Will Shorts Be Burned by This Natural Gas Company? – Ultra Petroleum Corp. (UPL): Anadarko Petroleum Corporation (APC), Royal Dutch Shell plc (ADR)(RDS.A)

Investors in natural gas exploration and production company Ultra Petroleum Corp. (NYSE:UPL)‘s have had a rough couple of years. These investors once basked in the natural gas-fueled rally that saw Ultra’s shares soar more than 6,000% from 2001 to 2008. Many of those same investors were later badly burned as natural gas prices collapsed, sending the company’s shares down nearly 80% since hitting its peak in the summer of 2008.

Some of those same investors are now betting against the company. With the price of natural gas stuck below $4, these investors see continued tough times for the company. At last count, short interest stood at 13.8%. But should investors really be hating this natural gas company?

Why it’s hated
Few companies are more levered to natural gas than Ultra Petroleum Corp. (NYSE:UPL). While many of its peers are now focusing on oil and liquids plays, Ultra’s focus continues be on developing its long-life natural gas reserves in the Pinedale and Jonah fields as well as continuing the exploration of the Marcellus shale. Investors shorting the stock don’t believe this is the right path, given the continued low price of natural gas.