October 26, 2005
Tulsa, Oklahoma . . . Unit Corporation (NYSE –
UNT) announced today its financial and operational results for the third
quarter and first nine months of 2005. Consolidated net income for the
third quarter was $57.6 million, or $1.25 per diluted share, on revenues
of $231.0 million, compared to 2004’s net income of $24.6 million,
or 54 cents per diluted share, on revenue of $143.4 million. Revenues
increased 61% while net income increased 134% between the comparative
quarters. Net income, revenues, and earnings per share are all-time
quarterly records for Unit. The dramatic improvement in revenue and
net income was attributable to increases in drilling dayrates and the
number of drilling rigs utilized as well as increases in natural gas
production and the prices received by the Company for its oil and natural
gas production.
For the nine-month period, the Company reported consolidated net income
of $128.0 million, or $2.78 per diluted share, on revenues of $592.5
million, compared to 2004’s net income of $60.3 million, or $1.31
per diluted share, on revenues of $359.0 million. The increases resulted
from improvement in oil and natural gas production and prices, as well
as drilling rig utilization and dayrates.
CONTRACT DRILLING RESULTS
Contract drilling revenues increased 48% between the comparative third
quarters to $119.9 million, primarily due to an increase in dayrates
and the number of rigs being used. Average rig utilization was 102.6
rigs in the third quarter of 2005, up 12% from 2004’s third quarter
of 92.0 rigs. Currently, Unit has 111 operational rigs, 109 of which
are operating under contract. Unit’s 112th rig is completing construction
and should be operational by November 15th. Unit is in the process of
securing major components to build its 113th and 114th rigs, both 1,500
horsepower SCR rigs. It has also ordered two new 1,500 horsepower SCR
rigs, which are scheduled to be delivered in the first quarter of 2006.
Drilling rig rates for the third quarter averaged $13,117 per day, up
44% above the comparable quarter of 2004. Operating margins for the
third quarter averaged $5,924 per day (before elimination of intercompany
rig profit of $3.2 million) as compared to $2,814 per day (before elimination
of intercompany rig profit of $0.7 million) for 2004. Unit’s average
dayrate at the end of the third quarter was $13,347.
Between the comparative first nine months, contract drilling revenues
increased 53% to $322.4 million from $211.2 million for the first nine
months of 2004. Rig utilization increased to an average of 100.7 rigs
for the first nine months of 2005 as compared to an average 85.8 rigs
operating in the first nine months of 2004.
EXPLORATION AND PRODUCTION RESULTS
Revenues from Unit’s oil and natural gas operations increased
81% to $84.0 million in the third quarter because of higher oil and
natural gas prices and natural gas production. For the third quarter
of 2005, natural gas production was 8,542 million cubic feet (MMcf)
and oil production was 251,000 barrels. For the first nine months of
2005, oil and natural gas revenues were $202.8 million, an increase
of 55% over the same period in 2004. Natural gas production was 24,055
MMcf in the first nine months of 2005, while oil production for the
same period was 788,000 barrels. Equivalent Mcf production was up 18%
over the comparative nine month periods.
The Company’s average natural gas prices for the third quarter
of 2005 increased 56% to $8.13 per Mcf, compared to $5.21 per Mcf for
the third quarter of 2004, and its average oil price was $54.60 per
barrel for the third quarter of 2005 as compared to $34.46 per barrel
in the third quarter of 2004, a 58% increase. For the first nine months
of 2005, average natural gas prices received increased 29% to $6.74
per Mcf compared to $5.23 per Mcf during the first nine months of 2004.
The average oil price received was $48.16 per barrel in the first nine
months of 2005 compared to $32.17 per barrel in 2004, a 50% increase.
During the first nine months of 2005, Unit completed 135 wells with
a success rate of 90%, compared to 110 wells completed during the first
nine months of 2004 with an 85% success rate.
GAS GATHERING AND PROCESSING 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
two natural gas treatment plants, owns four processing plants, 35 active
gathering systems and 480 miles of pipeline.
For the third quarter of 2005, Superior Pipeline gathered
159,821 MMBtu’s of natural gas per day and processed 36,061 MMBtu’s
per day. For the first nine months of 2005, Superior gathered 129,754
MMBtu’s of natural gas per day and processed 32,709 MMBtu’s
per day.
MANAGEMENT COMMENTS
“Our third quarter results reflect the impact of higher commodity
prices and favorable industry conditions,” said Larry Pinkston,
Chief Executive Officer and President. “Unit has positioned itself
to benefit from current industry conditions through strategic acquisitions
and internal growth. During the third quarter, Unit announced the closing
of its acquisition of all the Texas drilling operations of Texas Wyoming
Drilling, Inc., which included seven drilling rigs all of which are
currently working in the Barnett Shale area of North Texas and the Gulf
Coast. This brings our total fleet to 111 drilling rigs. We have ordered
two new rigs and continue to construct new rigs while searching for
opportunities to acquire rigs to meet the continued increase in customer
demand. Our drilling rig fleet continues to operate at nearly 100% utilization.
Our exploration and production operations have drilled an aggressive
135 wells during the first nine months. On October 7th, we announced
the signing of a purchase and sale agreement to acquire certain oil
and natural gas properties consisting of 42.5 Bcfe of proved oil and
natural gas reserves. The properties are located in Oklahoma, Arkansas
and Texas and currently produce 6.5 MMcfe per day. The closing is anticipated
to be mid November. We will continue to evaluate acquisition opportunities
during the remainder of the year. Long-term debt increased by $20.7
million from the second quarter to $115.6 million due primarily to the
recent acquisition. Our debt to capitalization ratio remains at a conservative
13%.”
WEBCAST
Unit will webcast its third quarter earnings conference call live over
the Internet on October 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 including 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.
