Bye-Bye, Bohai

Back in April, news bubbled to the surface that two American independent oil & gas outfits sought to shed their respective stakes in an Anadarko (NYSE: APC)-operated project off the Chinese coast. While Newfield Exploration (NYSE: NFX) continues to seek a buyer, Ultra Petroleum (NYSE: UPL) has successfully unloaded this Bohai Bay block, along with the rest of its Chinese assets, for a $223 million payout.

So how did Ultra fare in this disposal? According to yesterday's press release, the Chinese assets accounted for roughly 1% of its year-end proved reserves, or a little less than 24 billion cubic feet of gas equivalent. The sale works out to more than $9 per thousand cubic feet. What's Mandarin for "cha-ching"?

Investors were delighted with the news, bidding up the stock more than 6%. The firm can now pay down some debt, though its leverage is already modest. I think Ultra will direct more capital toward stock buybacks. This firm likes pointing to its industry-leading reserve growth per share, which tops formidable competitors XTO Energy (NYSE: XTO) and Chesapeake Energy (NYSE: CHK). Buybacks will help the company maintain that cachet.

This torrid reserve growth is coming from the Pinedale Anticline field in Wyoming, the country's second largest by reserves. Royal Dutch Shell (NYSE: RDS-A) (NYSE: RDS-B) and Questar are both active here, but Ultra is the top leaseholder. We've spilled plenty of virtual ink about the mighty Barnett Shale, but the Pinedale Anticline is a marvel in its own right. Ever since drillers figured out the geology at the neighboring Jonah field, Pinedale has become quite prolific.

With China out of the picture, Ultra is a very straightforward play on Rockies gas. It's an ultra low-cost operator, and with the Rockies Express pipeline still set to open for business on Jan. 1, Ultra is sitting pretty on the Anticline.

Further Foolishness:

• You don't know pain until you know coal-bed methane.
• Discover more paths to upstream profits.
• This gas is no laughing matter to some dissident shareholders.