UNT - Earnings call transcript Q3 2018

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Operator

Hello, and welcome to the Unit Corporation’s Third Quarter 2018 Earnings Call. My name is Mitchell, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. And please note that today's conference is being recorded.

the are today, or constitute statements. of make speakers similar course that statements projections, the conference the call may forward-looking During expectations, beliefs Company's the materially in The such could or any anticipated projected from statements. forward-looking results actual results differ

the information detailed the under could cause materially today the press release is readily heading factors actual Additional important that statements. to results concerning differ today's forward-looking information given from available in

those the conference, today's measures. Company will measures you certain can discussing measures financial Mr. begin. of document press is in the be The available Company's non-GAAP also reconciliation Sir, turn now may Larry on over during will the non-GAAP This found to GAAP President to Pinkston, the CEO. Additionally, be I call website. release. and

Larry Pinkston

for will Good this their updates you Les Austin, about Thank morning, us me are and you Cromling be responsibility. areas Each John of Thank everyone. Bob David joining today Mitchell. Parks. providing Frank Merrill, With morning. the you, with Young,

We the on call. in as outlook enhanced activity level We The price end as the part facilitate has commodity will our noted during of the levels. at segments. third-parties of questions quarter, supporting in has business improvement which activity been increased in take well helped growth our third the then each

which call to such doing have issues a While and seen turn surrounding are elections index heightened would to resulted contributed volatility further. levels. trade factors have rising Unit, industry heightened energy very we and our over we the I discuss of wars, in earnings the to the now macro-economic starting part Merrill. potential mix have delivering we broader like midterm will David many a reaching corporate broadly guiding in interest good more quarter, At outlook, the a markets rate, and as

David Merrill

everyone. Thank good you Larry, morning, and

position our had We mentioned, forward. our company quarter to a with segments. well, business very believe in progress all Larry three continues going solid we As growth

and natural segment a gas nice quarter. production saw increase oil in third Our during the

BOSS the experience and and success under for received to which deployed the rig drilling orders with have rigs, We BOSS and now continue are XXth our construction. under long-term XXth contracts XXth

to organic opportunities to well Our in situated many be growth very advantage of appears areas. take segment midstream

from expanded Units Finally, call we corporate facility, perspective, further I will turnaround will Les recently now of discuss a Austin over credit a to detail. the turn Les. which in

Les Austin

Thanks quarter share. the non-cash quarter, the David. which income income per for or third derivatives, of million $X.XX net Unit $XX.X diluted of to We or effect excludes to Adjusted reported was Unit diluted attributable $X.XX the for net $XX.X attributable share. per million

measures press non-GAAP financial reconciliation included release. is in our Our

and X% For oil this revenue the because unchanged. natural prices NGL this gas operating of the of the natural second lease the and quarter higher expense. quarter of NGL third oil, over with natural Operating segment, for oil increased costs lower the decreased and from year, volume X% second gas and essentially while gas was increased third quarter year, quarter production for

over the year. compared unchanged X% quarter due rates to drilling day increased quarter for second to the quarter increased Operating for revenues. utilization, the of remained the contract mobilization third this revenue the of second For relatively cost quarter this third segment, year, and

discount of million equivalents notes senior of combined liquid unamortized Long-term the quarter long-term Operating increased our prices this For cash liquid and prices. of condensate second sales increased volumes the entirely of year, this midstream because third subordinated year, due transported debt quarter segment, debt the $XXX.X primarily increased revenues over total for volume. with the net ended of cash recoveries X% of costs. issuance second XXXX the We gas and third X% and of for debt increased with quarter purchase increased third of million. quarter increased $XX.X consists the and and over costs to quarter and

X.X the ratio the Our times quarter. third at was end net of leverage

October As The XXXX. at is which on extending David commitment agreement available million. to subject $XXX mentioned October elected basis, and XX through the its borrowing credit amended XX, currently Unit facility stand terms

In update. addition around this fees. turn issuance senior to future increases the lowering and our Frank as gas of term, the extending oil I the for amendment new to borrowings Unit’s the will over and notes on as natural call well segment At flexibility pricing time,

Frank Young

higher quarter production second X.X% Good production. a was the BOE with was increase X.X% second XX,XXX quarter morning. On production quarter X.X million in-line per quarter and basis, third Total production over expectations. than a BOE, for day the

from production to not that saw was wells events Western higher loss the line quarter, sporadic significant. the across due pressure production resulting some Oklahoma During our curtailment

lengths area County, completed Trust exceeding of Oklahoma, more HXL, These IPXXs to X% However, XXXX to takeaway per BOE Midship in oil a in about is X-XXHXL number to than XXXX. BOE brought the each in wells In until and pipeline the Cheniere’s third and quarter SOHOT number could our XXXX feet. capacity August lateral of becomes XX%. which Schenk and will two X% XX.X with Units day operational increase tight million million Oklahoma in X-XX result had Grady were Western greater be cut gas for we wells production forecast XXXX XX.X over extended continue curtailments. online XXXX laterals in

in gas and future flow of well to running has first near exceeded of our first in potentially have G second drilled the XXXX. commissioned Unit's Buffalo non-operated stimulated XXXX fractured the Cheniere’s expectations rates possibility our in Wash activity good. we results operated average reserves impressive Granite of very this wells working once prices stack our exceed is realized rig lateral a in Panhandle, non-operated stack and wells the two Western in and rates expect an drilling pipeline foreseeable XXXX. the XXX% beginning participate adding about Offset In and continue one about XX continue will to dry Unit Oklahoma, areas activity we gas continue be drilling improve. play we on and the forward quarter rig extended return stack operated with Midship look Our for very and is level field. interest and results to X%, Texas program In the Wallow this play In our we will

Wallow over While completed Until too a horizontal feet healthy early was for ultimate wells the million reserve interval, of in one definitive equivalent drilling which is any our pounds that are these inventory conclusions pressure. day the well per currently G exceeding with from interval CX curve. recovery now focused cubic XX currently about XXXX The that field most flowing nine first targets. on provide our of drilling is Wash of intervals Buffalo, is flowing program Unit’s Granite top

Wallow Wash is foreseeable possibility gathered with Buffalo, subsidiary. Unit’s by the for a the We all from future produced gas the in XXXX. midstream and plan the to of operate the superior for rig of Granite field processed rig of second one All adding drilling part

In continue performed conference very in Field delineation well update. last Orange in the I Texas of Wilcox, Goliad, and the the depth Production near #X, exploring from Sand. in historical County, our Texas, Engel XXXX. the the prospect has near well the our a the to Brandt I'm area will program call, in has exploration current from success Wing wells Polk and we prospect prospect so give outstanding in our brief developing this exploration emphasized just Gilly been quarter On going discovery this

wellbores stack a seven well well these to wells #X Prospect. up to in months. of two be Creek the be from about will of of However hole Cherry Albrecht Pasture encouraging and the subsequent Cherry the Wolf Trinity play intervals, have prospect, were in to we permit the next testing cautiously in southwest continues #X, Production #X, #X Corps which the our Engineers miles Sand the from and zones commercial approximately the potential the Gilly which Trinity discovery delineation the to remain we Creek appears the Orange size the optimistic soon. we few plan start #X have received located Engel Army and Field, not and is the pipeline we In

Our of rig the At time, the the for drilling possibility John I continue future the over a call turn for now second will running foreseeable rig program one XXXX. company update. plans of adding to this all portion our are to for with of

John Cromling

good and Frank morning. you, Thank

over an increase utilization average The day very for of of positive $XX,XXX was was during costs operating third the rig the eliminations per rig quarter. revenue The quarter. our The second increased before quarter equipment several fluctuated $XX,XXX, quarter, $XXX total quarter for an the intercompany revenue over $XXX the we day our the rig average second contract completed segment. Even upgrades. rate and third was increase though drilling decreased daily

third was the which operating daily average before the by operating eliminations per third to before quarter second. compared over for quarter. intercompany $XXXX, an for cost The the $XXX day of elimination total as $XXX intercompany the of profits previous increase margin decreased quarter is Our

Our non-GAAP press found release. can be in today's reconciliation

increased operating. with of two also awarded term operating rig, utilization XXth them. under rigs of All rigs which two Wyoming. BOSS XXXX The currently for rigs, were of seven and extended are first long-term quarter for throughout on BOSS drilling two completed XX to for rig XX this them will contracts currently operate these the contracts from BOSS the and there XX rig rigs quarter rigs and Our contracts. are XX first our of the operator be in XXth other in We are

completed new first of Oklahoma. operate quarter XXXX second in and also The will build a the be in

major in Oklahoma. XXXX one the in the operating quarter, we rigs, SCR During our of refurbishment began which upgraded October completed and hp

long-term rig XX working operating, is We and skidding in also the SCR another under also Oklahoma. system recently are working contracts. XX completed rigs upgrading the it with Of

operating rigs that SCR and are market It being for the have budget. We to is the additional all as excellent the flow dictates. financed important cash note several are by CapEx candidates above within which refurbishment projects

to year. opportunity to be optimistic next continue turn into grow the Pipeline Superior and our of next update. for quarter the At over the during to time, this call I will Bob We

Robert Parks

John. you, Thank

liquid facilities Hemphill new up was well and to Cashion. continue the the to due over recovery produce XXX XXX,XXX connecting This Operating million the sold same throughput and due of was of volume additional of million compared at volumes cubic X% XXXX to along increase offload wells third-parties, of our of X% quarter quarter increased mainly at was day per to During our to for to feet Superior Pittsburgh three quarters our from increased The at XXXX volumes quarter XX% XXXX. results. this primarily additional second increase and facilities. existing primarily ethane Gas $XX.X Total to from the gallons higher of with year. second Mills day compared positive which amortization increase was to depreciation per XXXX. third slightly quarter last before was second and the quarter with operating Cashion profit higher processed processed and connect facilities most volume year

increased million and our facility quarter. setting now of gallons capital total quarter Construction the plant I the accommodate extension and to additional Unit of per the cubic be of XXXX. cubic We at second several summary, million before per natural Buffalo pleased new during million seven construction average was XXX.X of feet the XXXX have we approximately have will of lateral production quarter began located volumes. day additional facility first cubic for a order entire of late is XXXX capacity area, will and - This to prepared and be at an to In results quarter to is compressor to and and and receiving of operational pipeline pad new in upgrade well forward day XXXX. gas a in third we portion adding the from our a construction the our day southern facility for the XXX,XXX its in area, in liquids fourth capacity complete on to will Construction with we system the operational first $XX the to upgrade XXXX This XXX full of add three gathering the Bellmon process in financial the plant million connected million third well quarter. completed quarter. Pittsburgh and project look plant third compression new quarters approximately operating segment. Cashion approximately the Granite midstream system. the third connect This XX facility At per compressor relocated projects an and reading day. production in to to processing our seven well cubic will production approximately $XX in the we expansion Wallow will feet next in to increase our quarter approximately initiating stations the rig be to we We feet throughput liquids from are the anticipate expected cubic XXX,XXX the XX.X XXXX. of system. million per new invested midstream our petroleum million additional natural connecting Oklahoma, increased Hemphill feet future call and compressor day. is gas per increased production for the discuss an with the to infill oil project include area related plant and day. capacity increase fourth are processing is in the being for total in XX the the total This station in grow These average continues the million this Wallow completed average to year station is compressor of our feet to per position scheduled and increased assets. the this system wells operate gallons Pittsburgh complete In plan due project Cashion approximately pad pad to additional area and the gathered Appalachian to underway well volume in The Central well processing in of expenditures pipeline projects volume located processing approximately be the Mills This this the day, quarter day. per cubic throughput Mills XX.X At at first our compressor gathering to processing the feet total key and Cashion. volume continue per Wash to anticipate our station. to early currently was will Buffalo be quarter wells

continues XXXX. Our financial the will success comments. third several financial increases At well-positioned to complete areas turn quarter Larry improve. feel look the for continued in for quarter his with We in to to results back I profit this fourth now forward favorable over operating results and showed XXXX positive we the are call to and final time,

Larry Pinkston

Bob. Thank you

three segments had of as good we have been tell quarter. we very can over you As all have our a

solid Our growth can quarter-over-quarter oil have produce results. that and and we natural highly gas we segment competitive experienced and production economic demonstrated

level identifying and rig is to We the market the enabled fleet growth continue acceptance superior believe opportunities the benefits with focused BOSS are about this and build the expansion I results the see to and of us our XXth third rig. rig show performance has with the partnership rigs a but organic difficult, improving to new contracts XXth of strategic on focus. in quarter strong

we first open with Finally, cash from expenditures like we time focus we in-line to up been for our This where the has we will on this time, continue are capital do would flow At sales. confident feel asset to so. call questions. noncore proceeds focused keeping and that

Operator

[Operator have one it comes Instructions] and sir. SunTrust. from with Neal the in you We Dingmann Thank question do queue

Your line sir, is begin. pleas open

Neal Dingmann

I or business see morning now Larry or the year remainder drilling have mean margin maybe do the great next John, this about into continue that see to question and going a Good and to you what year you more least, of Could margins sort gentlemen. for you been at like year? you throughout just segment. for in talk you holding have contract the basically able that of do gain you even

John Cromling

- we know but Yes, rate where bit see some have that will completed will go to or on. will because that to rigs as down probably contracts many for in not completed are a weeks service of couple a little improvements. we on. we already thank contracts additional We increases see have Costs we will out we not you, refurbishments of quarter going due be later completed this some

So will on not will this gain substantial but quarter, some may continue we gains, I be as as modest think to that. we but see

Neal Dingmann

to for if I I what we Frank the could question one then so know there just growth my guys or with Frank. you just obviously oil that. talk is Could talked maybe for organically about and is I for next exposure the the there organically you year is - have And boosting guess about either so? external one of potential sort the and what Okay. last throughout potential or

Frank Young

to two potentially we be that organically. to the then SOHOT. oily to Western basis to close need an And more it’s run us margin that it’s Oklahoma having in you understand We when for we cash to area important and overrun rig would able We just do on. have become are acreage also slow a another be rigs try from oil in we it

the different oily will So continue lead more a make acquisition are are also - of we production. oil one side to looking terms in trying our evaluate to a bigger on acquisitions that do and to that we

Neal Dingmann

quarter. nice guys, Thanks good. Okay.

Larry Pinkston

Thanks Neal.

Operator

Instructions] the no the queue one question Wheeler. Yes, have joined from time. at this just sir question. questions comes actually Boese Colin [Operator from I further in I this Leith

line is open. Your

Colin Boese

gentlemen. Thanks

With credit do sheet the structure amended balance see say? evolving the credit your facility, the and months next - over how your in six current your you capital recently strength

Les Austin

extended we for about. we new the got as five know balance have got facility cash has credit have that talked So that you years, the that been sheet on the we

outstanding. prepared provide to do been for looking rather notes I notes until the senior than ability XXXX, not in flexibility senior as said have have that the the and subordinated we comments, senior did we my more issue mature at Our market but currently notes we

when the look notes. will at those to and look be might time evaluate to continue refinancing we So market at

Colin Boese

provide thanks. you on question and XXXX color QX for your strategy? then XXXX then one as be, hedging would your in please perfect, follow-up exposure transition you And can some hedging and Okay,

Les Austin

are of XX% right XX% about for hedged our our natural are the So the XXXX. we XXXX about quarter we for hedges for for remainder in XXXX now gas about XX% for at And first XXXX then oil for hedges. currently XXXX of

Larry Pinkston

Fourth quarter, he is asking fourth about quarter.

Les Austin

XX% quarter about gas for are gas. fourth volumes hedged XX% natural For - about of for we is fourth our natural of XX% are still oil, quarter

Larry Pinkston

All when be be in today. also those which the later would XX-Q will its information filed,

Colin Boese

great. is That

I think you. that’s all from Thank me.

Operator

the Mr. in Sir, to call we turn over for have no will I remarks. any the back questions further queue. final Pinkston

Larry Pinkston

Well, this joining you you us morning. Thank thank everybody for Mitchell.

are Of next the election seeing rest about so. of for Thank of joining the what course we excited results all you and But most the and XX days or happens we of for over you us you. today the be thank seeing hopefully will year.

Operator

and Thank Thank today's you teleconference. ladies participating. for gentlemen, you this concludes

now may You disconnect.

Unit (UNTC) 6 Nov 182018 Q3 Earnings call transcript