Ultra Petroleum Corp. (NYSE: UPL -) reported an operating cash flow(1) of $251.4 million, or $1.63 per diluted share for the fourth quarter, increasing 27 percent from prior year levels of $198.7 million, or $1.29 per diluted share. The company recognized $69.6 million, or $0.45 per diluted share in realized gains to cash flow, as a result of the company’s commodity price hedges during the quarter. Adjusted net income(3) increased 16 percent to $89.1 million, or $0.58 per diluted share during the fourth quarter, compared to $76.6 million, or $0.50 per diluted share during the same quarter a year ago.

Ultra’s natural gas and crude oil production during the fourth quarter increased 17 percent to a record 66.9 billion cubic feet equivalent (Bcfe), compared to 57.3 Bcfe of production during the fourth quarter of 2010. Ultra Petroleum’s fourth quarter 2011 production levels were the highest ever achieved by the company. The company’s production was comprised of 64.6 billion cubic feet (Bcf) of natural gas and 383.9 thousand barrels of condensate.

For 2011, Ultra Petroleum increased operating cash flow(1) 26 percent above 2010 levels to $964.3 million, or $6.25 per diluted share. This compares to operating cash flow(1) of $764.5 million, or $4.96 per diluted share for year-end 2010. The company’s commodity hedges contributed $213.3 million, or $1.38 per diluted share, during 2011 in realized gains to cash flow. Adjusted net income(3) for the year was $388.9 million, or $2.52 per diluted share, an increase of 16 percent above the prior year of $336.3 million or $2.18 per diluted share.

Ultra’s natural gas and crude oil production increased 15 percent to a record annual high of 245.3 Bcfe for 2011, compared to 213.6 Bcfe of production during 2010. Volumes for the year are comprised of 236.8 Bcf of natural gas and 1.4 million barrels of condensate.

For the year, Ultra drilled 242 gross (136 net) Wyoming wells together with its partners. The company initiated production from 291 gross (159 net) wells during 2011, as compared to 247 gross (137 net) wells in 2010. Ultra reduced the inventory of wells waiting on completion or pipeline by 49 gross (23 net) wells during 2011, exiting the year with 21 gross (10 net) wells in its inventory.

The initial production rates of the Ultra-operated wells brought online during the fourth quarter averaged 7.4 MMcfe per day, as compared to 7.1 MMcfe per day in the third quarter of 2011.

Compared to the fourth quarter of 2010, Ultra’s fourth quarter Marcellus production grew 104 percent.

Ultra Petroleum’s new Pennsylvania net production record of 188 MMcfe per day achieved during the fourth quarter compares to the third quarter 2011 net production record of 140 MMcfe per day, a 34 percent increase.

The initial production rates for the Tioga County wells brought online during the fourth quarter averaged 7.1 MMcfe per day and 7.0 MMcfe per day for the year. In Lycoming County, initial production rates averaged 6.1 MMcfe for the wells brought online during the fourth quarter as well as the year.

In 2011 Ultra and its partners drilled 157 gross (72 net) horizontal Marcellus wells, compared to 116 gross (72 net) wells drilled in 2010. The company initiated production from 111 gross (58 net) wells in 2011, compared to 77 gross (51 net) wells placed on production in 2010. For the year, Ultra Petroleum’s total Pennsylvania production was 43.3 Bcfe, exceeding the company’s estimate of 40 Bcfe. The 2011 volumes were over 2.5 times the company’s 2010 Pennsylvania annual volumes of 16.3 Bcfe.

Ultra Petroleum’s Board of Directors has promoted both A. Kent Rogers and Douglas Selvius to the executive leadership team of the company as Vice Presidents.