Unit Corporation (NYSE:UNT) today reported its financial and operational
results for the first quarter 2014.
Larry Pinkston, Unit’s Chief Executive Officer and President, stated,
“For the quarter, Unit reported net income of $56.9 million, or $1.17
per diluted share, and adjusted net income of $62.8 million, or $1.29
per diluted share (see Non-GAAP Financial Measures below). We continue
to make progress on our key initiatives within each business segment.
“For the oil and natural gas segment, production for the quarter
increased 5% over the first quarter of 2013 with oil and natural gas
liquids (NGLs) production increasing from 40% to 45% of total equivalent
production. Compared to the fourth quarter of 2013, production decreased
4%, or 1,745 barrels of oil equivalent (Boe) per day. The decrease was
due primarily to weather related factors. The combination of weather
related issues and mechanical issues reduced anticipated 2014 production
by approximately 2.2 billion cubic feet equivalent (Bcfe), representing
approximately 2% of our original production guidance for 2014.
Fortunately, the weather related issues appear to be behind us and the
mechanical issues are mostly resolved. Going forward, we plan to
accelerate our development operations in the Granite Wash and our SOHOT
(Southern Oklahoma Hoxbar Oil Trend) emerging play while slowing our
drilling schedule in the Mississippian play. Our original capital budget
of $718 million for this segment remains unchanged. We remain confident
in our prospect inventory and our ability to continue to provide solid
growth in production throughout the balance of 2014 and beyond.
“Rig utilization in our contract drilling segment improved through the
first quarter. Average utilization increased 4% to 68 drilling rigs
working compared to 65 drilling rigs working in the fourth quarter of
2013. The improvement is continuing into the second quarter. We sold
four idle 3,000 horsepower drilling rigs to an international contractor
during the quarter. Our first BOSS drilling rig was placed into service
in late March, bringing our total rig fleet to 118 drilling rigs. We
have contracts for three additional BOSS drilling rigs. Those drilling
rigs are currently being built and scheduled to go into service in the
second and third quarters of this year.
“Our midstream segment continues to benefit from our previous capital
investments in several of its projects including the Bellmon facility in
the Mississippian play in Oklahoma and the Pittsburgh Mills facility in
the Appalachian area. Operating profit for the quarter benefitted from
strong NGLs pricing, particularly propane, and we are now operating in
full ethane recovery mode at all of our processing facilities. Our goal
is to position this segment for sustainable growth with less exposure to
commodity price volatility. As appropriate, we continue to restructure
expiring commodity price based contracts to fee based contracts.”
Notable items for the quarter include:
-
Adjusted non-GAAP net income of $62.8 million, or $1.29 per diluted
share (see Non-GAAP Financial Measures below).
-
Total production of 4.2 million barrels of oil equivalent (MMBoe), a
5% increase over the first quarter of 2013.
-
The first BOSS drilling rig went into service, with three additional
BOSS drilling rigs under construction.
-
Average drilling rig utilization increased 4% over the prior quarter.
-
Mid-stream segment’s liquids sold volumes per day increased by 69%
over the first quarter of 2013.
Net income for the quarter was $56.9 million, or $1.17 per diluted
share, compared to $40.2 million, or $0.83 per diluted share, for the
first quarter of 2013. Adjusted net income, which excludes the effect of
non-cash commodity derivatives, was $62.8 million, or $1.29 per diluted
share (see Non-GAAP Financial Measures below). Total revenues were
$388.0 million (49% oil and natural gas, 27% contract drilling, and 24%
mid-stream), compared to $318.5 million (48% oil and natural gas, 34%
contract drilling, and 18% mid-stream) for the first quarter of 2013.
OIL AND NATURAL GAS SEGMENT INFORMATION
Total equivalent production for the quarter was 46,500 Boe per day, an
increase of 5% over the first quarter of 2013 and a decrease of 4% from
the fourth quarter of 2013. Liquids (oil and NGLs) production
represented 45% of total equivalent production for the quarter. Liquids
production has increased 155% since the first quarter of 2009. Oil
production for the quarter was 9,000 barrels per day, an increase of 2%
over the first quarter of 2013 and a decrease of 7% from the fourth
quarter of 2013. NGLs production for the quarter was 11,800 barrels per
day, an increase of 32% over the first quarter of 2013 and a decrease of
6% from the fourth quarter of 2013. Natural gas production for the
quarter was 153,900 Mcf per day, a decrease of 3% from the first quarter
of 2013 and a decrease of 1% from the fourth quarter of 2013.
Unit’s average realized per barrel equivalent price for the quarter was
$41.84, an increase of 10% and 9% over the first quarter of 2013 and the
fourth quarter of 2013, respectively. Unit’s average natural gas price
for the quarter was $4.24 per thousand cubic feet (Mcf), an increase of
28% and 32% over the first quarter of 2013 and the fourth quarter of
2013, respectively. Unit’s average oil price for the quarter was $91.53
per barrel, a decrease of 4% and 3% from the first quarter of 2013 and
the fourth quarter of 2013, respectively. Unit’s average NGLs price for
the quarter was $39.56 per barrel, an increase of 13% and 17% over the
first quarter of 2013 and the fourth quarter of 2013, respectively. All
prices in this paragraph include the effects of derivatives.
For 2014, Unit has derivative contracts for 7,250 Bbls per day of oil
production and 90,000 MMBtu per day of natural gas production. The
contracts for oil production are swap contracts for 3,250 Bbls per day
and collars for 4,000 Bbls per day. The swap transactions were done at a
comparable average NYMEX price of $92.35. The collar transactions were
done at a comparable average NYMEX floor price of $90.00 and ceiling
price of $96.08. The contracts for natural gas production are swaps for
80,000 MMBtu per day and a collar for 10,000 MMBtu per day. The swap
transactions were done at a comparable average NYMEX price of $4.24. The
collar transaction was done at a comparable average NYMEX floor price of
$3.75 and ceiling price of $4.37.
The following table illustrates Unit’s production and realized prices
for the periods indicated:
|
|
|
|
1st Qtr 14
|
|
|
4th Qtr 13
|
|
|
3rd Qtr 13
|
|
|
2nd Qtr 13
|
|
|
1st Qtr 13
|
|
|
4th Qtr 12
|
|
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3rd Qtr 12
|
|
|
2nd Qtr 12
|
|
|
1st Qtr 12
|
|
Oil and NGL Production, MBbl
|
|
|
1,875.2
|
|
|
2,046.7
|
|
|
1,832.9
|
|
|
1,794.1
|
|
|
1,600.6
|
|
|
1,694.1
|
|
|
1,545.8
|
|
|
1,460.2
|
|
|
1,375.2
|
|
Natural Gas Production, Bcf
|
|
|
13.9
|
|
|
14.3
|
|
|
14.3
|
|
|
13.9
|
|
|
14.2
|
|
|
14.5
|
|
|
11.7
|
|
|
11.3
|
|
|
11.4
|
|
Production, MBoe
|
|
|
4,184
|
|
|
4,438
|
|
|
4,217
|
|
|
4,109
|
|
|
3,971
|
|
|
4,115
|
|
|
3,498
|
|
|
3,341
|
|
|
3,275
|
|
Production, MBoe/day
|
|
|
46.5
|
|
|
48.2
|
|
|
45.8
|
|
|
45.2
|
|
|
44.1
|
|
|
44.7
|
|
|
38.0
|
|
|
36.7
|
|
|
36.0
|
|
Realized Price, Boe (1)
|
|
|
$41.84
|
|
|
$38.24
|
|
|
$35.77
|
|
|
$39.10
|
|
|
$37.99
|
|
|
$39.56
|
|
|
$37.99
|
|
|
$38.49
|
|
|
$40.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
(1) Realized price includes oil, natural gas liquids, natural gas and
associated derivatives.
During the quarter, Unit experienced two factors that contributed to the
estimated production loss of approximately 2.2 Bcfe. The first was
weather. Well freeze offs and operational delays caused by inclement
weather, primarily in the company’s Mid-Continent plays, resulted in a
reduction in production from the impacted wells. Second, Unit incurred
mechanical issues on nine separate wells primarily within its Granite
Wash play. These problems involved either liner issues in the horizontal
component of the wells or casing leaks just above the liner top packer.
As a result, the wells required remediation work before they could be
completed. To date, six of the nine wells have been repaired. Work is
continuing on the remaining three wells. Although the company believes
it will successfully repair all nine wells, the flow rate from five of
the nine wells may experience reduced rates as a result of these
problems. On average, first production from these nine wells has been
delayed approximately three months as compared to their initial
forecasted production date. Going forward, Unit has modified its casing
and liner program which should eliminate any further problems. In
response to these production delays, Unit plans to accelerate its
drilling program in both the Granite Wash and its new emerging play
(SOHOT, discussed below) in an effort to make up part of the incurred
production losses; however, the company forecasts that its first
production resulting from these increased drilling efforts will not
occur until mid-to-late third quarter primarily due to the production
timing of pad drilling. As a result, Unit is reducing its current 2014
production guidance to 13% - 15%. The capital required for the increased
drilling in the Granite Wash and SOHOT will be reallocated from its
Mississippian play (as discussed below).
Unit’s newest core play, SOHOT, is an emerging play located in southwest
Grady County. The Hoxbar is a Pennsylvanian sand/shale sequence that is
approximately 2,000’ thick that contains four to six potentially
productive stacked sand benches. Unit recently completed horizontal
wells in two of the Hoxbar sand benches, indicating the discovery of an
oil zone (Marchand) and a natural gas zone (Medrano) at true vertical
depths of approximately 11,000’ and 9,800’ respectively. The completed
well cost for the Marchand with a 4,300’ lateral is approximately $7.0
million. The estimated ultimate reserves (EUR) are projected at 300 MBoe
to 500 MBoe for this well, consisting of approximately 85% to 90% oil.
The Medrano completed well cost with a 4,200’ lateral is approximately
$4.2 million with an EUR of 3.0 to 4.5 Bcfe, consisting of an average of
approximately 30% liquids. In its current focus area in southwest Grady
County, Unit has 50,560 gross acres and 12,810 net acres. The company
has one rig drilling in the play and plans to add two additional rigs in
June for a total of three rigs running during the second half of 2014.
The 2014 capital drilling budget in this area has been increased
approximately 49% to $82 million.
In the Granite Wash (GW) play, all nine wells in the initial horizontal
program in the Buffalo Wallow field have been successfully completed.
Unit will move one drilling rig back into the Buffalo Wallow field in
late May. Unit will add an additional rig in the GW play in July. After
adding these two drilling rigs, there will be a total of six drilling
rigs running in the GW with expectations to maintain that pace through
the rest of the year.
The Wilcox play, located in southeast Texas, achieved its fifth
consecutive quarter of production growth with production up 32% for the
first quarter 2014 compared to the first quarter 2013. The Gilly field
continues to be a first class Basal Wilcox field discovery with
excellent results obtained from four recent well recompletions. For
2014, the company plans to run two rigs supplemented by a strategic
recompletion program throughout the Wilcox play area.
In the Marmaton horizontal oil play, three horizontally stacked lateral
wells have recently been drilled targeting both the Upper and Lower
Marmaton benches in the same wellbore. The production from these wells
will be evaluated to determine the feasibility of drilling a greater
portion of our Marmaton well program with this design. Currently, Unit
anticipates maintaining the two drilling rig program in the play.
In the Mississippian play, located in south central Kansas, the current
drilling program is being modified to reduce from two drilling rigs to
one drilling rig while Unit evaluates the well production results and
explores the potential of shooting a 3-D seismic survey over a portion
of its leasehold. Unit’s revised budgeted capital for this play is
approximately $89 million, which is a reduction of approximately $48
million. The $48 million will be reallocated to the company’s GW and
SOHOT plays.
CONTRACT DRILLING SEGMENT INFORMATION
The average number of drilling rigs used in the first quarter of 2014
was 67.9, an increase of 2% and 4% over the first quarter of 2013 and
the fourth quarter of 2013, respectively. Per day drilling rig rates for
the first quarter of 2014 averaged $19,615, relatively flat with the
first quarter of 2013 and the fourth quarter of 2013. Average per day
operating margin for the first quarter of 2014 was $7,870 (before
elimination of intercompany drilling rig profit of $5.3 million). This
compares to $7,534 (before elimination of intercompany drilling rig
profit of $3.4 million) for the first quarter of 2013, an increase of
4%, or $336. As compared to the fourth quarter of 2013 ($8,132 before
elimination of intercompany drilling rig profit of $5.7 million), first
quarter 2014 operating margin decreased 3% or $262 (in each case
regarding eliminating intercompany drilling rig profit see Non-GAAP
Financial Measures below). For the fourth quarter of 2013 average
operating margins included early termination fees of approximately $161
per day from the cancellation of certain long-term contracts.
Larry Pinkston said: “Drilling rig demand continued at a steady increase
during the first quarter of 2014. Almost all of our drilling rigs
working today are drilling for oil or NGLs. With the sale of the four
idle 3,000 horsepower drilling rigs and adding our first BOSS drilling
rig, our drilling fleet currently totals 118 drilling rigs. Of the 118
drilling rigs, we currently have 73 under contract. Long-term contracts
(contracts with original terms ranging from six months to two years in
length) are in place for 30 of the 73 drilling rigs. Of the 30 long-term
contracts, one is up for renewal during the second quarter, nine in the
third quarter, eight in the fourth quarter, and 12 are up for renewal in
2015. We are currently building three additional BOSS rigs. All three
are contracted to third party operators and are anticipated to be placed
into service in the second and third quarters of 2014.”
The following table illustrates Unit’s drilling segment drilling rig
count at the end of each period and average utilization rate during the
period:
|
|
|
|
1st Qtr 14
|
|
|
4th Qtr 13
|
|
|
3rd Qtr 13
|
|
|
2nd Qtr 13
|
|
|
1st Qtr 13
|
|
|
4th Qtr 12
|
|
|
3rd Qtr 12
|
|
|
2nd Qtr 12
|
|
|
1st Qtr 12
|
|
Drilling Rigs
|
|
|
118
|
|
|
121
|
|
|
124
|
|
|
126
|
|
|
127
|
|
|
127
|
|
|
127
|
|
|
128
|
|
|
127
|
|
Utilization
|
|
|
57%
|
|
|
53%
|
|
|
51%
|
|
|
51%
|
|
|
52%
|
|
|
50%
|
|
|
58%
|
|
|
60%
|
|
|
64%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MID-STREAM SEGMENT INFORMATION
First quarter per day liquids sold were 712,225 gallons, an increase of
69% over the first quarter of 2013. Per day gas gathered and processed
volumes increased 11% and 16%, respectively, as compared to the first
quarter of 2013. Compared to the fourth quarter of 2013, gathered
volumes per day decreased 3%, while liquids sold volumes per day and
processed volumes per day increased 9% and 1%, respectively. Operating
profit (as defined in the Selected Financial and Operational Highlights)
for the quarter was $12.2 million, an increase of 53% over the first
quarter of 2013 and relatively flat compared to the fourth quarter of
2013.
The following table illustrates certain results from this segment’s
operations for the periods indicated:
|
|
|
|
1st Qtr 14
|
|
|
4th Qtr 13
|
|
|
3rd Qtr 13
|
|
|
2nd Qtr 13
|
|
|
1st Qtr 13
|
|
|
4th Qtr 12
|
|
|
3rd Qtr 12
|
|
|
2nd Qtr 12
|
|
|
1st Qtr 12
|
Gas gathered
Mcf/day
|
|
|
304,083
|
|
|
312,254
|
|
|
326,474
|
|
|
326,039
|
|
|
272,831
|
|
|
279,990
|
|
|
241,271
|
|
|
262,269
|
|
|
217,404
|
Gas processed
Mcf/day
|
|
|
150,042
|
|
|
149,069
|
|
|
145,020
|
|
|
138,130
|
|
|
129,857
|
|
|
131,570
|
|
|
134,907
|
|
|
144,257
|
|
|
125,231
|
|
Liquids sold
Gallons/day
|
|
|
712,225
|
|
|
656,415
|
|
|
586,446
|
|
|
508,189
|
|
|
420,291
|
|
|
441,973
|
|
|
576,889
|
|
|
629,350
|
|
|
522,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Pinkston said: “During the quarter, we continued to see
improvement in NGLs pricing primarily associated with propane price
increases due to seasonal demand and shortages of supply. In order to
maximize our propane recovery, we began recovering all liquids. We
operated in full ethane recovery mode at all of our processing systems
during the quarter, which resulted in a significant increase in liquids
sold volumes. As a result of prior capital investment, we have
positioned the segment for growth with limited incremental capital
investment required to more efficiently utilize our system capacity.
During the quarter, we connected 46 new wells as compared to 31 wells in
the fourth quarter of 2013. These activities resulted in achieving new
records for gas processed volumes at three of our Central Oklahoma
processing plants. We believe this speaks positively to the activity
levels in the plays in which we have made investments.”
FINANCIAL INFORMATION
Unit ended the quarter with long-term debt of $645.8 million (comprising
senior subordinated notes), and a debt to capitalization ratio of 22%.
Unit currently has no borrowings under its credit agreement. Under the
credit agreement, the amount Unit could borrow is the lesser of the
amount it elects as the commitment amount (currently $500 million) or
the value of its borrowing base as determined by the lenders (currently
$900 million), but in either event not to exceed $900 million.
WEBCAST
Unit will webcast its first quarter conference call live over the
Internet on May 8, 2014 at 10:00 a.m. Central Time (11:00 a.m. Eastern).
To listen to the live call, please go to http://www.unitcorp.com/investor/calendar.htm
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 90 days.
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 on the New York Stock Exchange under the symbol UNT. For more
information about Unit Corporation, visit its website at http://www.unitcorp.com.
FORWARD-LOOKING STATEMENT
This news release contains forward-looking statements within the meaning
of the private Securities Litigation Reform Act. All statements, other
than statements of historical facts, included in this release that
address activities, events or developments that the company expects or
anticipates will or may occur in the future are forward-looking
statements. Several risks and uncertainties could cause actual results
to differ materially from these statements, including the productive
capabilities of the company’s wells, future demand for oil and natural
gas, future drilling rig utilization and dayrates, projected growth of
the company’s oil and natural gas production, oil and gas reserve
information, and its ability to meet its future reserve replacement
goals, anticipated gas gathering and processing rates and throughput
volumes, the prospective capabilities of the reserves associated with
the company’s inventory of future drilling sites, anticipated oil and
natural gas prices, the number of wells to be drilled by the company’s
oil and natural gas segment, development, operational, implementation
and opportunity risks, possible delays caused by limited availability of
third party services needed in its operations, unexpected delays or
operational issues associated with the company’s new drilling rig
design, possibility of future growth opportunities, and other factors
described from time to time in the company’s publicly available SEC
reports. The company assumes no obligation to update publicly such
forward-looking statements, whether because of new information, future
events or otherwise.
|
|
|
|
|
|
Unit Corporation
|
|
Selected Financial and Operations Highlights
|
|
(In thousands except per share and operations data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
Statement of Income:
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Oil and natural gas
|
|
|
$
|
188,207
|
|
|
|
$
|
153,609
|
|
|
Contract drilling
|
|
|
|
106,600
|
|
|
|
|
107,528
|
|
|
Gas gathering and processing
|
|
|
|
93,181
|
|
|
|
|
57,395
|
|
|
Total revenues
|
|
|
|
387,988
|
|
|
|
|
318,532
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Oil and natural gas:
|
|
|
|
|
|
|
|
Operating costs
|
|
|
|
40,415
|
|
|
|
|
43,038
|
|
|
Depreciation, depletion, and
|
|
|
|
|
|
|
|
amortization
|
|
|
|
59,680
|
|
|
|
|
51,983
|
|
|
Contract drilling:
|
|
|
|
|
|
|
|
Operating costs
|
|
|
|
63,804
|
|
|
|
|
66,002
|
|
|
Depreciation
|
|
|
|
18,395
|
|
|
|
|
17,260
|
|
|
Gas gathering and processing:
|
|
|
|
|
|
|
|
Operating costs
|
|
|
|
80,960
|
|
|
|
|
49,410
|
|
|
Depreciation and amortization
|
|
|
|
9,591
|
|
|
|
|
7,156
|
|
|
General and administrative
|
|
|
|
9,637
|
|
|
|
|
8,673
|
|
|
(Gain) loss on disposition of assets
|
|
|
|
(9,426
|
)
|
|
|
|
84
|
|
|
Total expenses
|
|
|
|
273,056
|
|
|
|
|
243,606
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
114,932
|
|
|
|
|
74,926
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
Interest, net
|
|
|
|
(3,790
|
)
|
|
|
|
(3,561
|
)
|
|
Loss on derivatives not
|
|
|
|
|
|
|
designated as hedges and
hedge ineffectiveness, net
|
|
|
|
(18,366
|
)
|
|
|
|
(5,924
|
)
|
|
Other
|
|
|
|
120
|
|
|
|
|
(66
|
)
|
|
Total other income (expense)
|
|
|
|
(22,036
|
)
|
|
|
|
(9,551
|
)
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
92,896
|
|
|
|
|
65,375
|
|
|
|
|
|
|
|
|
|
|
Income tax expense:
|
|
|
|
|
|
|
|
Current
|
|
|
|
9,795
|
|
|
|
|
2,517
|
|
|
Deferred
|
|
|
|
26,156
|
|
|
|
|
22,652
|
|
|
Total income taxes
|
|
|
|
35,951
|
|
|
|
|
25,169
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
56,945
|
|
|
|
$
|
40,206
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
1.17
|
|
|
|
$
|
0.84
|
|
|
Diluted
|
|
|
$
|
1.17
|
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
|
48,493
|
|
|
|
|
48,117
|
|
|
Diluted
|
|
|
|
48,872
|
|
|
|
|
48,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
$
|
223,263
|
|
|
|
|
$
|
212,031
|
|
|
Total assets
|
|
|
$
|
4,116,836
|
|
|
|
|
$
|
4,022,390
|
|
|
Current liabilities
|
|
|
$
|
263,237
|
|
|
|
|
$
|
243,573
|
|
|
Long-term debt
|
|
|
$
|
645,809
|
|
|
|
|
$
|
645,696
|
|
|
Other long-term liabilities
|
|
|
$
|
145,454
|
|
|
|
|
$
|
158,331
|
|
|
Deferred income taxes
|
|
|
$
|
827,554
|
|
|
|
|
$
|
801,398
|
|
|
Shareholders’ equity
|
|
|
$
|
2,234,782
|
|
|
|
|
$
|
2,173,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
Statement of Cash Flows Data:
|
|
|
|
|
|
|
|
|
Cash flow from operations before changes
|
|
|
|
|
|
|
|
|
in operating assets and liabilities (1)
|
|
|
$
|
178,224
|
|
|
|
|
$
|
153,314
|
|
|
Net change in operating assets and liabilities
|
|
|
|
(54,764
|
)
|
|
|
|
|
26,346
|
|
|
Net cash provided by operating activities
|
|
|
$
|
123,460
|
|
|
|
|
$
|
179,660
|
|
|
Net cash used in investing activities
|
|
|
$
|
(160,518
|
)
|
|
|
|
$
|
(191,471
|
)
|
|
Net cash provided by financing activities
|
|
|
$
|
19,517
|
|
|
|
|
$
|
11,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
Oil and Natural Gas Operations Data:
|
|
|
|
|
|
|
|
|
Production:
|
|
|
|
|
|
|
|
|
Oil – MBbls
|
|
|
|
810
|
|
|
|
|
|
797
|
|
|
Natural Gas Liquids - MBbls
|
|
|
|
1,065
|
|
|
|
|
|
804
|
|
|
Natural Gas - MMcf
|
|
|
|
13,854
|
|
|
|
|
|
14,220
|
|
|
Average Prices:
|
|
|
|
|
|
|
|
|
Oil price per barrel received
|
|
|
$
|
91.53
|
|
|
|
|
$
|
95.23
|
|
|
Oil price per barrel received, excluding derivatives
|
|
|
$
|
95.05
|
|
|
|
|
$
|
91.94
|
|
|
NGLs price per barrel received
|
|
|
$
|
39.56
|
|
|
|
|
$
|
34.99
|
|
|
NGLs price per barrel received,
|
|
|
|
|
|
|
|
|
excluding derivatives
|
|
|
$
|
39.56
|
|
|
|
|
$
|
34.99
|
|
|
Natural gas price per Mcf received
|
|
|
$
|
4.24
|
|
|
|
|
$
|
3.30
|
|
|
Natural gas price per Mcf received,
|
|
|
|
|
|
|
|
|
excluding derivatives
|
|
|
$
|
4.68
|
|
|
|
|
$
|
3.14
|
|
|
Operating profit before depreciation, depletion,
|
|
|
|
|
|
|
|
|
and amortization (2) ($MM)
|
|
|
$
|
147.8
|
|
|
|
|
$
|
110.6
|
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling Operations Data:
|
|
|
|
|
|
|
|
|
Rigs utilized
|
|
|
|
67.9
|
|
|
|
|
|
66.3
|
|
|
Operating margins (2)
|
|
|
|
40
|
%
|
|
|
|
|
39
|
%
|
|
Operating profit before depreciation (2) ($MM)
|
|
|
$
|
42.8
|
|
|
|
|
$
|
41.5
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Stream Operations Data:
|
|
|
|
|
|
|
|
|
Gas gathering - Mcf/day
|
|
|
|
304,083
|
|
|
|
|
|
272,831
|
|
|
Gas processing - Mcf/day
|
|
|
|
150,042
|
|
|
|
|
|
129,857
|
|
|
Liquids sold – Gallons/day
|
|
|
|
712,225
|
|
|
|
|
|
420,291
|
|
|
Operating profit before depreciation
|
|
|
|
|
|
|
|
|
and amortization (2) ($MM)
|
|
|
$
|
12.2
|
|
|
|
|
$
|
8.0
|
|
|
|
|
|
|
|
|
|
|
(1) The company considers its cash flow from operations before changes
in operating assets and liabilities an important measure in meeting the
performance goals of the company (see Non-GAAP Financial Measures below).
(2) Operating profit before depreciation is calculated by taking
operating revenues by segment less operating expenses excluding
depreciation, depletion, amortization, general and administrative, and
gain (loss) on disposition of assets. Operating margins are calculated
by dividing operating profit by segment revenue.
Non-GAAP Financial Measures
Unit Corporation reports its financial results in accordance with
generally accepted accounting principles (“GAAP”). The Company believes
certain non-GAAP performance measures provide users of its financial
information and its management additional meaningful information to
evaluate the performance of the company.
This press release includes cash flow from operations before changes in
operating assets and liabilities, its drilling segment’s average daily
operating margin before elimination of intercompany drilling rig profit,
net income, and earnings per share including only the effect of the cash
settled commodity derivatives.
Below is a reconciliation of GAAP financial measures to non-GAAP
financial measures for the three months ended March 31, 2014 and 2013.
Non-GAAP financial measures should not be considered by themselves or a
substitute for results reported in accordance with GAAP.
Unit Corporation
Reconciliation of Cash Flow From
Operations Before Changes in Operating Assets and Liabilities
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
(In thousands)
|
|
Net cash provided by operating activities
|
|
|
$
|
123,460
|
|
|
$
|
179,660
|
|
|
Net change in operating assets and liabilities
|
|
|
|
54,764
|
|
|
|
(26,346
|
)
|
|
Cash flow from operations before changes
|
|
|
|
|
|
|
|
in operating assets and liabilities
|
|
|
$
|
178,224
|
|
|
$
|
153,314
|
|
________________
The Company has included the cash flow from operations before changes in
operating assets and liabilities because:
-
It is an accepted financial indicator used by its management and
companies in the industry to measure the company’s ability to generate
cash which is used to internally fund its business activities.
-
It is used by investors and financial analysts to evaluate the
performance of the company.
Unit Corporation
Reconciliation of Average Daily
Operating Margin Before Elimination of Intercompany Rig Profit
|
|
|
|
Three Months Ended
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
(In thousands except operating days
and operating
margins)
|
|
Contract drilling revenue
|
|
|
$
|
101,598
|
|
|
$
|
106,600
|
|
|
$
|
107,528
|
|
Contract drilling operating cost
|
|
|
|
58,700
|
|
|
|
63,804
|
|
|
|
66,002
|
|
Operating profit from contract drilling
|
|
|
|
42,898
|
|
|
|
42,796
|
|
|
|
41,526
|
|
Add:
Elimination of intercompany rig profit
|
|
|
|
5,741
|
|
|
|
5,313
|
|
|
|
3,409
|
|
Operating profit from contract drilling
|
|
|
|
|
|
|
|
|
|
|
before elimination of intercompany
|
|
|
|
|
|
|
|
|
|
|
rig profit
|
|
|
|
48,639
|
|
|
|
48,109
|
|
|
|
44,935
|
|
Contract drilling operating days
|
|
|
|
5,981
|
|
|
|
6,113
|
|
|
|
5,964
|
|
Average daily operating margin before
|
|
|
|
|
|
|
|
|
|
|
elimination of intercompany rig profit
|
|
|
$
|
8,132
|
|
|
$
|
7,870
|
|
|
$
|
7,534
|
________________
The Company has included the average daily operating margin before
elimination of intercompany rig profit because:
-
Its management uses the measurement to evaluate the cash flow
performance of its contract drilling segment and to evaluate the
performance of contract drilling management.
-
It is used by investors and financial analysts to evaluate the
performance of the company.
Unit Corporation
Reconciliation of Adjusted Net Income
and Adjusted Diluted Earnings per Share
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
(In thousands except per share amounts)
|
|
Adjusted net income:
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
56,945
|
|
|
|
$
|
40,206
|
|
Loss on derivatives not designated as hedges
|
|
|
|
|
|
|
|
and hedge ineffectiveness (net of income tax)
|
|
|
|
11,258
|
|
|
|
|
3,644
|
|
Settlements during the period of matured
|
|
|
|
|
|
|
|
derivative contracts (net of income tax)
|
|
|
|
(5,438
|
)
|
|
|
|
639
|
|
|
|
|
|
|
|
|
|
Adjusted net income
|
|
|
$
|
62,765
|
|
|
|
$
|
44,489
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share:
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
$
|
1.17
|
|
|
|
$
|
0.83
|
|
Diluted earnings per share from the loss
|
|
|
|
|
|
|
|
on derivatives
|
|
|
|
0.23
|
|
|
|
|
0.08
|
|
Diluted earnings per share from the settlements
|
|
|
|
|
|
|
|
of matured derivative contracts
|
|
|
|
(0.11
|
)
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share
|
|
|
$
|
1.29
|
|
|
|
$
|
0.92
|
________________
The Company has included the net income and diluted earnings per share
excluding the impairment of oil and natural gas properties and including
only the cash settled commodity derivatives because:
-
It uses the adjusted net income to evaluate the operational
performance of the company.
-
The adjusted net income is more comparable to earnings estimates
provided by securities analyst.
Copyright Business Wire 2014