July 26, 2005
Tulsa, Oklahoma . . . Unit Corporation (NYSE – UNT) announced
today its financial and operational results for the second quarter and
first six months of 2005. Consolidated net income for the second quarter
was $39.6 million, or 86 cents per diluted share, on revenues of $189.9
million, compared to 2004’s net income of $20.2 million, or 44
cents per diluted share, on revenue of $114.0 million. Revenues increased
67% while net income increased 96% between the comparative quarters.
Both net income and revenues are all-time quarterly records for Unit.
The dramatic improvement in revenue and net income was attributable
to increases in the number of drilling rigs utilized and dayrates, increases
in the production of natural gas, and in the prices received for oil
and natural gas.
For the six-month period, the Company reported consolidated net income
of $70.3 million, or $1.53 per diluted share, on revenues of $361.4
million, compared to 2004’s net income of $35.7 million, or 78
cents per diluted share, on revenues of $215.6 million. The increases
were due to a marked improvement in oil and natural gas production and
prices, as well as rig utilization and dayrates.
UNIT DRILLING RESULTS
Contract drilling revenues increased 58% between the comparative second
quarters to $105.8
million, primarily due to an increase in dayrates and the number of
rigs utilized. The average rig utilization was 100.3 rigs in the second
quarter of 2005, up 20% from 2004’s second quarter of 83.7 rigs.
Currently, Unit has 103 operational rigs, 102 of which are operating
under contract. Unit’s 104th rig, which is completing construction,
is committed to a customer and should be working by the end of July.
Unit’s 105th rig is under construction and should be operational
by the end of the third quarter. Currently, Unit is in the process of
securing major components to build its 106th and 107th rigs, both 1,500
horsepower SCR rigs, and has ordered two new rigs, which also will be
1,500 horsepower SCR rigs, to be delivered during the first quarter
of 2006. Drilling rig rates for the second quarter averaged $11,298
per day, which was 29% above the comparable quarter of 2004. Operating
margins for the second quarter averaged $4,724 per day before elimination
of intercompany rig profit of $1.6 million as compared to $2,604 per
day before elimination of intercompany rig profits of $1.1 million for
2004. Unit’s average dayrate at the end of the second quarter
was $11,900.
Between the comparative first six months, contract drilling revenues
increased 55% to $202.5 million with rig utilization increasing to an
average of 99.8 rigs operating during the first six months of 2005 as
compared to an average 82.6 rigs operating in the first six months of
2004.
UNIT PETROLEUM RESULTS
Revenues from Unit’s oil and natural gas operations increased
34% in the second quarter to $62.0 million due to higher oil and natural
gas prices and natural gas production. During the first six months of
2005, oil and natural gas revenues were $118.8 million, an increase
of 41% over the same period in 2004. Natural gas production was 7,861
million cubic feet (MMcf) in the second quarter of 2005, while oil production
for the same period was 257,000 barrels. Natural gas production was
15,514 MMcf in the first six months of 2005, while oil production for
the same period was 537,000 barrels. Equivalent Mcf production was up
18% over the comparative six month periods.
Average natural gas prices received during the second quarter of 2005
increased 13% to $6.27 per Mcf compared to $5.57 per Mcf during the
second quarter of 2004. The average oil price received was $45.79 per
barrel in the second quarter of 2005 and $31.12 per barrel in the 2004
comparative quarter, a 47% increase. For the first six months of 2005,
average natural gas prices received increased 14% to $5.98 per Mcf compared
to $5.24 per Mcf during the first six months of 2004. The average oil
price received was $45.15 per barrel in the first six months of 2005
compared to $30.91 per barrel in 2004, a 46% increase. During the first
six months of 2005, Unit completed 83 wells with a success rate of 90%,
compared to 73 wells completed during the first six months of 2004 with
an 86% success rate.
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 now reflected in the gas gathering and processing segment.
Before 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 purchasing,
gathering, processing and treating of natural gas. The company operates
one natural gas treatment plant, owns four processing plants, 35 active
gathering systems and 480 miles of pipeline.
For the second quarter of 2005, Superior Pipeline gathered 121,611 MMBtu’s
of natural gas per day and processed 31,670 MMBtu’s per day. For
the first six months of 2005, Superior gathered 114,472 MMBtu’s
of natural gas per day and processed 31,005 MMBtu’s per day.
MANAGEMENT COMMENTS
“Favorable commodity prices and industry conditions are producing
great results and more growth opportunities for Unit,” said Larry
Pinkston, Chief Executive Officer and President. “In our contract
drilling operations, we have ordered two new rigs and continue to construct
new rigs while searching for opportunities to acquire rigs to meet the
increases in customer demand. Our drilling rig fleet continues to operate
at nearly 100% utilization. Our exploration and production operations
are on track to drill 220 to 230 wells by year-end, providing rigs are
available to drill the wells. On June 15th, we announced the closing
of an acquisition of 14.0 Bcfe of proved oil and natural gas reserves.
The properties are located in Oklahoma and currently produce 2.5 MMcfe
per day. We will continue to consider acquisition opportunities during
the remainder of the year. Long-term debt increased by $16.9 million
from the first quarter to $94.9 million due primarily to the recent
producing property acquisition. Our debt to capitalization ratio remains
at a conservative 12%. We are pleased with the industry’s present
conditions and will continue our emphasis on growing our asset base.”
WEBCAST
Unit will webcast its second quarter earnings conference call live over
the Internet on July 26,
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.
Please click here for a pdf with the financial 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 productive capabilities of the
wells, future demand for oil and natural gas, future rig utilization
and dayrates, the timing of the completion of rigs currently under construction,
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.
