Ultra Petroleum Corp. has reached an agreement to settle Rockies Express Pipeline LLC's $303.0 million breach of contract claim. The settlement will be submitted to the U.S. Bankruptcy Court for approval and will be implemented in connection with Ultra's chapter 11 plan of reorganization.
The settlement includes a cash payment of $150.0 million to REX natural gas pipeline six months after Ultra emerges from chapter 11, but no later than October 30, 2017. Additionally, Ultra has agreed to enter into a new seven-year firm transportation agreement with REX commencing December 1, 2019 for service west-to-east of 200,000 dekatherms per day at a rate of approximately $0.37, or approximately $26.8 million annually.
Mr. Michael Watford, Chairman, President and Chief Executive Officer of the Company, said, "Our settlement of REX's claim is another major achievement in our in-court restructuring. This settlement removes the uncertainty around this very significant claim and represents a critical step towards the implementation of the plan of reorganization we filed last month. We appreciate the cooperation of REX and are pleased to be working with them again as business partners."