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Unit Corporation

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  1. 40 years serving the energy industry Unit Corporation

  2. What is Unit? • Contract driller and producer of domestic natural gas • Founded in 1963; public in 1979 (NYSE: UNT) • Average daily trading volume for 2003: 199,310 shares • Added to the S&P SmallCap 600 Index in 2001 • Headquartered in Tulsa, Oklahoma • Current market cap of $1.25 billion (as of 3/31/04) • 45,709,568 shares outstanding • Business units: • Unit Drilling Company – 88 drilling rigs • Unit Petroleum Company – 341.7 Bcfe proved reserves* • Web address: www.unitcorp.com *includes PetroCorp acquisition completed January 30, 2004

  3. Unit’s History Two consistently growing successful segments # Rigs Bcfe 1963 1979 1993 2003

  4. Unit’s Strengths • Two consistent growing energy segments: • Unit Drilling Company • 300% increase in rig count since 1993 • 4th largest U.S. deep onshore drilling contractor • Unit Petroleum Company • 208% average production replacement since 1993 • Average annual reserve growth of 12% since 1993 • Focused on natural gas, drilling and production • Strong balance sheet focus • Respected and experienced workforce drives consistent results

  5. U.S. Gas Production per Well & Total Gas Wells 21.9 Tcf Total Production 19 Tcf Source: EIA

  6. Contract Drilling Strategy • Unit’s premium service is achieved by supplying: • Top quality equipment • Experienced personnel • Alertness to expansion opportunities

  7. Unit Rig Fleet 4th Largest Deep Drilling Contractor in United States SerDrilCoacquisition 12 rigs Cactusacquisition 20 rigs Parkeracquisition 13 rigs Hickmanacquisition 9 rigs

  8. Service Drilling Company Acquisition • Purchased 12 active rigs • $35 million acquisition • Expected to be immediately accretive • All rigs located in Anadarko Basin within the Texas Panhandle • Acquisition includes a 12-truck moving fleet • Strategic fit: • Significant drilling contractor in the Texas Panhandle • Well established franchise developed over 50 years • Expands a current market area to Unit

  9. Unit Rig Fleet Depth Capacity Over 98% of wells drilled are natural gas wells Depthin Feet 15 6 32 5 17 Service Drilling Company rigs 1 6 6

  10. Significant Presence in Major Gas-Producing Regions CasperOffice 8 TulsaHeadquarters 48 7 12 Service Drilling rigs Oklahoma CityOffice 2 88 2003 Unit Rigs 89th rig under construction HoustonOffice 11

  11. Unit Current Utilization: 95% High Utilization vs. Industry - 2003 Unit 1st Qtr. ‘04 Utilization

  12. Cash Flow per Operating Day Rig Utilization: 38% 44% 65% 80% 67% 62% 85% 90% 63% 83% 93%

  13. Cash Flow Sensitivity – 88 rigs Annual Segment Cash Flow ($mm) Rig Rates $150 $11,000 $125 $10,000 $100 $9,000 $75 $8,500 Unit 2003 83% $50 $8,000 $25 $7,500 75% 80% 85% 90% 95% 100% Assumed Industry Rig Utilization

  14. Unit Drilling Company Recap • Medium and deep depth land drilling • 4th largest fleet in the United States (88 rigs) • Rig fleet has tripled in size in the last 10 years • Average utilization higher than industry

  15. Unit Petroleum Company Strategy • Unit provides consistent economic growth of its oil and natural gas reserves of at least 150% of each year’s production by: • Generating most drilling prospects internally • Staying alert for opportunistic acquisitions • Maintaining strong cost controls

  16. Annual Reserve Additions as a Percent of Production 143% Average Annual Reserve Replacement through drilling over last 20 years 224% Average Annual Reserve Replacement from all sources over last 20 years *Not Restated for Questa Activity

  17. PetroCorp Inc. Acquisition • Closed – January 30, 2004 • Expected to be immediately accretive • Purchase price - $182,000,000 paid in cash • Preliminary allocation of purchase price: • $94,000,000 to working capital • $78,000,000 to proved reserves • $10,000,000 to undeveloped leasehold & • partnership interest • PetroCorp operating data: • 12/31/03 2003 • Reserves Production • Oil (MBbls) 2,740 416 • Natural Gas (MMcf) 40,260 4,200

  18. Reserve Growth Average annual reserve growth since 1993 of 12% Bcfe *Not Restated for Questa Activity

  19. Production Growth Mcfe *Not Restated for Questa Activity

  20. Core Producing Areas AnadarkoBasin TulsaHeadquarters 46% ArkomaBasin 23% PermianBasin 12% Gulf CoastBasin 17% HoustonOffice Proved Reserves At 12/31/03: 341.7 Bcfe (includes PetroCorp acquisition)

  21. Wells Drilled *Not Restated for Questa Activity

  22. Acreage Inventory Growth *Not Restated for Questa Activity

  23. Prospect Inventory Drives Reserve Growth Over 90% of our drillsites are internally generated. 127 are identified as PUD’s and reflected in our reserve base. 288 (40% WI) have unrisked probable net reserves of 210 Bcfge. Number of Prospects

  24. Unit’s Return History Finding Cost/ Years Mcfe Rev/Mcfe ROR 15 $0.94 $2.70 19.6% 10 $1.03 $2.87 18.9% 5 $1.20 $3.60 23.4% 3 $1.65 $3.95 15.3%

  25. Gas Price Sensitivities Segment Cash Flow 2003 Actual Gas Price per Mcfg

  26. Recap • Consistent Reserve Growth • 2003 – 166% Production Replacement • 20th consecutive year of replacing more than 150% of production with new reserves • Successful Drilling Program • 20% rate of return for last 15 years • Drilling program underway • Expect to drill 165 to 175 wells in 2004, up 11% to 17% over 2003

  27. Revenues (in millions)

  28. Earnings per Share

  29. Balance Sheet Summary 12/31/03 3/31/04 (In Thousands) Working Capital $20.9 $25.7 Total Assets 712.9 856.8 Long-Term Debt .4 75.0 Shareholder’s Equity 515.8 532.7 Credit Line Undrawn 99.6 75.0 Long-Term Debt to Total Capitalization: 0% 12%

  30. Cash Flow Before Changes in Working Capital (in millions)

  31. Capital Expenditures (In Thousands) Cactus rig acquisition: 7.22 million shares & $4.5 million cash

  32. 2004 Capital Program • $95 million budgeted for Unit Petroleum • 165 - 175 wells • $83 million drilling, $9 million acreage & seismic, $3 million acquisitions • Focus areas are Anadarko & Arkoma Basins; Texas Gulf Coast • $30 million budgeted for Unit Drilling • $8 million for drill pipe • $22 million for rig maintenance & additions

  33. Why Unit? • Two consistent growing energy segments: • Unit Drilling Company • 300% increase in rig count since 1993 • 4th largest U.S. deep onshore drilling contractor • Unit Petroleum Company • 208% average production replacement since 1993 • Average annual reserve growth of 12% since 1993 • Focused on natural gas, drilling and production • Strong balance sheet focus • Respected and experienced workforce drives consistent results

  34. Forward-Looking Statement This presentation contains forward-looking statements within the meaning of the Securities Litigation Reform Act that involve risks and uncertainties, including the closing of pending acquisitions, productive capabilities of the wells, future demand for oil and natural gas, future rig utilization and dayrates, oil and natural gas reserve information, anticipated production rates from company wells, the prospective capabilities of offset acreage, anticipated oil and natural gas prices, 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.

  35. 40 years serving the energy industry Unit Corporation