February 8, 2005
Tulsa, Oklahoma….Unit Corporation (NYSE - UNT) today announced
that its wholly owned subsidiary, Unit Petroleum Company, replaced 285%
of its 2004 oil and natural gas production and increased its proved
oil and natural gas reserves 22%. At December 31, 2004, Unit’s
net proved oil and natural gas reserves, as reviewed by Ryder Scott,
are 8.6 million barrels of oil and 295.4 Bcf of natural gas. The increase
in reserves resulted from the acquisition of PetroCorp Incorporated
and our participation in the drilling of 168 gross wells in 2004. 2004
marks the 21st consecutive year that Unit has met its goal of replacing
more than 150% of its annual production with new oil and natural gas
reserves. The net present value, discounted at 10%, of these reserves
as of December 31, 2004 is approximately $787.1 million dollars. Future
net revenue from these properties, before income taxes, is estimated
at $1.38 billion. This value is based on unescalated prices of $43.45
per barrel of oil and $5.65 per Mcf of natural gas for the life of the
properties per SEC regulations.
During 2004, Unit produced 1,048,000 barrels of oil and 27.1 Bcf of
natural gas, or an equivalent Bcf of 33.4. This is an increase of 41%
from the equivalent production for 2003 when Unit produced 516,000 barrels
of oil and 20.7 Bcf of natural gas for an equivalent Bcf of 23.7.
Of particular note is Unit’s Buzzard Gap Prospect, located in
Latimer County, Oklahoma. Unit has been active in this 15 section area
since 1981, where it owns approximately an average 42% working interest
in the prospect. Unit owns interests in 47 Buzzard Gap wells which produce
from several Atokan age sandstones and have produced approximately 83.0
Bcf of natural gas. Two additional significant wells have been recently
drilled and are currently producing. The Scharff #3X (13.6% working
interest) has been producing for 121 days and is currently producing
14,000 Mcf per day, while the Lively #4 (29.6% working interest) has
been producing for 53 days and is currently producing 22,500 Mcf per
day. Currently, at least two potential offset wells exist for the Scharff
#3X and the Lively #4.
Unit Petroleum has budgeted $125 million for capital expenditures for
2005 with $105 million planned for exploration and development drilling.
This budget for Unit Petroleum represents about a 25% increase over
2004 capital expenditures, excluding acquisitions. Unit Petroleum plans
to drill 220 to 230 wells during 2005.
Unit Drilling Company, a wholly owned subsidiary of Unit Corporation,
announced its fourth quarter average rig utilization was 95.0 rigs and
its average rig utilization for 2004 was 88.1 rigs, an increase of 36%
and 40%, respectively, over the same periods in 2003. Unit had 100 total
rigs available for drilling during the fourth quarter of 2004. Unit’s
101st rig, which had previously been under construction, is now operating
under contract. Early in January 2005, Unit closed its acquisition of
a subsidiary of Strata Drilling LLC, by which Unit acquired two additional
drilling rigs, its 102nd and 103rd rigs, as well as spare parts, inventory,
drill pipe, and other major rig components. One of the newly acquired
rigs is currently operating under contract while the other rig should
be fully operational within 90 days. Currently, Unit has 102 rigs, all
of which are contracted and 101 are operating. Apart from the newly
acquired rigs, Unit has two additional rigs under construction which
are committed to a customer and are expected to be operational by the
third quarter.
Unit Corporation is a Tulsa-based, publicly held
energy company engaged through its subsidiaries in oil and gas exploration,
production, contract drilling and natural gas gathering and processing.
Unit’s Common Stock is listed on the New York Stock Exchange under
the symbol UNT. For more information about Unit Corporation, visit our
website at http://www.unitcorp.com.
This news release contains forward-looking statements within the meaning
of the Securities Litigation Reform Act that involve risks and uncertainties,
including the amount of the company’s oil and natural gas reserves,
the value of the company’s oil and natural gas reserves, the number
of future wells the company plans to drill, productive capabilities
of the wells, future demand for oil and natural gas, oil and natural
gas reserve information, anticipated production rates from company wells,
the prospective capabilities of offset acreage, anticipated oil and
natural gas prices, anticipated operational dates for newly constructed
rigs and other development, operational, implementation and opportunity
risks, and other factors described from time to time in the company’s
publicly available SEC reports, which could cause actual results to
differ materially from those expected.
