Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and Ultra Petroleum (NASDAQOTH:UPLMQ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

Ultra Petroleum is among the lowest-cost producers of natural gas, but that hasn't stopped the plunge in natural gas prices from hurting the company's results. Let's take an early look at what's been happening with Ultra Petroleum over the past quarter and what we're likely to see in its quarterly report on Friday.

Stats on Ultra Petroleum



Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$261 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Ultra Petroleum drill up better profits?
Analysts have had mixed views on Ultra lately, having increased their fourth-quarter consensus earnings estimates by $0.03 per share in the past three months but making substantial cuts to their full-year 2013 outlook. The stock has been stuck at its lowest levels since 2004, having dropped more than 20% just since mid-November.

Ultra Petroleum has a huge advantage over most of its peers in the natural gas industry: low production costs. That hasn't prevented Ultra from having to take big writedowns on its nat-gas assets, but it does bode better for Ultra's future than rivals Chesapeake Energy (NYSE:CHK) and Range Resources (NYSE:RRC), which have much higher production costs above the current price of natural gas. As a result, Ultra hasn't had to flee the natural gas industry as quickly as its rivals, many of which have turned their attention to oil and gas liquids to stay profitable on an operating basis.

One longer-term concern that has arisen recently is the possibility that estimates of recoverable shale-gas reserves don't reflect increasing costs of production as yields decline. If that's the case, then natural gas prices may rise faster than expected, and that would boost Ultra and fellow low-cost provider Southwestern Energy (NYSE:SWN) substantially, given their respective natural gas-rich portfolios.

In its quarterly report, look for Ultra to talk about the impact that a relatively warm winter has had on demand and pricing. The key to Ultra's success will be to outlast less profitable companies until natural gas prices rise, at which point the profit gates should open up. Any hints that Ultra's management can give about when prices might rise will be valuable in guiding your investing decision about the company.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Range Resources and Ultra Petroleum. The Motley Fool owns shares of Ultra Petroleum and has options positions on Chesapeake Energy and Ultra Petroleum. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.