3. DEBT AND OTHER LONG-TERM OBLIGATIONS:

			June 30,		December 31,
			2011		2010

	Short-term debt:
	Bank indebtedness	$	154,000	$	-

	Long-term debt:
	Senior Notes		1,560,000		1,560,000
	Other long-term obligations		59,369		52,575

	Total long-term obligations	$	1,619,369	$	1,612,575

Bank indebtedness: The Company (through its subsidiary) is a party to a revolving credit facility with a syndicate of banks led by JP Morgan Chase Bank, N.A. which matures in April 2012. Currently, the Company anticipates replacing this facility prior to its maturity in 2012.

This agreement provides an initial loan commitment of $500.0 million and may be increased to a maximum aggregate amount of $750.0 million at the request of the Company. Each bank has the right, but not the obligation, to increase the amount of its commitment as requested by the Company. In the event the existing banks increase their commitment to an amount less than the requested commitment amount, then it would be necessary to add new financial institutions to the credit facility.

Loans under the credit facility are unsecured and bear interest, at the Company's option, based on (A) a rate per annum equal to the higher of the prime rate or the weighted average fed funds rate on overnight transactions during the preceding business day plus 50 basis points, or (B) a base Eurodollar rate, substantially equal to the LIBOR rate, plus a margin based on a grid of the Company's consolidated leverage ratio (125 basis points per annum as of June 30, 2011).

At June 30, 2011, the Company had $154.0 million in outstanding borrowings and $346.0 million of available borrowing capacity under the credit facility.

The facility has restrictive covenants that include the maintenance of a ratio of consolidated funded debt to EBITDAX (earnings before interest, taxes, DD&A and exploration expense) not to exceed three and one half times; and as long as the Company's debt rating is below investment grade, the maintenance of an annual ratio of the net present value of the Company's oil and gas properties to total funded debt of at least 1.75 to 1.00. At June 30, 2011, the Company was in compliance with all of its debt covenants under the credit facility.

Senior Notes: At June 30, 2011, the Company had $1.56 billion in outstanding Senior Notes. The Senior Notes rank pari passu with the Company's bank credit facility. Payment of the Senior Notes is guaranteed by Ultra Petroleum Corp. and UP Energy Corporation. The Senior Notes are pre-payable in whole or in part at any time and are subject to representations, warranties, covenants and events of default customary for a senior note financing. At June 30, 2011, the Company was in compliance with all of its debt covenants under the Master Note Purchase Agreement.

Other long-term obligations: These costs primarily relate to the long-term portion of production taxes payable and asset retirement obligations.