UNIT CORPORATION’S TOTAL PROVED RESERVES REACH A COMPANY-RECORD
475.9 BCFE; COMPANY RECORDS 23RD CONSECUTIVE YEAR OF REPLACING MORE
THAN 150% OF PRODUCTION
Tulsa, Oklahoma….Unit Corporation
(NYSE - UNT) today announced the following information regarding
the results of the operations of its wholly owned subsidiaries.
Unit
Petroleum Company
Unit Petroleum
Company set new company-records
for nearly ever major category: total proved reserves, annual production,
and wells drilled and achieved its stated annual goal to replace
more than 150% of its production.
At December 31, 2006, Unit’s
net proved oil and natural gas reserves, as reviewed by its independent
petroleum engineers, Ryder Scott Company, were 475.9 Bcfe of natural
gas, which includes 11.6 million barrels of oil and natural gas liquids
and 406.4 Bcf of natural gas.
This increase in total proved reserves
resulted from the company’s participation in the drilling of
244 gross wells, with an 88% success rate, and certain acquisitions
made during the year. Seventy-seven percent of the company’s
oil and natural gas reserves are proved developed of which 85% are
natural gas. The remaining 23% comprising total proved undeveloped
reserves, reflects the company’s conservative approach to adding
reserves each year.
The company replaced 221% of its 2006 oil and natural
gas production despite a reduction of 11.2 Bcfe of reserves as a result
of adjustments due to lower commodity prices at the end of 2006 as
compared to 2005. This is the 23rd consecutive year that Unit has met
its goal of replacing more than 150% of its annual production with
new oil and natural gas reserves, a measurement that is unmatched within
the U.S. independent exploration and production industry. Over the
23-year period, Unit’s average annual reserve replacement percentage
is 228%.
The net present value of Unit’s total proved reserve
base as of December 31, 2006, discounted at 10%, is approximately $984.1
million. Future net revenue from these properties, before income taxes,
is estimated to be $2.8 billion. This value is based on unescalated
prices of $61.05 per barrel of oil and $5.27 per Mcf of natural gas
for the life of the properties per SEC regulations.
During 2006, Unit
produced a company-record 1,453,000 barrels of oil and 44.2 Bcf of
natural gas, or an equivalent Bcf of 52.9. This is an increase of 30%
from the equivalent production for 2005 when Unit produced 1,084,000
barrels of oil and 34.1 Bcf of natural gas for an equivalent Bcf of
40.6. In a news release dated January 9, 2007, Unit announced that
it estimated its production for the year 2007 to be approximately 60
Bcfe.
The following table shows the company’s five–year
growth trend for its total reserves and total production. Total proved
reserves during this period increased an average of 15.5% each year,
while production increased an average 25.4% per annum.
| |
2002 |
2003 |
2004 |
2005 |
2006 |
2007E |
| Total Reserves (Bcfe) |
269.4 |
285.0 |
346.8 |
412.1 |
475.9 |
-- |
| Total Production (Bcfe) |
21.8 |
23.7 |
33.4 |
40.6 |
52.9 |
60.0 |
Larry D. Pinkston, Unit Corporation Chief Executive
Officer and President said: “We are pleased that the company
has been able to grow its E&P operating asset base as it has over
the past five years and even more impressed that we have met the company’s
longstanding objective of replacing 150% of the year’s production
with new reserves this year. We believe replacing more than 150% of
our reserves each year since 1983 is an outstanding accomplishment,
especially considering the amount of risk and price volatility that
we experience as an industry. On a per-share basis, adjusted for increases
in the company’s long-term bank debt, which was approximately
$175 million as of December 31, 2006, Unit grew its total proved reserve
base 57% over the previous five years and production was up 117%. I
believe we have some of the best oil and natural gas explorers working
for Unit, as evidenced by our ability to consistently find, produce
and replace such a valuable commodity each of the previous years. I’m
particularly pleased with our efforts to increase the productive performance
of certain of our assets. In 2007, our plan is to participate in the
drilling of a company-record 270 wells, an increase of 11% over 2006.
Our exploration team is focused on attaining our own internal targets,
which we believe will greatly benefit our shareholders.”
Unit
Drilling Company
Unit Drilling Company’s dayrates for the fourth
quarter averaged a company-record $19,767 per day, which is $208 per
day or 1% higher than the company’s third quarter 2006 dayrate
average. Current dayrates average $19,555 per day, or $212 per day
lower than the fourth quarter average.
Fourth quarter drilling rig
utilization averaged 106.7 drilling rigs, which was relatively flat
compared to the fourth quarter of 2005, and drilling rig utilization
for the year averaged 109.0, an increase of 7%, compared to our 2005
average utilization rate. The company’s drilling rig quality,
service and labor force are reflected in its utilization rate, which
continues to be one of the highest in the deeper land drilling industry.
At present, Unit has 117 drilling rigs, of which 90% are under contract.
Pinkston said: “Our contract drilling operations are delivering
excellent results for our customers who are operating in some of America’s
fastest growing basins. Although some demand for drilling rigs can
be determined by commodity prices, Wall Street’s demand that
producers keep growing production helps maintain Unit’s 750 to
1,500 horsepower drilling rigs, which are capable of reaching depths
between 15,000 feet and 20,000 feet, at a high utilization rate. Although
we are seeing some utilization weakness with some of our smaller rigs
and in demand from privately-held customers, we are still the largest
operating land driller in Oklahoma, and we are keeping our deep rigs
working at near capacity in the Rockies and are finding new customers
in southeast Texas and in southwest Louisiana. Having been a drilling
contractor of choice for more than 40 years, we believe we have a unique
perspective about our business and remain optimistic about the outlook
for the remainder of the year.”
Superior Pipeline Company
Fourth quarter 2006 gathering
volumes for Superior’s gas gathering and processing operations
were 253,776 MMBtu per day, a 41% increase from the fourth quarter
of 2005. Processing volumes for the fourth quarter of 2006 were 45,504
MMBtu per day, an 87% increase from the comparable quarter of 2005.
Gathering volumes for the year were 247,537 MMBtu per
day, a 74% increase from 2005, while processing volumes for the year
were 31,833 MMBtu per day, a 4% increase over 2005. Pinkston said, “The company’s
subsidiary, Superior, plans to spend approximately $25 million in 2007
carrying out its grassroots growth plans. We are actively reviewing
larger opportunities to grow this part of the Unit story. It is exciting
to see just how well all three of our segments – E&P, drilling
and gas gathering – work together for the benefit of our shareholders.”
Fourth Quarter and Year-End 2006 Webcast Unit will
release its fourth quarter and year-end 2006 earnings and host a conference
call on Thursday, February 22, 2007. The webcast will be broadcast
live over the Internet at 11:30 a.m. Eastern Time at http://www.unitcorp.com.
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 and value of the
company’s oil and natural gas reserves, the number of future
wells the company’s exploration and
production segment 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 drilling rigs under construction, future rates to be paid
for the company’s drilling rigs as well as
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.
