What happened

Shares of Ultra Petroleum Corp (OTC:UPL) slumped on Wednesday and were down 11% at 3:15 p.m. EST, after the natural-gas company reported fourth-quarter results.

So what

Ultra Petroleum's fourth-quarter results were decent. Production, for example, rose 5% versus the third quarter, which met the midpoint of the company's guidance range. Earnings, meanwhile, came in a bit better than expected; the company pulled in $83.9 million, or $0.43 per share, of adjusted net income, which was $0.04 per share ahead of the consensus estimate. Ultra also noted that it drilled four successful horizontal wells, driving its decision to ramp up that drilling program this year.

Drilling rigs against a backdrop of mountains

Image source: Getty Images.

That said, while the company plans to drill more horizontal wells in 2018, it's hitting the brakes on spending overall, to better balance production growth with generation of free cash flow. That desire has it planning to invest $400 million into capital projects this year, which is about 30% less than last year. That should enable the company to increase production 7% to 11% while generating about $175 million in free cash flow.

Now what

For a company not that far removed from bankruptcy, the decision to hold back on growth to produce free cash flow is a sensible one. That said, the plan still doesn't put Ultra Petroleum into the elite territory of the top natural-gas stocks, most of which are growing faster while producing more free cash. However, given the company's previous struggles, it's certainly a step in the right direction.

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