| Summary: | A sturdy equity valuation is the result of both strong theoretical foundations and practical awareness when modelling a company. By analysing the “state of the art” literature in valuation we select the Net Asset Value Model and the Multiples approach to value Ultra Petroleum, a leading independent energy company actively engaged in the exploration and production of shale oil and natural gas in North America. Supported by both methodologies, we conclude that Ultra is undervalued. Trading at $5.48 per share at the end of the 3rd quarter 2015, we present our investment thesis and “Buy” recommendation with a target price of $9.43, which is based on our probability weighted average of three scenarios. We compare our results with a Barclays equity research, which applies a multiple to forward year pre-interest cash flow to target Enterprise Value.
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