Some natural gas Q&A with President of Ultra Petroleum

More discussion on production and pricing in the Q&A (below). Looks like Watford is forecasting production to start falling in a couple months, then to continue to fall for 2 years until we have $5+ natgas to spur investment...and this comes from the company that claims the lowest cash cost of production. ---------------- …David R. Tameron - Wells Fargo Securities, LLC, Research Division If you got what you're looking for as far as the $4. And as you have been consistent about that and saying how much better the economics are, with the uplift, why not go ahead and lock in some hedges for '14 today and secure that CapEx budget? Michael D. Watford - Chairman, Chief Executive Officer and President Well, because I think the upside is greater. I think it's limited the downside -- upside. I don't think people are properly forecasting gas supply reductions. David R. Tameron - Wells Fargo Securities, LLC, Research Division All right. But no -- I guess, I'm looking at -- obviously, you're running the company, you're making decisions, but why double down at this point? You've got the gas price rebound you're looking for and why not take some that risk off the table? Michael D. Watford - Chairman, Chief Executive Officer and President Again, because the upside looks greater. I mean, we still have bottom, but we're nowhere near bouncing back up to where we need to be. There's just not going to be any significant investment in dry natural gas wells at $4 gas, not going happen. So I think we're probably in a 2-year window here before we get gas prices back at $5 plus to where you growth and investment I think you're going to continue to see industry-wide investment decrease in 2013 and '14. …Mark P. Hanson - Morningstar Inc., Research Division Great. And my follow-up will be, have you had discussions with Shell and Anadarko? And I know it's for 2013 and beyond, but at what point do you think they start to ramp back up in the Marcellus? And is there a floor at which you'd choose to not consent versus participating there? Michael D. Watford - Chairman, Chief Executive Officer and President I won't speak for Shell, but I think Anadarko didn't have any intentions of ramping back up probably until you get closer to $5 gas price. So I think 2013 and certainly 0 activity and depending on where the 2014 gas prices the, when you're this the next year, will dictate what happens then. And that's my point about I think for a 3-year window here of decreasing supply because I think majority of the folks have drastically cut back going through the budget cycle in 2013. And those cutbacks are going to continue or be worse. I mean you've seen them average through the course of 2012. You're going to see them at a very low level for 2013. And then when you go budgeting cycle for 2014, your gas prices are $5 or above for '14. You'll see that continue if they are, and they start to spend back up, you don't even get a production increases based on the capital spend uplift in 2014 to late third quarter or fourth quarter of 2014. So I think we've got 24 months of maybe we have another couple of months of flat production. But after that, it starts coming down, and it keeps coming down for the next 2 years. source: http://seekingalpha.com/article/969751-ultra-petroleum-management-discusses-q3-2012-results-earnings-call-transcript?page=1