Wednesday, February 22
Tulsa, Oklahoma . . . Unit Corporation (NYSE
- UNT) announced today its financial and operational results for the
fourth quarter and year-end 2005. Net income for the fourth quarter
of 2005 was $84.5 million, or $1.82 per diluted share, on revenues of
$293.1 million, compared with net income of $29.9 million, or $0.65
per diluted share, on revenues of $160.2 million for the fourth quarter
of 2004. For the full 2005 year, net income was $212.4 million, or $4.60
per diluted share, on revenues of $885.6 million, compared with net
income of $90.3 million, or $1.97 per diluted share, on revenues of
$519.2 million for 2004. Both fourth quarter and full-year 2005 revenue,
net income and earnings per share are all-time records for Unit.
“We are very pleased with the fourth quarter and full-year results
that all three of our business units achieved in 2005, with each making
significant contributions to our outstanding performance,” said
Larry Pinkston, Chief Executive Officer and President. “Dayrates
and margins on our drilling rigs reached record levels and the momentum
of this cycle has continued into 2006. Our exploration and production
segment replaced 261% of its oil and natural gas production, achieving
our goal of greater than 150% production replacement for the 22nd consecutive
year, and we continued to expand our gas gathering and processing business
and gathered record volumes in 2005.”
CONTRACT DRILLING RESULTS
Contract drilling rig rates for the fourth quarter averaged $14,857
per day, up 56% from the comparable quarter of 2004. Operating margins
for the fourth quarter reached an all-time record averaging $7,283 per
day (before elimination of intercompany drilling rig profit of $3.0
million) as compared to $3,410 per day (before elimination of intercompany
drilling rig profit of $0.9 million) for 2004, an increase of 114%.
Unit’s current dayrates average $17,129 per day, or $2,272 per
day higher than the 2005 fourth quarter average and $1,486 per day higher
than the December 2005 average. Contract drilling revenues increased
61% between the comparative fourth quarters to $139.8 million, primarily
due to an increase in dayrates and the number of drilling rigs utilized. Average drilling rig utilization was 106.2
drilling rigs in the fourth quarter of 2005, up 12% from 2004’s
fourth quarter of 95.0 drilling rigs. Operating margins for the year
averaged $5,481 per day (before elimination of intercompany drilling
rig profit of $8.6 million) as compared to $2,823 per day (before elimination
of intercompany drilling rig profit of $3.7 million) in 2004, an increase
of 94%. Contract drilling revenues increased 55% in 2005 to $462.1 million,
while drilling rig utilization increased to an average of 102.1 drilling
rigs operating during 2005, compared to 88.1 drilling rigs operating
during 2004.
During 2005, Unit increased its drilling rig fleet by 12 drilling rigs
through construction and by the acquisition of seven drilling rigs from
Texas Wyoming Drilling, Inc. in August, bringing its total fleet to
112 drilling rigs at year-end. The Texas Wyoming Drilling rigs were
operating in the active Barnett Shale area of North Texas, adding a
new geographic area of operation to Unit’s drilling rig fleet.
In January 2006, Unit lost a drilling rig in a blow-out fire. Also in
January 2006, Unit acquired a 1,000 horsepower electric drilling rig
that requires some modifications, but is expected to be operational
in March. Unit is also constructing two additional 1,500 horsepower
SCR drilling rigs. The first of these drilling rigs should be completed
and operational in April, and the second in June. Unit has also ordered
two new 1,500 horsepower SCR drilling rigs. The first of these drilling
rigs should be operational by mid-March and the second drilling rig
is expected to be placed into operation in April. Currently, Unit has
111 operational drilling rigs of which 110 are operating under contract.
EXPLORATION AND PRODUCTION RESULTS
Fourth quarter production for Unit’s oil and natural gas operations
was 296,000 barrels of oil and 10.0 billion cubic feet (Bcf) of natural
gas, a quarterly production record of 11.8 billion cubic feet equivalent
(Bcfe) and a 31% equivalent Mcf increase from the fourth quarter of
2004. Revenues for the fourth quarter were $115.4 million or 113% higher
than 2004’s fourth quarter. The increase in revenue was due to
higher oil and natural gas prices and record production. Unit’s
2005 oil and natural gas production was 1,084,000 barrels of oil and
34.1 Bcf of natural gas, a production record of 40.6 Bcfe and a 21%
equivalent Mcf increase over 2004’s production. Oil and natural
gas revenues for 2005 were $318.2 million, a 72% improvement over 2004.
Average natural gas prices received during the fourth quarter of 2005
increased 65% to $9.79 per thousand cubic feet (Mcf) compared to $5.95
per Mcf during the fourth quarter of 2004. The average oil price received
was $55.41 per barrel in the fourth quarter of 2005 compared to $36.03
per barrel in the fourth quarter of 2004, a 54% increase. For the year,
the average natural gas price received increased 41% to $7.64 per Mcf
compared to $5.42 per Mcf during 2004. The average oil price received
was $50.14 per barrel during 2005 compared to $33.20 per barrel in 2004,
a 51% increase.
During 2005, Unit completed 192 wells, a 14%
increase over the number of wells drilled during 2004. Of the 192 wells,
177 wells, or 92%, were completed as producing wells. Unit’s total
oil and natural gas reserves at December 31, 2005 reached a record 412.1
Bcfe, a 19% increase over 2004, which includes 9.9 million barrels of
oil and natural gas liquids and 352.8 Bcf of natural gas. Seventy-eight
percent of these reserves are proved developed and 86% of the total
proved reserves are natural gas. Unit’s threeyear average finding
cost was $2.25 per Mcfe.
GAS GATHERING AND PROCESSING RESULTS
Fourth quarter 2005 gathering volumes for Unit’s gas gathering
and processing operations were 180,098 MMBtu per day, a 277% increase
from the fourth quarter of 2004. The significant increase in volumes
gathered per day is primarily attributable to one system that gathered
97,867 MMBtu and 11,293 MMBtu per day during the fourth quarter of 2005
and 2004, respectively. Operating profit (as defined below) for the
fourth quarter was $2.7 million or 65% higher than 2004’s fourth
quarter. For 2005, Unit’s gas gathering volumes were 142,444 MMBtu
per day, a 330% increase from 2004. Operating profit (as defined below)
for the year was $8.0 million or 196% higher than 2004.
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 five processing
plants, 36 active gathering systems and 500 miles of pipeline.
MANAGEMENT COMMENTS
“2005 marked a year of record-setting performance and growth as
we responded to a strong operating environment within the industry,”
said Larry Pinkston, Chief Executive Officer and President.
“Increases in dayrates and margins for 2005 were positively impacted
by increased demand for drilling rigs throughout the year. The recent
decline in commodity prices has had no impact on customer demand for
our drilling rigs. We continue to experience strong demand for drilling
rigs into 2006 and are optimistic about continued increases in dayrates
and margins which is evident in our plans to add at least 10 drilling
rigs to our fleet during 2006.”
“Our outlook for exploration and production remains very optimistic
at current commodity prices. We plan to drill aggressively during 2006,
with a goal of drilling 235 wells, a 22% increase over 2005. Our record
2005 production of 40.6 Bcfe was a 21% increase over 2004 production,
and with the acquisitions we completed in mid-to-late 2005, we should
experience production growth of 12% to 14% in 2006 when combined with
our aggressive internal drilling program.”
WEBCAST
Unit will webcast its fourth quarter and year-end earnings conference
call live over the Internet on February 22, 2006 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 financial
tables (pdf)
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 drilling rig utilization and dayrates, the
timing of the completion of drilling rigs currently under construction,
projected additions to the company’s drilling rig fleet, projected
growth of the company’s oil and natural gas production, 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.
