“After several months of liability management efforts and careful consideration of how best to navigate a challenging low commodity price environment and our debt levels, Ultra’s Board of Directors determined that a voluntarily filing for Chapter 11 reorganization provides the best outcome for the entity,” said Brad Johnson, CEO at Ultra.
“This financial restructuring will result in an enterprise with very little debt, good liquidity and significant free cash flow that is underpinned by a large-scale, low-cost base of natural gas and condensate production.”
Johnson took over as CEO in March 2019 as the company underwent a major retooling of its executive positions. He had been in the interim CEO for nearly a year before being named the choice of the board. The board also brought on a new COO and CFO as part of major management changes.
As one of the top producers – and taxpayers – in the state, Ultra’s insolvency puts Wyoming’s entire revenue in additional jeopardy. It comes at a time when only one rig is actively exploring new sources of oil and gas in the state, down from the 31 rigs drilling a year ago.
The Cowboy State is struggling. Low demand for oil, gas, and coal is crippling the local economy, and lawmakers are scrambling for solutions according to Oilprice.com. Production has been limited and exploration for new wells has come to a grinding halt. But is there some relief on the horizon?
COVID-19 has taken a major toll on the oil and gas industry as a whole, but Wyoming, a state highly dependent on its abundance of natural resources, is really feeling the sting. And the dominoes are already starting to fall.
The rig count in Wyoming fell from 30 rigs in March to just two rigs in early June. Experts estimate that for every rig lost, around 100 oil and gas jobs cease to exist. And though oil prices have rebounded in recent weeks, a full recovery of Wyoming’s oil and gas industry appears unlikely in the short or even medium term.
Adding to the pain, Texas and New Mexico have had a significant advantage in this market. The nature of drilling in the south means that Permian producers are able to pull up natural gas as a free byproduct of oil production. This has made it difficult for producers in Wyoming who deal exclusively with gas.
While most of the natural gas in the U.S. comes from oil drilling operations, the collapse in energy demand worldwide makes it even more difficult for producers who only pump gas because they have nothing else to fall back on.
Source: OilPrice.com