracts. During 2008, 2007 and 2006, we sold
    32.7 MMMBtu (23%), 6.8 MMMBtu (6%) and
    20.4 MMMBtu (22%) pursuant to these contracts,
    respectively. The average price we received for production sold
    pursuant to term fixed price contracts was $6.84, $6.20 and
    $5.86 per MMBtu in 2008, 2007 and 2006, respectively. The
    average spot price (as measured by the Inside FERC First of
    Month Index for Northwest Pipeline  Rocky Mountains)
    was $6.25, $3.95 and $5.66 per MMBtu in 2008, 2007 and 2006,
    respectively. If we had sold the production we sold under the
    fixed price contracts at spot market prices during these
    periods, we may have received more or less than these prices,
    because the amount of production we sell could have influenced
    the spot market prices in the areas in which we produce and
    because we are able to select among several market indices when
    selling our production. 26




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##### Table of Contents



Productive
    Wells
    Productive Wells*

Gross Wells


Net WellsNatural Gas and Condensate


1,007.0



467.6     *
    
    Productive wells are producing wells, shut-in wells the Company
    deems capable of production, wells that are drilled/cased and
    waiting for completion, plus wells that are drilled/cased and
    completed, but waiting for pipeline
    hook-up. A
    gross well is a well in which a working interest is owned. The
    number of net wells represents the sum of fractional working
    interests the Company owns in gross wells.  Oil and
    Gas Acreage
    Developed Acres


Undeveloped AcresGross


Net


Gross


NetWyoming


18,916



8,528



102,516



51,425Pennsylvania


839



739



286,906



151,488Other


80



14







All States


19,835



9,281



389,422



202,913   Drilling
    Activities
    Wyoming 
    Green River Basin
  2008


2007


2006Gross


Net


Gross


Net


Gross


NetDevelopment WellsProductive


120.00



61.98



72.00



32.35



80.00



38.44Dry


0.00



0.00



0.00



0.00



0.00



0.00Total


120.00



61.98



72.00



32.35



80.00



38.44     2008


2007


2006Gross


Net


Gross


Net


Gross


NetExploratory WellsProductive


108.00



59.50



79.0



43.76



44.0



19.79Dry


0.00



0.00



0.00



0.00



0.00



0.00Total


108.00



59.50



79.0



43.76



44.0



19.79    27




---



##### Table of Contents



Pennsylvania
  2008


2007


2006Gross


Net


Gross


Net


Gross


NetExploratory WellsProductive


0.00



0.00



2.00



1.12



0.00



0.00Dry


0.00



0.00



0.00



0.00



0.00



0.00Total


0.00



0.00



2.00



1.12



0.00



0.00     China 
    Bohai Bay
  2008


2007


2006Gross


Net


Gross


Net


Gross


NetDevelopment WellsProductive


0.00



0.00



15.00



1.34



26.00



2.16Dry


0.00



0.00



0.00



0.00



0.00



0.00Total


0.00



0.00



15.00



1.34



26.00



2.16Exploratory WellsProductive and Successful Appraisal*


0.00



0.00



0.00



0.00



0.00



0.00Dry


0.00



0.00



2.00



0.18



1.00



0.23Total


0.00



0.00



2.00



0.18



1.00



0.23     *
    
    A successful appraisal well is a well that is drilled into a
    formation shown to be productive of oil or natural gas by an
    earlier well for the purpose of obtaining more information about
    the reservoir.  Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   28




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  intra-day
  2008

High


LowFirst Quarter

$
81.33


$
60.00Second Quarter

$
102.81


$
75.35Third Quarter

$
102.81


$
49.41Fourth Quarter

$
56.71


$
28.85   2007

High


LowFirst Quarter

$
53.65


$
44.20Second Quarter

$
64.94


$
52.09Third Quarter

$
62.49


$
52.16Fourth Quarter

$
72.32


$
61.50    29




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##### Table of Contents



COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among Ultra Petroleum Corp.
  
    *
    $100 invested on
    12/31/03 in
    stock or index-including reinvestment of dividends. Fiscal year
    ending December 31.  ©
  ©
      Total Numberof Shares


Maximum NumberPurchased


(or Approximateas Part of


Dollar Value) ofPublicly


Shares ThatTotal Number





Announced


May Yet beof Shares


Average


Plans or


PurchasedPurchased


Price Paid


Programs


Under thePeriod

(000s)


per Share


(000s)


Plans or ProgramsOct 1  Oct 31, 2008





$







$
420 millionNov 1  Nov 30, 2008





$







$
420 millionDec 1  Dec 31, 2008


402


$
32.83



402


$
407 million  30




---



##### Table of Contents



Item 6.
    Selected
    Financial Data.    Year Ended December 31,2008


2007


2006


2005


2004(In thousands, except per share data)Statement of Operations DataRevenues:Natural gas sales

$
986,374


$
509,140


$
470,324


$
422,091


$
224,208Gain on commodity derivatives


33,216















Oil sales


98,026



57,498



38,335



26,640



14,659Interest and other


418



1,087



1,941



612



91Total revenues

$
1,118,034


$
567,725


$
510,600


$
449,343


$
238,958Expenses:Production expenses and taxes


194,243



115,371



92,688



78,862



47,574Transportation charges


46,310















Depreciation, depletion and amortization


184,795



135,470



79,675



48,455



27,346General and administrative


11,230



7,543



12,259



11,405



6,123Stock compensation


5,816



5,718



2,626



2,859



924Interest


21,276



17,760



3,909



3,286



3,783Total expenses


463,670



281,862



191,157



144,867



85,750Income before income taxes


654,364



285,863



319,443



304,476



153,208Income tax provision


240,504



105,621



122,741



107,864



53,406Net income from continuing operations


413,860



180,242



196,702



196,612


$
99,802Income from discontinued operations (including pre-tax gain on
    sale of $98,066 in 2007)


415



82,794



34,493



31,688



9,348Net income

$
414,275


$
263,036


$
231,195


$
228,300


$
109,150Basic Earnings per Share:Income per common share from continuing operations

$
2.72


$
1.19


$
1.28


$
1.28


$
0.67Income per common share from discontinued operations

$
0.00


$
0.54


$
0.22


$
0.21


$
0.06Net income per common share

$
2.72


$
1.73


$
1.50


$
1.49


$
0.73Fully Diluted Earnings per Share:Income per common share from continuing operations

$
2.65


$
1.14


$
1.22


$
1.21


$
0.62Income per common share from discontinued operations

$
0.00


$
0.52


$
0.21


$
0.20


$
0.06Net income per common share

$
2.65


$
1.66


$
1.43


$
1.41


$
0.68Statement of Cash Flows DataNet cash provided by (used in):Operating activities

$
840,803


$
427,949


$
437,333


$
414,140


$
175,343Investing activities


(915,319
)


(507,070
)


(453,882
)


(306,549
)


(165,014
)Financing activities


78,041



75,179



(12,845
)


(80,344
)


4,770Balance Sheet Data Cash and cash equivalents

$
14,157


$
10,632


$
14,574


$
43,968


$
16,721Working capital (deficit)


(149,355
)


(67,505
)


55,036



44,600



(18,298
)Oil and gas properties


2,350,526



1,574,529



1,006,998



599,901



381,409Total assets


2,558,162



1,751,582



1,258,299



742,566



435,076Total long-term debt


570,000



290,000



165,000







102,000Other long-term obligations


46,206



26,672



25,262



19,821



9,312Deferred income taxes, net


503,597



341,406



252,808



148,743



78,129Total shareholders equity


1,090,786



857,546



631,258



572,910



267,992  31




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.    2003-2008
    2008


2007


2006


2005


2004Production  Bcfe


145.3



121.3



91.6



73.8



49.5         Outlook
     32




---



##### Table of Contents



Critical
    Accounting Policies
    Oil and Gas Reserves. Rule 4-10(a) Regulation S-X
      Full Cost Method of Accounting.
   33




---



##### Table of Contents



country-by-country regulation S-X Rule 4-10 states
  and/or
  Asset Retirement Obligation.
  Entitlements Method of Accounting for Oil and Natural Gas
    Sales.
  Make-up
  Valuation of Deferred Tax Assets.
 34




---



##### Table of Contents



Forward natural gas sales transactions:
  Fair Value Measurements.
        Level 1(a)


Level 2(b)


Level 3(c)


TotalAssets  current:Derivatives

$



$
39,939


$



$
39,939Liabilities  current:Derivatives

$



$
1,712


$



$
1,712     (a)
    
    Values represent observable unadjusted quoted prices for traded
    instruments in active markets.(b)
    
    Values with inputs that are observable directly or indirectly
    for the instrument, but do not qualify for Level 1.(c)
    
    Values with a significant amount of inputs that are not
    observable for the instrument.  Legal, Environmental and Other
    Contingencies. and/or
  Share-Based Payment Arrangements.
 35




---



##### Table of Contents



Financial Statement Restatement.
    Recently issued accounting pronouncements. Form 10-K
    FAS 157-2, SFAS 157-2). SFAS 157-2 SFAS 157-2 FAS 157-2
 36




---



##### Table of Contents



Results
    of Operations  Year Ended December 31, 2008
    Compared to Year Ended December 31, 2007
                   37




---



##### Table of Contents



Sino-American
    Results
    of Operations  Year Ended December 31, 2007
    Compared to Year Ended December 31, 2006
       38




---



##### Table of Contents



Sino-American
    Liquidity
    and Capital Resources
      Bank indebtedness:
     39




---



##### Table of Contents



1 2
  Senior Notes, due 2015 and 2018:
      Operating Activities.
  Investing Activities.
  Financing Activities
  Off-Balance
    Sheet Arrangements
    Contractual
    Obligations
    Payments Due by Period:Less than








More thanTotal


One Year


1-3 Years


3-5 Years


5 Years(Amounts in thousands of U.S. dollars)Long-term debt (See Note 5)

$
570,000


$



$



$
270,000


$
300,000Transportation contract (REX)


562,100



56,210



168,630



112,420



224,840Drilling contracts


203,129



61,713



114,740



26,676



Office space lease


2,285



845



1,440







Total contractual obligations

$
1,337,514


$
118,768


$
284,810


$
409,096


$
524,840  40




---



##### Table of Contents



Transportation contract.
  Drilling contracts. 2009-2012
  Office space lease.
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.         41




---



##### Table of Contents



Royalty-in-Kind
  Volume-


AverageRemaining Contract Period

MMBTU/Day


Price/MMBTUSummer 2009 (April  October)


130,000


$
6.15Calendar 2009


60,000


$
5.04Calendar 2010


20,000


$
5.17     Volume-


AverageType

Point of Sale

Remaining Contract Period


MMBTU/Day


Price/MMBTUSwap

NWPL  Rockies


Jan 2009  Dec 2009



40,000


$
6.57Swap

Mid-Continent


Apr 2009  Oct 2009



110,000


$
4.99     For the Year Ended December 31,2008


2007


2006Realized gain (loss) on derivatives designated as cash flow
    hedges(1)

$
1,148


$
1,107


$
Realized gain (loss) on commodity derivatives(2)

$
18,991


$



$
Unrealized gain (loss) on commodity derivatives(3)

$
14,225


$



$
     (1)
    
    Included in natural gas sales in the income statement. (Related
    tax expense of $403 and $389, respectively).(2)
    
    Included in gain on commodity derivatives in the income
    statement. (Related tax expense of $6,666).(3)
    
    Included in gain on commodity derivatives in the income
    statement. (Related tax expense of $4,993). 42




---



##### Table of Contents



Volume-


AverageRemaining Contract Period

MMBTU/Day


Price/MMBTUCalendar 2010


30,000


$
4.87     Volume-


AverageType

Point of Sale


Remaining Contract Period


MMBTU/Day


Price/MMBTUSwap


Mid-Continent



Apr 2009  Oct 2009



20,000


$
5.02  43




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.  MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
    Rules 13a-15(f).
   44




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  
              
    45




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  
          
    46




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2008


2007


2006(Amounts in thousands of U.S. dollars, except per share
    data)REVENUES:Natural gas sales

$
986,374


$
509,140


$
470,324Oil sales


98,026



57,498



38,3351,084,400



566,638



508,659EXPENSES:Lease operating expenses


36,997



23,968



15,068Production taxes


119,502



63,480



57,899Gathering fees


37,744



27,923



19,721Transportation charges


46,310







Depletion, depreciation and amortization


184,795



135,470



79,675General and administrative, excluding depreciation and
    amortization


17,046



13,261



14,885442,394



264,102



187,248OPERATING INCOME


642,006



302,536



321,411OTHER INCOME (EXPENSE):Interest income


418



1,087



1,941Gain on commodity derivatives


33,216







Interest expense


(21,276
)


(17,760
)


(3,909
)12,358



(16,673
)


(1,968
)INCOME BEFORE INCOME TAX PROVISION


654,364



285,863



319,443Income tax provision


240,504



105,621



122,741NET INCOME FROM CONTINUING OPERATIONS


413,860



180,242



196,702Income from discontinued operations (including pre-tax gain on
    sale in 2007 of $98,066)


415



82,794



34,493NET INCOME

$
414,275


$
263,036


$
231,195Basic Earnings per Share:Income per common share from continuing operations

$
2.72


$
1.19


$
1.28Income per common share from discontinued operations

$
0.00


$
0.54


$
0.22Net income per common share

$
2.72


$
1.73


$
1.50Fully Diluted Earnings per Share:Income per common share from continuing operations

$
2.65


$
1.14


$
1.22Income per common share from discontinued operations

$
0.00


$
0.52


$
0.21Net income per common share

$
2.65


$
1.66


$
1.43Weighted average common shares outstanding  basic


152,075



151,762



153,879Weighted average common shares outstanding  diluted


156,531



158,616



161,615     /s/  Michael
    D. Watford

/s/  Stephen
    J. McDanielChairman of the Board,
    Chief Executive Officer and President

Director    47




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(Amounts in thousands ofU.S. dollars, except share data)ASSETSCurrent assetsCash and cash equivalents

$
14,157


$
10,632Restricted cash


2,727



2,590Accounts receivable


126,710



135,849Derivative assets


39,939



5,625Inventory


8,522



13,333Prepaid expenses and other current assets


6,163



424Total current assets


198,218



168,453Oil and gas properties, using the full cost method of accounting
    Proved


2,294,982



1,537,751Unproved


55,544



36,778Property, plant and equipment


5,770



4,739Deferred financing costs, derivative assets and other


3,648



3,861TOTAL ASSETS

$
2,558,162


$
1,751,582LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable and accrued liabilities

$
163,902


$
102,405Production taxes payable


61,416



34,269Derivative liabilities


1,712



Current taxes payable






10,839Capital cost accrual


120,543



88,445Total current liabilities


347,573



235,958Long-term debt


570,000



290,000Deferred income tax liability


503,597



341,406Other long-term obligations


46,206



26,672Shareholders equity:Common stock  no par value; authorized 
    unlimited; issued and outstanding  151,232,545 and
    152,003,671 at December 31, 2008 and 2007, respectively


346,832



256,889Treasury stock


(45,740
)


(59,245
)Retained earnings


774,117



654,948Accumulated other comprehensive income


15,577



4,954Total shareholders equity


1,090,786



857,546Commitments and contingencies (Note 12)TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$
2,558,162


$
1,751,582    48




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
  AccumulatedOtherShares








Comprehensive





TotalIssued and


Common


Retained


Income


Treasury


ShareholdersOutstanding


Stock


Earnings


(Loss)


Stock


Equity(Amounts in thousands)Balances at December 31, 2005


155,076


$
180,511


$
392,399


$



$



$
572,910Stock options exercised


656



9,203















9,203Employee stock plan grants


34



2,141















2,141Shares repurchased and retired


(3,970
)


(3,302
)


(194,249
)










(197,551
)Fair value of employee stock plan grants






2,857















2,857Tax benefit of stock options exercised






10,503















10,503Comprehensive earnings:Net earnings










231,195











231,195Total comprehensive earnings






















231,195Balances at December 31, 2006


151,796


$
201,913


$
429,345


$



$



$
631,258Stock options exercised


1,849



11,686















11,686Employee stock plan grants


56



877















877Shares repurchased and retired


(364
)


(317
)


(19,326
)










(19,643
)Shares repurchased


(1,068
)














(59,245
)


(59,245
)Net share settlements


(265
)






(18,107
)










(18,107
)Fair value of employee stock plan grants






6,038















6,038Tax benefit of stock options exercised






36,692















36,692Comprehensive earnings:Net earnings










263,036











263,036Change in derivative instruments fair value, net of taxes














4,954







4,954Total comprehensive earnings






















267,990Balances at December 31, 2007


152,004


$
256,889


$
654,948


$
4,954


$
(59,245
)

$
857,546Stock options exercised


3,595



19,086















19,086Employee stock plan grants


151



997















997Shares repurchased and retired






(1,669
)


(108,741
)






110,410



Shares reissued from treasury






(14,885
)


(135,581
)






150,466



Shares repurchased


(3,661
)














(247,371
)


(247,371
)Net share settlements


(856
)


(152
)


(50,784
)










(50,936
)Fair value of employee stock plan grants






7,726















7,726Tax benefit of stock options exercised






78,840















78,840Comprehensive earnings:Net earnings










414,275











414,275Change in derivative instruments fair value, net of taxes














14,273







14,273Reclassification of derivative fair value into earnings, net of
    taxes














(3,650
)






(3,650
)Total comprehensive earnings






















424,898Balances at December 31, 2008


151,233


$
346,832


$
774,117


$
15,577


$
(45,740
)

$
1,090,786    49




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2008


2007


2006(Amounts in thousands of U.S. dollars)Cash flows from operating activities:Net income

$
414,275


$
263,036


$
231,195Adjustments to reconcile net income to net cash provided by
    operating activities:Income from discontinued operations (including pre-tax gain on
    sale in 2007 of $98,066)


(415
)


(82,794
)


(34,493
)Depletion, depreciation and amortization


184,795



135,470



79,675Deferred and current non-cash income taxes


235,031



127,802



105,681Stock compensation


5,816



5,718



2,626Excess tax benefit from stock based compensation


(78,840
)


(36,692
)


(10,503
)Unrealized (gain) on commodity derivatives


(14,225
)






Other


426



177



Net changes in non-cash working capital:Restricted cash


(137
)


(1,923
)


(453
)Accounts receivable


9,139



(48,044
)


(12,149
)Prepaid expenses and other current assets


(5,543
)


(273
)


128Accounts payable and accrued liabilities


86,487



58,019



28,635Other long-term obligations


14,833



413



129Taxation payable


(10,839
)


8,632



2,207Net cash provided by operating activities from continuing
    operations


840,803



429,541



392,678Net cash provided by operating activities from discontinued
    operations






(1,592
)


44,655Net cash provided by operating activities


840,803



427,949



437,333Cash flows from investing activities:Oil and gas property expenditures


(949,650
)


(696,124
)


(480,432
)Change in capital costs accrual


32,097



(6,422
)


47,987Post closing adjustments on sale of subsidiary


640







Proceeds on sale of subsidiary, net of transaction costs






208,032



Inventory


4,811



5,596



1,677Purchase of capital assets


(1,356
)


(3,702
)


(623
)Other


(1,861
)






Investing activities from discontinued operations






(14,450
)


(22,491
)Net cash (used in) investing activities


(915,319
)


(507,070
)


(453,882
)Cash flows from financing activities:Borrowings of long-term debt, gross


662,000



396,000



180,000Payments on long-term debt, gross


(682,000
)


(271,000
)


(15,000
)Proceeds from issuance of Senior Notes


300,000







Repurchased shares


(298,307
)


(96,995
)


(197,551
)Proceeds from issuance of common stock


19,086



11,686



9,203Excess tax benefit from stock based compensation


78,840



36,692



10,503Deferred financing costs


(1,578
)


(1,204
)


Net cash provided by (used in) financing activities


78,041



75,179



(12,845
)Net (decrease)/increase in cash and cash equivalents


3,525



(3,942
)


(29,394
)Cash and cash equivalents, beginning of year


10,632



14,574



43,968Cash and cash equivalents, end of year

$
14,157


$
10,632


$
14,574SUPPLEMENTAL INFORMATIONCash paid for:Interest

$
16,092


$
16,218


$
1,913Income taxes

$
16,322


$
21,513


$
21,380    50




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Years Ended December 31, 2008, 2007 and 2006
    DESCRIPTION OF THE BUSINESS
  Form 10-K
    1.
    SIGNIFICANT
    ACCOUNTING POLICIES:  Basis of presentation and principles of
    consolidation: Sino-American
  Cash and cash equivalents:
  Restricted cash:
  Capital assets:
  Oil and natural gas properties:
      Regulation S-X Rule 4-10. country-by-country regulation S-X Rule 4-10 states
 51




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Inventories:
  Forward natural gas sales
    transactions:
  Income taxes:
    Earnings per share:
 52




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007


2006Income from continuing operations

$
413,860


$
180,242


$
196,702Income from discontinued operations


415



82,794



34,493Net Income

$
414,275


$
263,036


$
231,195Weighted average common shares outstanding during the period


152,075



151,762



153,879Effect of dilutive instruments


4,456



6,854



7,736Weighted average common shares outstanding during the period
    including the effects of dilutive instruments


156,531



158,616



161,615Basic Earnings per Share:Income per common share from continuing operations

$
2.72


$
1.19


$
1.28Income per common share from discontinued operations

$
0.00


$
0.54


$
0.22Net income per common share

$
2.72


$
1.73


$
1.50Fully Diluted Earnings per Share:Income per common share from continuing operations

$
2.65


$
1.14


$
1.22Income per common share from discontinued operations

$
0.00


$
0.52


$
0.21Net income per common share

$
2.65


$
1.66


$
1.43Number of shares not included in dilutive earnings per share
    that would have been anti-dilutive because the exercise price
    was greater than the average market price of the common shares


418



674



240   Use of estimates:
  Accounting for share-based
    compensation:
  Fair Value Accounting.
 53




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revenue Recognition.
  Accumulated Other Comprehensive
    Income:
  Year Ended December 31,2008


2007


2006Net income

$
414,275


$
263,036


$
231,195Unrealized gain on derivative instruments*


16,368



7,633



Taxes on unrealized gain on derivative instruments*


(5,745
)


(2,679
)


Other comprehensive income

$
424,898


$
267,990


$
231,195     *
    
    Effective November 3, 2008, the Company changed its method
    of accounting for natural gas commodity derivatives to reflect
    unrealized gains and losses on commodity derivative contracts in
    the income statement rather than on the balance sheet (See
    Note 7). The net gain or loss in accumulated other
    comprehensive income at November 3, 2008 will remain on the
    balance sheet and the respective months gains or losses
    will continue to be reclassified from accumulated other
    comprehensive income to earnings as the counterparty settlements
    affect earnings (January through December 2009). It is still
    considered probable that the original forecasted transactions
    will occur; therefore, the net gain or loss in accumulated other
    comprehensive income shall not be immediately reclassified into
    earnings. As a result of the de-designation on November 3,
    2008, the company no longer has any derivative instruments which
    qualify for cash flow hedge accounting.    Reclassifications:
    Financial Statement Restatement.
 54




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Impact of recently issued accounting
    pronouncements: Form 10-K
    FAS 157-2, SFAS 157-2). SFAS 157-2 SFAS 157-2 FAS 157-2
  2.
    ASSET
    RETIREMENT OBLIGATIONS:  and/or
 55




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      December 31,


December 31,2008


2007Asset retirement obligations at beginning of period

$
8,298


$
6,131Accretion expense


686



493Liabilities incurred


3,140



2,674Liabilities settled


(220
)


(66
)Revisions of estimated liabilities


2,175



(934
)Asset retirement obligations at end of period


14,079



8,298Less: current asset retirement obligations






Long-term asset retirement obligations

$
14,079


$
8,298   3.
    OIL AND
    GAS PROPERTIES:  December 31,


December 31,2008


2007Developed Properties:Acquisition, equipment, exploration, drilling and environmental
    costs

$
2,809,082


$
1,868,564Less accumulated depletion, depreciation and amortization


(514,100
)


(330,813
)2,294,982



1,537,751Unproven Properties:Acquisition and exploration costs


55,544



36,778$
2,350,526


$
1,574,529       Total


2008


2007


2006


PriorUnited States:Acquisition costs

$
54,459


$
17,650


$
5,423


$
12,780


$
18,606Exploration costs


13,261



2,284



3,348



151



7,478Less transfers to proved


(12,176
)


(1,168
)


(991
)


(1,580
)


(8,437
)Total

$
55,544


$
18,766


$
7,780


$
11,351


$
17,647  56




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    CAPITAL
    ASSETS:  December 31,December 31,


2008


December 31,


December 31,2008


Accumulated


2008


2007Cost


Depreciation


Net Book Value


Net Book ValueComputer equipment

$
1,475


$
(738
)

$
737


$
508Office equipment


384



(245
)


139



163Leasehold improvements


380



(232
)


148



210Land


2,437







2,437



2,437Other


4,171



(1,862
)


2,309



1,421$
8,847


$
(3,077
)

$
5,770


$
4,739   5.
    LONG TERM
    LIABILITIES:  December 31,


December 31,2008


2007Bank indebtedness

$
270,000


$
290,000Senior notes


300,000



Other long-term obligations


46,206



26,672$
616,206


$
316,672   Bank indebtedness:
      1 2
  Senior Notes, due 2015 and 2018:
 57




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Other long-term obligations:
  6.
    SHARE
    BASED COMPENSATION:       58




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Valuation
    and Expense Information under SFAS 123R
    Year-Ended


Year-Ended


Year-EndedDecember 31,


December 31,


December 31,2008


2007


2006Total cost of share-based payment plans

$
10,355


$
9,581


$
4,742Amounts capitalized in fixed assets

$
4,539


$
3,863


$
2,116Amounts charged against income, before income tax benefit

$
5,816


$
5,718


$
2,626Amount of related income tax benefit recognized in income

$
2,041


$
2,007


$
922     2008


2007


2006Non-Executives


Executives


Non-Executives


Executives


Non-Executives


ExecutivesExpected volatility


41.2-47.6
%


42.5-43.3
%


41.3-45.8
%


43.5-47.4
%


43.7-45.8
%


43.5-47.4
%Expected dividends


0
%


0
%


0
%


0
%


0
%


0
%Expected term (in years)


5.01-5.15



5.98-6.45



2.75-5.02



3.58-5.55



2.75-4.71



3.58-5.55Risk free rate


2.48-3.41
%


2.98-3.00
%


4.16-5.07
%


4.69-4.84
%


4.51-5.03
%


4.76-4.84
%Expected forfeiture rate


14.0
%


14.0
%


18.0
%


18.0
%


20.0
%


20.0
%  59




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Number of SecuritiesNumber of





Remaining Available forSecurities to


Weighted-


Future Issuance Underbe Issued


Average


Equity CompensationUpon Exercise of


Exercise Price of


Plans (ExcludingOutstanding


Outstanding


Securities Reflected inPlan Category

Options


Options


the First Column)Equity compensation plans approved by security holders


4,213


$
24.04



10,004Equity compensation plans not approved by security holders


n/a



n/a



n/aTotal


4,213


$
24.04



10,004   Changes
    in Stock Options and Stock Options Outstanding
    Number of


Weighted AverageOptions


Exercise Price (US$)Balance, December 31, 2005


9,389


$
0.25 to $58.71Granted


380


$
46.05 to $67.73Exercised


(656
)

$
0.46 to $40.00Forfeited


(30
)

$
16.97 to $63.05Balance, December 31, 2006


9,083


$
0.25 to $67.73Granted


436


$
45.95 to $65.94Exercised


(1,849
)

$
0.25 to $67.73Forfeited


(81
)

$
47.19 to $63.05Balance, December 31, 2007


7,589


$
0.25 to $67.73Granted


299


$
51.14 to $98.87Exercised


(3,595
)

$
0.25 to $67.73Forfeited


(80
)

$
51.60 to $85.05Balance, December 31, 2008


4,213


$
0.25 to $98.87  60




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Options OutstandingWeightedAverage


WeightedNumber


Remaining


Average


AggregateRange of Exercise Price

Outstanding


Contractual Life


Exercise Price


Intrinsic Value$0.25  2.61


1,082



1.71


$
0.98


$
36,279$3.91  4.83


672



3.86


$
4.63


$
20,078$11.68  19.18


639



5.21


$
13.71


$
13,291$25.08  58.71


899



6.52


$
36.98


$
2,283$46.05  65.04


240



7.48


$
57.88


$
$45.95  65.94


421



8.28


$
53.97


$
$51.14  98.87


260



9.40


$
71.15


$
   Options ExercisableWeightedAverage


WeightedNumber


Remaining


Average


AggregateRange of Exercise Price

Exercisable


Contractual Life


Exercise Price


Intrinsic Value$0.25  2.61


1,082



1.71


$
0.98


$
36,279$3.91  4.83


672



3.86


$
4.63


$
20,078$11.68  19.18


639



5.21


$
13.71


$
13,291$25.08  58.71


899



6.52


$
36.98


$
2,283$46.05  65.04


85



7.25


$
62.42


$
$45.95  65.94









$



$
$51.14  98.87









$



$
       2008


2007


2006Share options granted

$
30.94


$
23.85


$
23.65Non-vested share options at beginning of year

$
23.93


$
23.65


$
Non-vested share options at end of year

$
26.18


$
23.93


$
23.65Options vested during the year

$



$
22.79


$
Options forfeited during the year

$
27.35


$
22.25


$
21.64      61




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##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  PERFORMANCE
    SHARE PLANS:
  Long-Term
    Incentive Plan
        he/she
   62




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Best in
    Class Program
      he/she
    7.
    DERIVATIVE
    FINANCIAL INSTRUMENTS:     63




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Volume-


AverageRemaining Contract Period

MMBTU/Day


Price/MMBTUSummer 2009 (April  October)


130,000


$
6.15Calendar 2009


60,000


$
5.04Calendar 2010


20,000


$
5.17  64




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Volume-


AverageType

Point of Sale

Remaining Contract Period


MMBTU/Day


Price/MMBTUSwap

NWPL  Rockies


Jan 2009  Dec 2009



40,000


$
6.57Swap

Mid-Continent


Apr 2009  Oct 2009



110,000


$
4.99     For the YearEnded December 31,2008


2007


2006Realized gain (loss) on derivatives designated as cash flow
    hedges(1)

$
1,148


$
1,107


$
Realized gain (loss) on commodity derivatives(2)

$
18,991


$



$
Unrealized gain (loss) on commodity derivatives(3)

$
14,225


$



$
     (1)
    
    Included in natural gas sales in the income statement. (Related
    tax expense of $403 and $389, respectively).(2)
    
    Included in gain on commodity derivatives in the income
    statement. (Related tax expense of $6,666).(3)
    
    Included in gain on commodity derivatives in the income
    statement. (Related tax expense of $4,993).    Volume-


AverageRemaining Contract Period

MMBTU/Day


Price/MMBTUCalendar 2010


30,000


$
4.87     Volume-


AverageType

Point of Sale


Remaining Contract Period


MMBTU/Day


Price/MMBTUSwap


Mid-Continent



Apr 2009  Oct 2009



20,000


$
5.02   8.
    SHARE
    REPURCHASE PROGRAM:     65




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Shares


Weighted AverageTotal

Purchased


Price per Share


$ Value1st

    Quarter  2008


397


$
75.25


$
29,8292nd

    Quarter  2008


452


$
85.97


$
38,8073rd

    Quarter  2008


3,266


$
66.27


$
216,4614th Quarter 

    2008


402


$
32.83


$
13,210Prior


5,694


$
51.73


$
294,549May 2006  December 31, 2008


10,211


$
58.06


$
592,856   Shares


Weighted AverageOpen Market

Purchased


Price per Share


$ Value1st

    Quarter  2008


214


$
75.53


$
16,1392nd

    Quarter  2008


210


$
84.13


$
17,6433rd

    Quarter  2008


3,237


$
65.97


$
213,5894th Quarter 

    2008





$



$
Prior


5,401


$
51.19


$
276,442May 2006  December 31, 2008


9,062


$
57.81


$
523,813   Shares


Weighted AverageNet Share Settlements

Purchased


Price per Share


$ Value1st

    Quarter  2008


183


$
74.92


$
13,6902nd

    Quarter  2008


242


$
87.57


$
21,1643rd

    Quarter  2008


29


$
98.88


$
2,8724th Quarter 

    2008


402


$
32.83


$
13,210Prior


293


$
61.73


$
18,107May 2006  December 31, 2008


1,149


$
60.08


$
69,043   9.
    INCOME
    TAXES:    Year Ended December 31,2008


2007


2006United States

$
654,465


$
286,045


$
320,033Foreign


(100
)


(182
)


(590
)Total

$
654,365


$
285,863


$
319,443  66




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007


2006Current:U.S. federal & state

$
84,313


$
14,511


$
27,563Foreign










Deferred:U.S. federal & state


156,191



91,110



95,178Foreign










Total income tax provision

$
240,504


$
105,621


$
122,741       Year Ended December 31,2008


2007


2006Income tax provision computed at the U.S. statutory rate

$
229,028


$
100,052


$
111,805State income tax provision net of federal benefit


650



423



150Withholding tax on share repurchase transactions


5,409



1,068



10,401Foreign tax credit valuation allowance


1,692







Other, net


3,725



4,078



385$
240,504


$
105,621


$
122,741       Year Ended December 31,2008


2007Deferred tax assets:U.S. federal tax credit carryforwards

$
21,263


$
20,101Canadian net operating loss carryforwards


497



1,808Incentive compensation / Other, net


7,866



4,51729,626



26,426Valuation allowance (FTC)


(1,692
)


Valuation allowance (Canadian NOL)


(497
)


(1,808
)Net deferred tax assets

$
27,437


$
24,618Deferred tax liabilities:Property and equipment


(517,616
)


(363,345
)Other comprehensive income, tax effect of derivative instruments


(13,418
)


(2,679
)Net deferred tax liabilities

$
(531,034
)

$
(366,024
)Net deferred tax asset (liability)

$
(503,597
)

$
(341,406
)  67




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        non-U.S. income
            and/or
   68




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    10.
    EMPLOYEE
    BENEFITS:    11.
    DISCONTINUED
    OPERATIONS:  Sino-American (Sino-American),
  Sino-American,
  Sino-American
  For the Year Ended December 31,2008


2007


2006Operating revenues

$



$
64,822


$
84,008Gain on sale of subsidiary


640



98,066



Lease operating expenses






11,419



8,922Severance taxes






8,113



8,398Depletion, depreciation and amortization expenses






14,981



13,822General and administrative expenses






99



52Income before income tax provision


640



128,276



52,814Income tax provision


225



45,482



18,321Income from discontinued operations, net of tax

$
415


$
82,794


$
34,493   12.
    COMMITMENTS
    AND CONTINGENCIES:  Office space lease.
 69




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Drilling contracts. 2009-2012
  Transportation contract.
    Other.
  13.
    FAIR
    VALUE MEASUREMENTS:    Level 1:
  Level 2:
 70




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Level 3:
      Level 1


Level 2


Level 3


TotalAssets  Current:Derivatives

$



$
39,939


$



$
39,939Liabilities  Current:Derivatives

$



$
1,712


$



$
1,712     Fair
    Market Value of Financial Instruments
    December 31, 2008


December 31, 2007Carrying


Estimated


Carrying


EstimatedAmount


Fair Value


Amount


Fair ValueLong-Term Debt5.45% Notes due 2015

$
100,000


$
93,836


$



$
5.92% Notes due 2018


200,000



180,729







Credit Facility


270,000



270,000



290,000



290,000Long-Term Debt

$
570,000


$
544,565


$
290,000


$
290,000   14.
    SIGNIFICANT
    CUSTOMERS:   71




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    15.
    SUMMARIZED
    QUARTERLY FINANCIAL INFORMATION (UNAUDITED):  1st

    Quarter


2nd

    Quarter


3rd

    Quarter


4th

    Quarter


Total2008Revenues from continuing operations

$
271,137


$
308,240


$
297,627


$
207,396


$
1,084,400Gain (loss) on commodity derivatives


(27,673
)


(11,596
)


58,117



14,368



33,216Expenses from continuing operations


107,922



112,346



110,308



111,818



442,394Interest expense, net


5,122



4,416



5,091



6,229



20,858Income before income tax provision


130,420



179,882



240,345



103,717



654,364Income tax provision


47,021



63,489



91,370



38,624



240,504Income from continuing operations


83,399



116,393



148,975



65,093



413,860Revenues from discontinued operations


(103
)


743











640Expenses from discontinued operations


















Income tax (benefit) provision  discontinued
    operations


(36
)


261











225Net income


83,332


$
116,875


$
148,975


$
65,093


$
414,275Basic Earnings per Share:Income per common share from continuing operations

$
0.55


$
0.76


$
0.98


$
0.43


$
2.72Income per common share from discontinued operations

$
0.00


$
0.00


$
0.00


$
0.00


$
0.00Net income per common share

$
0.55


$
0.76


$
0.98


$
0.43


$
2.72Fully Diluted Earnings per Share:Income per common share from continuing operations

$
0.53


$
0.74


$
0.95


$
0.42


$
2.65Income per common share from discontinued operations

$
0.00


$
0.00


$
0.00


$
0.00


$
0.00Net income per common share

$
0.53


$
0.74


$
0.95


$
0.42


$
2.65   72




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  1st

    Quarter


2nd

    Quarter


3rd

    Quarter


4th

    Quarter


Total2007Revenues from continuing operations

$
156,576


$
130,871


$
117,216


$
161,975


$
566,638Gain (loss) on commodity derivatives


















Expenses from continuing operations


61,530



63,259



61,386



77,927



264,102Interest expense, net


2,373



3,913



5,347



5,040



16,673Income before income tax provision


92,673



63,699



50,483



79,008



285,863Income tax provision


32,030



23,949



17,727



31,915



105,621Income from continuing operations


60,643



39,750



32,756



47,093



180,242Revenues from discontinued operations


19,617



25,951



19,254



98,066



162,888Expenses from discontinued operations


9,683



12,399



12,110



420



34,612Income tax provision  discontinued operations


3,985



4,235



2,500



34,762



45,482Net income

$
66,592


$
49,067


$
37,400


$
109,977


$
263,036Basic Earnings per Share:Income per common share from continuing operations

$
0.40


$
0.26


$
0.22


$
0.31


$
1.19Income per common share from discontinued operations

$
0.04


$
0.06


$
0.03


$
0.42


$
0.54Net income per common share

$
0.44


$
0.32


$
0.25


$
0.73


$
1.73Fully Diluted Earnings per Share:Income per common share from continuing operations

$
0.38


$
0.25


$
0.21


$
0.30


$
1.14Income per common share from discontinued operations

$
0.04


$
0.06


$
0.03


$
0.40


$
0.52Net income per common share

$
0.42


$
0.31


$
0.24


$
0.70


$
1.66     16.
    DISCLOSURE
    ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED):    A.
    OIL
    AND GAS RESERVES:   73




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    B.
    ANALYSES
    OF CHANGES IN PROVEN RESERVES:  United States


China


TotalNatural Gas





Natural





Natural GasOil (Bbls)


(Mcf)


Oil (Bbls)


Gas (Mcf)


Oil (Bbls)


(Mcf)Reserves, December 31, 2005


15,204,700



1,900,222,800



5,060,900







20,265,600



1,900,222,800Extensions, discoveries and additions


3,962,000



505,773,000











3,962,000



505,773,000Production


(594,100
)


(78,395,500
)


(1,603,400
)






(2,197,500
)


(78,395,500
)Revisions


(730,000
)


(69,499,600
)


529,200







(200,800
)


(69,499,600
)Reserves, December 31, 2006


17,842,600



2,258,100,700



3,986,700







21,829,300



2,258,100,700Extensions, discoveries and additions


6,091,000



747,914,000











6,091,000



747,914,000Sales










(2,833,400
)






(2,833,400
)


Production


(870,100
)


(109,177,600
)


(1,153,300
)






(2,023,400
)


(109,177,600
)Revisions


(232,000
)


(54,182,200
)










(232,000
)


(54,182,200
)Reserves, December 31, 2007


22,831,500



2,842,654,900











22,831,500



2,842,654,900Extensions, discoveries and additions


6,536,100



803,199,500











6,536,100



803,199,500Sales






















Production


(1,121,500
)


(138,563,700
)










(1,121,500
)


(138,563,700
)Revisions


(1,238,600
)


(151,503,000
)










(1,238,600
)


(151,503,000
)Reserves, December 31, 2008


27,007,500



3,355,787,700











27,007,500



3,355,787,700Proved developed reserves:December 31, 2006


6,522,000



842,969,000



2,686,000







9,208,000



842,969,000December 31, 2007


8,764,000



1,084,224,000











8,764,000



1,084,224,000December 31, 2008


11,462,000



1,412,562,000











11,462,000



1,412,562,000   C.
    STANDARDIZED
    MEASURE:   74




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    United States


China


TotalAs of December 31, 2006Future cash inflows

$
11,239,526


$
185,659


$
11,425,185Future production costs


(2,974,427
)


(67,750
)


(3,042,177
)Future development costs


(1,674,893
)


(5,915
)


(1,680,808
)Future income taxes


(2,217,709
)


(6,710
)


(2,224,419
)Future net cash flows


4,372,497



105,284



4,477,781Discounted at 10%


(2,587,417
)


(18,811
)


(2,606,228
)Standardized measure of discounted future net cash flows

$
1,785,080


$
86,473


$
1,871,553As of December 31, 2007Future cash inflows

$
19,411,520


$



$
19,411,520Future production costs


(4,233,952
)






(4,233,952
)Future development costs


(2,100,647
)






(2,100,647
)Future income taxes


(4,414,331
)






(4,414,331
)Future net cash flows


8,662,590







8,662,590Discounted at 10%


(4,793,188
)






(4,793,188
)Standardized measure of discounted future net cash flows

$
3,869,402


$



$
3,869,402As of December 31, 2008Future cash inflows

$
16,608,609


$



$
16,608,609Future production costs


(4,217,034
)






(4,217,034
)Future development costs


(2,351,312
)






(2,351,312
)Future income taxes


(3,222,246
)






(3,222,246
)Future net cash flows


6,818,017







6,818,017Discounted at 10%


(3,800,331
)






(3,800,331
)Standardized measure of discounted future net cash flows

$
3,017,686


$



$
3,017,686    75




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  D.
    SUMMARY
    OF CHANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET
    CASH FLOWS:  December 31, 2008


December 31, 2007


December 31, 2006Standardized measure, beginning

$
3,869,402


$
1,871,553


$
3,576,494Net revisions of previous quantity estimates


(247,791
)


(126,447
)


(185,419
)Extensions, discoveries and other changes


1,313,391



1,784,862



755,149Sales of reserves in place






(46,451
)


Changes in future development costs


(327,325
)


(254,538
)


(193,004
)Sales of oil and gas, net of production costs


(890,157
)


(496,556
)


(482,659
)Net change in prices and production costs


(1,971,128
)


1,607,811



(2,915,081
)Development costs incurred during the period that reduce future
    development costs


503,582



315,523



243,933Accretion of discount


584,119



269,046



544,558Net changes in production rates and other


(362,018
)


11,007



(395,071
)Net change in income taxes


545,611



(1,066,408
)


922,653Aggregate changes


(851,716
)


1,997,849



(1,704,941
)Standardized measure, ending

$
3,017,686


$
3,869,402


$
1,871,553    76




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  E.
    COSTS
    INCURRED IN OIL AND GAS EXPLORATION AND DEVELOPMENT ACTIVITIES
    (US$000):  UNITED
    STATES
  Years EndedDecember 31,


December 31,


December 31,2008


2007


2006Acquisition costs  unproved properties

$
18,766


$
7,780


$
11,351Exploration


395,970



385,238



152,922Development


534,914



304,782



317,118Total

$
949,650


$
697,800


$
481,391   CHINA
  Years EndedDecember 31,


December 31,


December 31,2008


2007


2006Acquisition costs  unproved properties

$



$
10,356


$
7,152Exploration










Development






4,094



15,339Total

$



$
14,450


$
22,491   TOTAL
  Years EndedDecember 31,


December 31,


December 31,2008


2007


2006Acquisition costs  unproved properties

$
18,766


$
18,136


$
18,503Exploration


395,970



385,238



152,922Development


534,914



308,876



332,457Total

$
949,650


$
712,250


$
503,882   F.
    RESULTS
    OF OPERATIONS FOR OIL AND GAS PRODUCING
    ACTIVITIES:  UNITED
    STATES
  Years EndedDecember 31,


December 31,


December 31,2008


2007


2006Oil and gas revenue

$
1,084,400


$
566,638


$
508,659Production expenses and taxes


(194,243
)


(115,371
)


(92,688
)Depletion and depreciation


(184,795
)


(135,470
)


(79,675
)Income taxes


(235,095
)


(104,553
)


(111,722
)Total

$
470,267


$
211,244


$
224,574  77




---



##### Table of Contents



ULTRA
    PETROLEUM CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CHINA
  Years EndedDecember 31,


December 31,


December 31,2008


2007


2006Oil and gas revenue

$



$
64,822


$
84,008Production expenses and taxes






(19,532
)


(17,320
)Depletion and depreciation






(14,981
)


(13,822
)Income taxes






(10,454
)


(18,941
)Total

$



$
19,855


$
33,925   TOTAL
  Years EndedDecember 31,


December 31,


December 31,2008


2007


2006Oil and gas revenue

$
1,084,400


$
631,460


$
592,667Production expenses and taxes


(194,243
)


(134,903
)


(110,008
)Depletion and depreciation


(184,795
)


(150,451
)


(93,497
)Income taxes


(235,095
)


(115,007
)


(130,663
)Total

$
470,267


$
231,099


$
258,499   G.
    CAPITALIZED
    COSTS RELATING TO OIL AND GAS PRODUCING
    ACTIVITIES:  December 31,


December 31,2008


2007Developed Properties:Acquisition, equipment, exploration, drilling and environmental
    costs  Domestic

$
2,809,082


$
1,868,564Less accumulated depletion, depreciation and
    amortization  Domestic


(514,100
)


(330,813
)2,294,982



1,537,751Unproven Properties:Acquisition and exploration costs  Domestic


55,544



36,778$
2,350,526


$
1,574,529  78




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##### Table of Contents



Item 9.
    Change
    in and Disagreements with Accountants on Accounting and
    Financial Disclosures.    Item 9A.
    Controls
    and Procedures.  Managements
    Report on Assessment of Internal Control Over Financial
    Reporting
  form 10-K.
  Changes
    in Internal Control Over Financial Reporting
    Evaluation
    of Effectiveness of Disclosure Controls and Procedures
  Rule 13a-15(e) Rule 15d-15(e)
  Item 9B.
    Other
    Information.   Part III  Item 10.
    Directors,
    Executive Officers and Corporate Governance      Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Regulation S-K
 79




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##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accounting Fees and Services.   Part IV  Item 15.
    Exhibits,
    Financial Statement Schedules.    Financial Statements:
  Financial Statement Schedules:
  Exhibits. Regulation S-K
  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).3
.3

Articles of Amendment to Articles of Incorporation of Ultra
    Petroleum Corp. (incorporated by reference to Exhibit 3.3
    of the Companys Report on
    Form 10-K/A
    for the period ended December 31, 2005)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).4
.2

Form 8-A
    filed with the Securities and Exchange Commission on
    July 23, 2007.10
.1

Credit Agreement dated as of April 30, 2007 among Ultra
    Resources, Inc., JPMorgan Chase Bank, N.A. as Administrative
    Agent, J.P. Morgan Securities Inc. as Sole Bookrunner and
    Sole Lead Arranger, and the Lenders party thereto (incorporated
    by reference to Exhibit 10.1 of the Companys
    Quarterly Report on
    Form 10-Q
    for the period ended March 31, 2007).10
.2

Share Purchase Agreement dated September 26, 2007 between
    UP Energy Corporation and SPC E&P (China) Pte. Ltd.
    (incorporated by reference to Exhibit 10.1 of the
    Companys Report on
    Form 8-K
    filed on September 26, 2007).10
.3

Precedent Agreement between Rockies Express Pipeline LLC and
    Ultra Resources, Inc. dated December 19, 2005 (incorporated
    by reference to Exhibit 10.1 of the Companys Report
    of
    Form 8-K
    filed on February 9, 2006).10
.4

Precedent Agreement between Rockies Express Pipeline LLC,
    Entrega Gas Pipeline LLC and Ultra Resources, Inc. dated
    December 19, 2005 (incorporated by reference to
    Exhibit 10.2 of the Companys Report on
    Form 8-K
    filed on February 9, 2006).10
.5

Ultra Petroleum Corp. 2005 Stock Incentive Plan (incorporated by
    reference to Exhibit 99.1 of the Companys
    Registration Statement on
    Form S-8
    (Reg.
    No. 333-132443),
    filed with the SEC on March 15, 2006).10
.6

Ultra Petroleum Corp. 2000 Stock Incentive Plan (incorporated by
    reference to Exhibit 99.1 of the Companys
    Registration Statement on
    Form S-8
    (Reg.
    No. 333-13278),
    filed with the SEC on March 15, 2001). 80




---



##### Table of Contents



ExhibitNumber

Description10
.7

Ultra Petroleum Corp. 1998 Stock Option Plan (incorporated by
    reference to Exhibit 99.1 of the Companys
    Registration Statement on
    Form S-8
    (Reg.
    No. 333-13342)
    filed with the SEC on April 2, 2001).10
.8

Employment Agreement between Ultra Petroleum Corp. and Michael
    D. Watford dated August 6, 2007 (incorporated by reference
    from Exhibit 10.2 of the Companys Quarterly Report on
    Form 10-Q
    for the period ended June 30, 2007).10
.9

Master Note Purchase Agreement dated March 6, 2008
    (incorporated by reference to Exhibit 10.1 of the
    Companys Report on
    Form 8-K
    filed on March 6, 2008).*10
.10

Base Contract for Sale and Purchase of Natural Gas dated
    November 1, 2004 between Ultra Resources, Inc. and Tenaska
    Marketing Ventures.*10
.11

Base Contract for Sale and Purchase of Natural Gas dated
    November 1, 2007 between Ultra Resources, Inc. and Nicor
    Enerchange, LLC.21
.1

Subsidiaries of the Company (incorporated by reference from
    Exhibit 21.1 of the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2007).*23
.1

Consent of Netherland, Sewell & Associates, Inc.*23
.2

Consent of Ryder Scott Company.*23
.3

Consent of Ernst & Young LLP.*31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*32
.1

Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.*32
.2

Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.*100
.INS

XBRL Instance Document*100
.SCH

XBRL Taxonomy Extension Schema Document*100
.CAL

XBRL Taxonomy Extension Calculation Linkbase Document*100
.LAB

XBRL Taxonomy Extension Label Linkbase Document*100
.PRE

XBRL Taxonomy Extension Presentation Linkbase Document     *
    
    Filed herewith 81




---



##### Table of Contents



SIGNATURES      By:
    /s/  Michael
    D. Watford   Title:
    Chairman of the Board,     Signature

Title

Date/s/  Michael
    D. WatfordMichael
    D. Watford

Chairman of the Board, 
    Chief Executive Officer, and President (principal executive
    officer)

February 20, 2009/s/  Marshall
    D. SmithMarshall
    D. Smith

Chief Financial Officer 
    (principal financial officer)

February 20, 2009/s/  Garland
    R. ShawGarland
    R. Shaw

Corporate Controller
    (principal accounting officer)

February 20, 2009/s/  W.
    Charles HeltonW.
    Charles Helton

Director

February 20, 2009/s/  Stephen
    J. McDanielStephen
    J. McDaniel

Director

February 20, 2009/s/  Robert
    E. RigneyRobert
    E. Rigney

Director

February 20, 2009/s/  Roger
    A. BrownRoger
    A. Brown

Director

February 20, 2009  82




---



##### Table of Contents



EXHIBIT INDEX
  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).3
.3

Articles of Amendment to Articles of Incorporation of Ultra
    Petroleum Corp. (incorporated by reference to Exhibit 3.3 of the
    Companys Report on Form 10-K/A for the period ended
    December 31, 2005)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).4
.2

Form 8-A filed with the Securities and Exchange Commission on
    July 23, 2007.10
.1

Credit Agreement dated as of April 30, 2007 among Ultra
    Resources, Inc., JPMorgan Chase Bank, N.A. as Administrative
    Agent, J.P. Morgan Securities Inc. as Sole Bookrunner and
    Sole Lead Arranger, and the Lenders party thereto (incorporated
    by reference to Exhibit 10.1 of the Companys Quarterly
    Report on Form 10-Q for the period ended March 31, 2007).10
.2

Share Purchase Agreement dated September 26, 2007 between UP
    Energy Corporation and SPC E&P (China) Pte. Ltd.
    (incorporated by reference to Exhibit 10.1 of the Companys
    Report on Form 8-K filed on September 26, 2007).10
.3

Precedent Agreement between Rockies Express Pipeline LLC and
    Ultra Resources, Inc. dated December 19, 2005 (incorporated
    by reference to Exhibit 10.1 of the Companys Report of
    Form 8-K filed on February 9, 2006).10
.4

Precedent Agreement between Rockies Express Pipeline LLC,
    Entrega Gas Pipeline LLC and Ultra Resources, Inc. dated
    December 19, 2005 (incorporated by reference to Exhibit 10.2 of
    the Companys Report on Form 8-K filed on February 9, 2006).10
.5

Ultra Petroleum Corp. 2005 Stock Incentive Plan (incorporated by
    reference to Exhibit 99.1 of the Companys Registration
    Statement on Form S-8 (Reg. No. 333-132443), filed with the SEC
    on March 15, 2006).10
.6

Ultra Petroleum Corp. 2000 Stock Incentive Plan (incorporated by
    reference to Exhibit 99.1 of the Companys Registration
    Statement on Form S-8 (Reg. No. 333-13278), filed with the SEC
    on March 15, 2001).10
.7

Ultra Petroleum Corp. 1998 Stock Option Plan (incorporated by
    reference to Exhibit 99.1 of the Companys Registration
    Statement on Form S-8 (Reg. No. 333-13342) filed with the SEC on
    April 2, 2001).10
.8

Employment Agreement between Ultra Petroleum Corp. and Michael
    D. Watford dated August 6, 2007 (incorporated by reference from
    Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q
    for the period ended June 30, 2007).10
.9

Master Note Purchase Agreement dated March 6, 2008 (incorporated
    by reference to Exhibit 10.1 of the Companys Report on
    Form 8-K filed on March 6, 2008).*10
.10

Base Contract for Sale and Purchase of Natural Gas dated
    November 1, 2004 between Ultra Resources, Inc. and Tenaska
    Marketing Ventures.*10
.11

Base Contract for Sale and Purchase of Natural Gas dated
    November 1, 2007 between Ultra Resources, Inc. and Nicor
    Enerchange, LLC.21
.1

Subsidiaries of the Company (incorporated by reference from
    Exhibit 21.1 of the Companys Annual Report on Form 10-K
    for the year ended December 31, 2007).*23
.1

Consent of Netherland, Sewell & Associates, Inc.*23
.2

Consent of Ryder Scott Company .*23
.3

Consent of Ernst & Young LLP.*31
.1

Certification of Chief Executive Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.*31
.2

Certification of Chief Financial Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.*32
.1

Certification of Chief Executive Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.*32
.2

Certification of Chief Financial Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002. 83




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##### Table of Contents



ExhibitNumber

Description*100
.INS

XBRL Instance Document*100
.SCH

XBRL Taxonomy Extension Schema Document*100
.CAL

XBRL Taxonomy Extension Calculation Linkbase Document*100
.LAB

XBRL Taxonomy Extension Label Linkbase Document*100
.PRE

XBRL Taxonomy Extension Presentation Linkbase Document     *
    
    Filed herewith 84