Ultra Petroleum Corp. (NYSE: UPL) announced Jan. 12 that it has updated its natural gas production hedging.

Houston's Ultra said it placed fixed price natural gas swaps for 2015 of 123.3 billion cubic feet (Bcf) at a weighted average price of $4/Mcf. A large majority of the swaps are in the second and third quarters of the year where it is estimated that about 70% of the company's natural gas production is hedged.

The company opportunistically hedges a portion of its forecasted production to lessen the volatility associated with swings in commodity prices and improve the certainty of cash flows in support of its capital investment program, the release said.

"Our current hedges provide sufficient cash flow certainty to allow us to allocate capital toward our highest returning projects," said Garland R. Shaw , senior vice president and CFO, in a statement. "Currently in Pinedale, we are drilling in areas with EUR's averaging approximately 5 Bcfe. The returns at $4/Mcf are over 70% with break-evens at $2/Mcf."

"On the operations front," Shaw continued, "Our Uinta oil production exceeded the 11,000 barrels a day equivalent gross that was targeted for the year-end exit rate. Furthermore, we continue to have success in integrating our acquired Pinedale assets from Shell. For example, recently we began restoring production on a set of 19 wells that were previously shut-in due to the lack of a liquids gathering system in the area."

Ultra exited 2014 with 85% of the company's outstanding borrowings comprised of fixed-rate debt with an average remaining term of 6.4 years and a 5.8% weighted average coupon rate. The company has $482 million of available liquidity under its $1 billion revolver.

The covenant for the outstanding debt at the subsidiary level, consisting of the senior credit facility and senior notes, is based upon a debt to trailing 12-month EBIDTA ratio that is not to exceed 3.5 times. It is expected that at the end of 2014 it was 2.6 times. The outstanding debt associated at the parent level is subject to an interest coverage ratio of debt to trailing twelve month interest that needs to be at least 2.25 times or greater. It is estimated that at the end of 2014 it was in excess of 5 times.