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We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.
The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.
These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.
When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?
Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.
Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.
Home / Markets / Industries / Energy
Monday, May 05, 2008
Ultra Petroleum is 'Best In Class'
Comtex
HOUSTON, May 5, 2008 (Canada NewsWire via COMTEX News Network) ----Ultra Petroleum Corp. (NYSE: UPL) today announced the awarding of its "Best in Class" incentive compensation to its employees.
The three year program, January 1, 2005 to December 31, 2007, was created to reward all Ultra Petroleum employees for excellence in two performance metrics -- All Sources Finding and Development Cost and Full Cycle Economics. Ultra Petroleum's three year average finding and development cost is $0.86 per million cubic feet equivalent (Mcfe) and full cycle economics is 478 percent, leading to a maximum payout under the plan.
The initial award for each Ultra Petroleum employee at January 1, 2005, was $50,000 of Ultra Petroleum stock. Due to share price appreciation and performance incentives the award now totals over $250,000 of Ultra Petroleum stock for each employee. Every one of Ultra Petroleum's 76 year-end 2007 employees will receive an award with 92 percent of the recipients being non-executive. A total of about 135,360 shares will be paid out giving credit to new employees on a prorated basis.
"The relentless hard work and dedication by such a small number of skilled employees is amazing. During the three year time period from January 2005 to December 2007, Ultra's share price increased 300 percent while market capitalization appreciated over $7.0 billion," stated Michael D. Watford, Chairman President and Chief Executive Officer.
<< About Ultra Petroleum >>
Ultra Petroleum Corp. is an independent exploration and production company focused on developing its long-life natural gas reserves in the Green River Basin of Wyoming -- the Pinedale and Jonah Fields. Ultra Petroleum is listed on the New York Stock Exchange and trades under the ticker symbol "UPL". The company had 152,687,824 shares outstanding on March 31, 2008.
<< This release can be found at http://www.ultrapetroleum.com >>
This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The opinions, forecasts, projections or other statements, other than statements of historical fact, are forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Certain risks and uncertainties inherent in the company's business are set forth in our filings with the SEC, particularly in the section entitled "Risk Factors" included in our Annual Report on Form 10-K for our most recent fiscal year and from time to time in other filings made by us with the SEC. These risks and uncertainties include increased competition, the timing and extent of changes in prices for crude oil and natural gas, particularly in Wyoming, the timing and extent of the Company's success in discovering, developing, producing and estimating reserves, the effects of weather and government regulation, availability of oil field personnel, services, drilling rigs and other equipment, and other factors listed in the reports filed by the company with the SEC.
SOURCE: Ultra Petroleum Corp.
Kelly L. Whitley, Manager Investor Relations of Ultra Petroleum Corp., +1-281-876-0120, Ext. 302, info@ultrapetroleum.com Web Site: http://www.ultrapetroleum.com
Copyright (C) 2008 CNW Group. All rights reserved.
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