February 22, 2005
Tulsa, Oklahoma . . . Unit Corporation (NYSE – UNT) announced
today its financial and operational results for the fourth quarter and
year-end 2004. Net income and earnings per share for 2004 increased
80% to $90.3 million and 71% to $1.97, respectively, compared to 2003.
Total revenue for 2004 was $519.2 million, a 72% improvement over 2003
and an all-time record. The improvement in revenue and net income was
attributable to increases in the number of drilling rigs utilized and
dayrates, as well as increases in the production of oil and natural
gas and the price received for those commodities. Drilling rig utilization
averaged 88.1 rigs operating during 2004 versus 62.9 rigs operating
during 2003. Unit added 12 drilling rigs during the year, bringing its
fleet to a record 100 drilling rigs. Unit’s rig fleet currently
stands at 102 operational rigs. Unit replaced 285% of its oil and natural
gas production, achieving its goal of greater than 150% production replacement
for the 21st consecutive year.
For the fourth quarter of 2004, consolidated net income was $29.9 million,
or 65 cents per diluted share, on revenues of $160.2 million. In 2003,
net income for the fourth quarter was $11.8 million, or 27 cents per
diluted share, on revenues of $82.6 million.
UNIT DRILLING RESULTS
Contract drilling revenues increased 63% between the comparative fourth
quarters to $87.0 million, due to an increase in dayrates and the number
of drilling rigs utilized. Drilling rig rates for the fourth quarter
averaged $9,529 per day, 17% higher than the comparable quarter of 2003.
Contract drilling operating margins per drilling rig averaged $3,298
per day in the fourth quarter of 2004. The operating margins for the
fourth quarter were favorably impacted by $150 per day for adjustments
primarily associated with a reduction in accrued health insurance costs.
The average drilling rig utilization was 95.0 rigs in the fourth quarter
of 2004, up 36% from 2003’s fourth quarter. During 2004, Unit
increased its drilling rig fleet by 12 rigs, bringing the total fleet
to 100 drilling rigs. Currently, Unit has 102 operational rigs, all
of which are contracted and 100 are operating.
Between the comparative years, contract drilling revenues increased
63% in 2004 to $298.2 million, while drilling rig utilization increased
to an average of 88.1 rigs operating during 2004, compared to 62.9 rigs
operating during 2003. Contract drilling operating margins increased
to 29%, compared to 24% during 2003.
UNIT PETROLEUM RESULTS
Fourth quarter production for Unit’s oil and natural gasoperations
was 281,000 barrels of oil and 7,294 million cubic feet (MMcf) of natural
gas, a 39% equivalent Mcf increase from the fourth quarter of 2003.
Revenues for the fourth quarter were $54.3 million or 87% higher than
2003’s fourth quarter. The increase in revenue was due to higher
oil and natural gas prices and production.
Unit’s 2004 oil and natural gas production was
1,048,000 barrels of oil and 27,149 MMcf of natural gas, a 41% equivalent
Mcf increase over 2003’s production. Excluding production associated
with the PetroCorp acquisition, equivalent Mcf production for 2004 increased
17%. 2004 oil and natural gas revenues were $185.0 million, a 59% improvement
over 2003.
Average natural gas prices received during the fourth quarter of 2004
increased 35% to $5.95 per thousand cubic feet (Mcf) compared to $4.40
per Mcf during the fourth quarter of 2003. The average oil price received
was $36.03 per barrel in the fourth quarter of 2004 compared to $26.76
per barrel in the fourth quarter of 2003, a 35% increase. For the year,
the average natural gas price received increased 11% to $5.42 per Mcf
compared to $4.87 per Mcf during 2003. The average oil price received
was $33.20 per barrel during 2004 compared to $26.94 per barrel in 2003,
a 23% increase.
During 2004, Unit completed 168 wells, a 13% increase over the number
of wells drilled during 2003. Of the 168 wells, 140 wells, or 83%, were
completed as producing wells. Unit’s total oil and natural gas
reserves at December 31, 2004, were 346.8 billion cubic feet equivalent
(Bcfe), a 22% increase over 2003. Unit replaced 285% of 2004 production,
achieving for the 21st consecutive year the company’s goal of
replacing at least 150% of production with new oil and natural gas reserves.
Unit’s three-year average finding cost was $1.99 per Mcfe.
SUPERIOR PIPELINE RESULTS
On July 29, 2004, Unit purchased the 60% of Superior Pipeline Company
LLC that it did not already own for $19.8 million. The operations of
Superior Pipeline and Unit’s previously existing gas gathering
activities are reflected in the gas gathering and processing segment.
Prior to this acquisition, Unit’s 40% interest in the operations
of Superior Pipeline was shown as equity in earnings of unconsolidated
investments.
Superior Pipeline is a mid-stream company engaged primarily in the gathering,
processing and treating of natural gas. The company owns one natural
gas treatment plant, two processing plants, 12 active gathering systems
and 400 miles of pipeline. For the fourth quarter of 2004, Superior
Pipeline gathered 47,778 MMBtu’s of natural gas per day and processed
31,980 MMBtu’s per day.
MANAGEMENT COMMENTS
“2004 was a year of growth for Unit as we responded to favorable
industry conditions during the year,” said John Nikkel, Chairman
and Chief Executive Officer. “The year was marked by three significant
transactions with the acquisitions of PetroCorp Incorporated, Sauer
Drilling Company, and the outstanding interest of Superior Pipeline
Company LLC.”
“Unit increased its drilling rig fleet by 12 rigs during 2004,
primarily by the acquisition of 9 rigs with the purchase of Sauer Drilling
Company in August. During January 2005, Unit placed into service its
101st rig, which had previously been under construction. Also in January
2005, Unit closed its acquisition of a subsidiary of Strata Drilling
LLC, by which Unit acquired two drilling rigs, its 102nd and 103rd rigs,
as well as spare parts, inventory, drill pipe and other major components.
The 103rd rig requires refurbishment, but should be fully operational
within 90 days. Unit also has an additional rig under construction which
is committed to a customer and is expected to be operational by the
third quarter.”
“Within our exploration and production operations, we completed
our acquisition of PetroCorp Inc., on January 30, 2004 and benefited
from those operations the remainder of the year. With the inclusion
of PetroCorp’s oil and natural gas reserves, Unit’s total
oil and natural gas reserve base at December 31, 2004 consisted of 8.6
million barrels of oil and 295.4 Bcf of natural gas, a 22% equivalent
increase in total reserves over 2003. We plan to drill aggressively
during 2005, with a goal of drilling 220 to 230 wells. Our acquisition,
exploration and development drilling capital expenditure budget for
2005 is $125 million, an increase of 25% over 2004, excluding acquisitions.”
“Long-term debt has increased to $95.5 million due to strong acquisition
activity during the year, leaving us with a conservative 14% debt to
capitalization ratio.”
WEBCAST
Unit will webcast its fourth quarter and year-end earnings conference
call live over the Internet on February 22, 2005 at 11:00 a.m. Eastern
Time. To listen to the live call, please go to www.unitcorp.com at least
fifteen minutes prior to the start of the call to download and install
any necessary audio software. For those who are not available to listen
to the live webcast, a replay will be available shortly after the call
and will remain on the site for twelve months.
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tables
Unit Corporation is a Tulsa-based, publicly held
energy company engaged through its subsidiaries in oil and gas exploration,
production, contract drilling and 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 its 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 closing of the pending acquisitions, the productive capabilities
of the wells, future demand for oil and natural gas, future rig utilization
and dayrates, oil and gas reserve information, anticipated production
rates from company wells, anticipated gas gathering and processing rates,
the prospective capabilities of offset acreage, anticipated oil and
natural gas prices, the number of wells to be drilled by the company,
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.
