Ultra buys Pinedale Energy Partners, assets

Brady Oltmans photo An oil pad sits on the Pinedale Anticline with the Wind River Mountains behind. UP Energy has purchased Pinedale Energy Partners after both companies planned to build more pads in their decade forecasts.

PINEDALE – One less operator and over a dozen fewer jobs exist on the Pinedale Anticline now than this time last month.

UP Energy LLC – better known as Ultra before the company converted to a private company as a result of its second Chapter 11 bankruptcy in September 2016 – purchased Pinedale Energy Partners, an official confirmed to the Roundup.

UP Energy representative Kelly Bott told the Roundup her company has acquired PEP’s assets as of Friday, April 30.

“With this consolidation of assets, we are able to further streamline operations with a focus on safety and environmental diligence,” Bott said. “UP Energy is excited for the opportunity to bring our laser focus on sustainability and asset optimization to this expanded leasehold, and we look forward to a continued partnership with the local community.”

“We plan to continue our effort to produce and certify responsibly sourced gas in the Pinedale Anticline and Jonah fields, and are committed to be best-in-class with a focus on delivering on our promises to all our stakeholders.”

Financial terms of the deal were not released and neither UP Energy nor PEP issued a press release on the deal.

PEP representatives directed comment to their parent company, Oak Ridge Natural Resources. Representatives at Oak Ridge, based in Oklahoma, directed comment on the deal to contract partner Red Bluff Resources, also based in Oklahoma. Red Bluff Resources refused to comment on the sale and instead referred all questions to UP Energy.

Representatives at UP Energy would not comment on the deal beyond the short statement Bott made a week prior.

The deal sent shockwaves throughout Pinedale and greater Sublette County, the full extent of which are largely unknown.

The amount of workers affected, and how many jobs were lost as a result of the acquisition, were not confirmed to the Roundup.

Sublette County Board of Commissioners Chairman Joel Bousman said it was his understanding about half of PEP’s workforce – roughly 20 employees – lost their jobs as a result of the purchase.

Those hoping to stay in the energy sector will find little opportunity in the county. Even those hoping to pivot into adjacent sectors like construction don’t have a plethora of options if their aim is to stay in Sublette, Bousman said. That likely means those seeking employment again have to leave Pinedale, some with their families. That could immediately decrease enrollment in schools, which could receive diminished funding as a result of a smaller population.

It also harms the community itself with a loss of neighbors.

“You feel for them,” Bousman said. “When they’re here they’re part of the community. Their kids go to our schools, our kids are friends with their kids. It can be a destructive thing.”

Bousman and county treasurer Emily Paravicini said the economic impact of one less producer in a community 90-percent dependant on oil and natural gas shouldn’t be overbearing.

The county’s tax revenue depends on production, not producers, they agreed. And as long as this doesn’t take active rigs out of the ground, the sale shouldn’t alter revenue.

“I don’t think that there will be any issues for the county with the Ultra purchase of PEP,” Paravicini said. “Ultra has a good history with Sublette County, and having a purchaser that has deep roots here means that perhaps they’ll stay and keep Sublette County residents working. It’s been a tough go for oil and gas producers for the last year or so, fingers crossed that things at the very least do not get worse.”

Continued Ad Valorem tax payments are “paramount” to the county being able to fund social services and infrastructure like schools, health-care facilities and libraries, she said.

Bousman said the board of commissioners was given ample notice on the possibility of a sale.

“We haven’t been left out to dry by PEP or Ultra,” he said.

The board’s chairman also cited Ultra’s history of prompt tax payments and a “good working relationship” as reasons not to worry. Ultra stayed on schedule with its tax payments when the company went through its most recent bankruptcy in 2016, he said. Bousman also said Ultra made its most recent tax payment on time.

Ultra Petroleum emerged from its second Chapter 11 bankruptcy in September 2016 with $60 million in funding and $100 million in available credit, according to CEO and President Brad Johnson at the time.

According to the company’s numbers, it produces on 83,000 net acres in the Pinedale Anticline and Jonah fields, and generated $742 million in revenue from its natural gas operations in fiscal year 2019.

In the latest Pinedale Anticline production forecasts, released at the end of April, UP Energy plans to use 1.3 drilling rigs to develop 27 wells in Development Area 3 and 16 wells in DA 5 this year. Two new pads will be built with no plans at this time to build additional wells in 2022. In that same forecast, PEP reported four completed wells in the first quarter of 2021 with plans of one pad expanding in the third quarter “if business metrics are met.” PEP stated its 10-year forecast anticipated 64 more wells drilled and about one pad per year.

UP Energy and PEP jointly submitted an air-quality update earlier this month.

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