news UNIT CORPORATION
- ------------------------------------------------------------------------------
7130 South Lewis Avenue, Tulsa, Oklahoma 74136
Telephone 918 493-7700, Fax 918 493-7714
Contact: Larry D. Pinkston
President, Treasurer
and Chief Financial Officer
(918) 493-7700
For Immediate Release...
February 18, 2004
UNIT CORPORATION REPORTS FOURTH QUARTER
AND YEAR-END EARNINGS FOR 2003
Tulsa, Oklahoma . . . Unit Corporation (NYSE - UNT) announced today its
financial and operational results for the fourth quarter and year-end 2003.
Year-over-year revenue improved 61%, a record for Unit. Year-over-year earnings
per share increased 145% to $1.15 per diluted share. The improvement in revenue
and net income was attributable to increases in drilling rig utilization and
dayrates, as well as increases in production of oil and natural gas and the
price received for those commodities. Drilling rig utilization averaged 62.9
rigs operating during 2003 versus 39.1 rigs operating during 2002. Unit added 13
drilling rigs during the year, bringing its fleet to a record 88 drilling rigs.
Unit replaced 166% of its oil and natural gas production, achieving its goal of
greater than 150% production replacement for the 20th consecutive year.
For the fourth quarter of 2003, consolidated net income was $11.8 million,
or 27 cents per diluted share, on revenues of $83.0 million. In 2002, net income
for the fourth quarter was $6.8 million, or 16 cents per diluted share, on
revenues of $55.9 million.
Net income for the year ended December 31, 2003 was $50.2 million, or $1.15
per diluted share, on revenue of $302.6 million. In 2002, net income was $18.2
million, or 47 cents per diluted share, on revenue of $187.6 million.
Consolidated cash flow provided by operating activities for the fourth
quarter of 2003 was $33.3 million versus $16.3 million for 2002's corresponding
period. Cash flow provided by operating activities for the year was $121.7
million versus $70.5 million in 2002.
UNIT DRILLING RESULTS
Contract drilling revenues increased 57% between the comparative fourth
quarters to $53.3 million, due to an increase in dayrates and drilling rig
utilization. Drilling rig rates for the fourth quarter averaged $8,128 per day,
10% higher than the comparable quarter of 2002. Contract drilling operating
margins per drilling rig averaged $1,815 per day in the fourth quarter of 2003
as compared to $1,440 for the same period in 2002. Higher insurance cost,
primarily from workers compensation reserves, negatively impacted operating
margins by $449 per day in the fourth quarter of 2003. The average drilling rig
utilization was 69.8 rigs in the fourth quarter of 2003, up 47% from 2002's
fourth quarter. With the acquisition of 12 drilling rigs during December of
2003, combined with an additional drilling rig that was built and placed into
service, Unit's fleet now totals 88 drilling rigs. Currently, 84 of the 88
drilling rigs are operating.
Between the comparative years, contract drilling revenues increased 55% in
2003 to $183.1 million while drilling rig utilization increased to an average of
62.9 rigs operating during 2003, compared to 39.1 rigs operating during 2002.
Contract drilling operating margins increased to 24%, compared to 23% during
2002.
UNIT PETROLEUM RESULTS
Fourth quarter production was 144,000 barrels of oil and 5,606 million
cubic feet (MMcf), a 21% equivalent Mcf increase from the fourth quarter of
2002. Revenues for the fourth quarter were $29.1 million or 39% higher than
2002's fourth quarter. The increase in revenue was due to higher oil and natural
gas prices and production.
Unit's 2003 oil and natural gas production was 516,000 barrels of oil and
20,648 MMcf of natural gas, a 9% equivalent Mcf increase over 2002's production.
2003 oil and natural gas revenues were $116.6 million, a 72% improvement over
2002.
Average natural gas prices received during the fourth quarter of 2003
increased 18% to $4.40 per thousand cubic feet (Mcf) compared to $3.74 per Mcf
during the fourth quarter of 2002. The average oil price received was $26.76 per
barrel in the fourth quarter of 2003 compared to $23.24 per barrel in the fourth
quarter of 2002, a 15% increase. For the year, the average natural gas price
received increased 70% to $4.87 per Mcf compared to $2.87 per Mcf during 2002.
The average oil price received was $26.94 per barrel during 2003 compared to
$21.54 per barrel in 2002, a 25% increase.
During 2003, Unit drilled 149 wells, a 55% increase over the number of
wells drilled during 2002. Of the 149 wells, 128 wells, or 86%, were completed
as producing wells. Unit's total oil and natural gas reserves at December 31,
2003, were 285.0 billion cubic feet equivalent (Bcfe), a 6% increase over 2002.
Unit replaced 166% of 2003 production, achieving for the 20th consecutive year
the company's goal of replacing at least 150% of production with new oil and
natural gas reserves. Unit's three-year average finding cost was $1.65 per Mcfe.
MANAGEMENT COMMENTS
"We are pleased with our fourth quarter 2003 and year-end results," said
John Nikkel, Chairman of the Board and Chief Executive Officer. "During December
of 2003, as a result of our acquisition of Serdrilco Incorporated, we acquired
12 additional drilling rigs, a fleet of 12 trucks and a district office and
equipment yard in and near Borger, Texas. This acquisition fits nicely with our
current drilling operations. Along with a rig that was recently built and placed
into service, Unit's drilling rig fleet now stands at 88 drilling rigs, the
largest in Unit's history."
"Within our exploration and production operations, we completed our
acquisition of PetroCorp Inc., on January 30, 2004. Including PetroCorp's oil
and natural gas reserves, Unit's total oil and natural gas reserve base now
consists of 7.8 million barrels of oil and 294.5 Bcf of natural gas, a 27%
equivalent increase in total reserves over 2002. We plan to drill aggressively
during 2004, with a goal of drilling 165 to 175 wells. Our acquisition,
exploration and development drilling capital expenditure budget for 2004 is $95
million, an increase of 30% over 2003."
WEBCAST
Unit will webcast its fourth quarter earnings conference call live over the
Internet on February 18, 2004 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 90 days.
-----------------------------------------------------------------
Unit Corporation is a Tulsa-based, publicly held energy company engaged
through its subsidiaries in oil and gas exploration, production and contract
drilling. 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 projected utilization rates of the company's drilling rigs, the
number of wells we intend to drill during the year 2004, the size of our
proposed capital budgets, the productive capabilities of the wells, future
demand for oil and natural gas, future dayrates, oil and 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.
Unit Corporation
Selected Financial and Operations Highlights
(In thousands except per share amounts and operations data)
Three Months Ended Year Ended
December 31, December 31,
2002 2003 2002 2003
- --------------------------------------------------------------------------------
Statement of Operations:
Revenues:
Contract drilling $ 34,029 $ 53,307 $ 118,173 $ 183,146
Oil and natural gas 20,973 29,088 67,959 116,609
Other 879 562 1,504 2,829
--------- --------- ---------- ----------
Total revenues 55,881 82,957 187,636 302,584
--------- --------- ---------- ----------
Expenses:
Contract drilling:
Operating costs 27,719 41,657 91,338 138,762
Depreciation and
amortization 4,767 6,533 14,684 23,644
Oil and natural gas:
Operating costs 5,517 6,401 20,795 25,169
Depreciation, depletion
and amortization 5,939 7,879 23,338 27,343
General and administrative 2,490 2,456 8,712 9,222
Interest 226 153 973 693
--------- --------- ---------- ----------
Total expenses 46,658 65,079 159,840 224,833
--------- --------- ---------- ----------
Income Before Income Taxes and
Change in Accounting Principle 9,223 17,878 27,796 77,751
--------- --------- ---------- ----------
Income Tax Expense:
Current (3,544) (456) (3,469) ---
Deferred 5,981 6,583 13,021 28,887
--------- --------- ---------- ----------
Total income taxes 2,437 6,127 9,552 28,887
--------- --------- ---------- ----------
Income Before Change in Accounting
Principle 6,786 11,751 18,244 48,864
Cumulative Effect of Change in
Accounting Principle ---- ---- ---- 1,325
--------- --------- ---------- ----------
Net Income $ 6,786 $ 11,751 $ 18,244 $ 50,189
========= ========= ========== ==========
Income Before Change in Accounting
Principle Per Common Share:
Basic $ .16 $ .27 $ .47 $ 1.12
Diluted $ .16 $ .27 $ .47 $ 1.12
Net Income Per Common Share:
Basic $ .16 $ .27 $ .47 $ 1.15
Diluted $ .16 $ .27 $ .47 $ 1.15
Weighted Average Common Shares
Outstanding:
Basic 43,338 43,950 38,844 43,616
Diluted 43,632 44,116 39,112 43,773
December 31, December 31,
2002 2003
- --------------------------------------------------------------------------------
Balance Sheet Data:
Current assets $ 51,399 $ 72,742
Total assets $ 578,163 $ 712,925
Current liabilities $ 34,532 $ 51,811
Long-term debt $ 30,500 $ 400
Other long-term liabilities $ 5,439 $ 17,893
Deferred income taxes $ 86,320 $ 127,053
Shareholders' equity $ 421,372 $ 515,768
Year Ended
December 31,
2002 2003
- --------------------------------------------------------------------------------
Statement of Cash Flows Data:
Cash Flow From Operations
before Changes in
Working Capital (1) $ 70,876 $ 129,830
Net Change in Working Capital (329) (8,118)
----------- -----------
Net Cash Provided by Operating
Activities $ 70,547 $ 121,712
=========== ===========
Net Cash Used in Investing
Activities $ 72,736 $ 132,099
Net Cash Provided by Financing
Activities $ 2,295 $ 10,488
Three Months Ended Year Ended
December 31, December 31,
2002 2003 2002 2003
- ------------------------------------------------------------------------------
Contract Drilling Operations Data:
Rigs Utilized 47.5 69.8 39.1 62.9
Operating Margins (2) 19% 22% 23% 24%
Operating Profit Before
Depreciation (2) ($MM) $ 6.3 $ 11.7 $ 26.8 $ 44.4
Oil and Natural Gas Operations Data:
Production
Oil - MBbls 126 144 473 516
Natural Gas - MMcf 4,609 5,606 18,968 20,648
Average Prices
Oil -- Bbl $ 23.24 $ 26.76 $ 21.54 $ 26.94
Natural Gas - Mcf $ 3.74 $ 4.40 $ 2.87 $ 4.87
Operating Profit Before
DD&A (2) ($MM) $ 15.5 $ 22.7 $ 47.2 $ 91.4
- -------------
(1) Unit Corporation considers Unit's cash flow from operations before changes
in working capital an important measure in meeting the performance goals
of the company.
(2) Operating profit before depreciation is calculated by taking operating
revenues by segment less operating expenses by segment excluding
depreciation, depletion, amortization and impairment, general and
administrative and interest expense. Operating margins are calculated
by taking operating profit divided by segment revenues.