Unit Corporation (ticker: UNT) is a diversified energy company engaged through its subsidiaries in the exploration for and production of oil and natural gas, the acquisition of producing oil and natural gas properties, the contract drilling of onshore oil and natural gas wells, and the gathering and processing of natural gas. The company is celebrating its 50th Anniversary in 2013.
Quick Earnings Recap
On November 5, 2013, Unit Corporation announced its Q3’13 results. Production from the E&P segment for the quarter reached 4.2 MMBOE, a 21% increase over the same period as last year and volumes gathered per day increased 35% with a 19% increase in liquids production over the same time period.
Unit’s midstream segment reported operating profit of $12.7 million, an increase of 15% compared to Q2’13 while the drilling segment utilized an average of 63.5 rigs, a decrease of 13% from Q3’12, and a decrease of 3% from the Q2’13. Per day drilling rig rates for the Q3’13 averaged $19,773, a decrease of 1%, or $216, from the Q3’12, and an increase of 1% over the Q2’13.
UNT Doubles Rig Count to 12
Unit’s successful exploration programs in the Wilcox, Granite Wash, Marmaton and Mississippian have prompted UNT to run 12 rigs for the remainder of the year.
UNT’s averaged record daily production of 4.4 MBOEPD in Q3’13 within the company’s core horizontal play in the Marmaton, a 16% increase compared to Q2’13. The company expects to drill 46 gross wells by year-end 2013. Marmaton well costs are approximately $2.5 million to $2.7 million including a 4500-foot lateral. Initial production rates for a 30-day period reached 350 BOPD to 375 BOPD with 90% oil, and per-well estimated ultimate recovery is expected to be between 110 MBOE and 120 MBOE. UNT is currently operating six rigs in the Granite Walsh (86% WI). Approximately 27 gross horizontal wells are expected to be completed in 2013, with approximately half of these being completed in Q4’13.
UNT increased daily production from the Mississippian by 62% compared to Q2’13 and increased its leasehold by 13%. UNT plans to add a second rig in the play during Q4’13,
Unit’s Wilcox production increased by 5% from Q3’12 and the company achieved a 100% success rate with six wells. UNT expects to drill a total of 8 to 10 gross wells by year-end 2013. OAG 360 reminds readers that Unit expects to drill five more in 2014, and the company believes there may be as many as nine pay zones in the Gilly region. The number of zones is expected to increase over the next five years. Initial rates are between $5 million to $10 million a day equivalent, with EURs in the range of 15 Bcfe to 20 Bcfe.
Midstream Capacity Expanding
UNT’s Bellmon facility is processing approximately 29 Mcfe/d with a capacity of 55 Mcfe/d. The increased production and the termination of a rental plant contract has prompted UNT to install an additional 60 Mcfe/d processing skid. The skid is expected to be operational by Q4’13 and hold a total capacity of 90 Mcfe/d. Construction on two other plants are aimed at increasing Mcfe/d capacity and will be completed in 2014.
BOSS Rig Will Support Horizontal Program
OAG 360 notes Unit is selling many of its older rigs and refurbishing others as the market dictates. UNT is nearing completion of two BOSS rigs that will be placed into service in Q4’13 and Q2’14, respectively, the first of which will be deployed to the Granite Wash to drill for Unit E&P. The BOSS rig design excels in horizontal drilling and will be the prototype for the future expansion of Unit’s fleet, representing Unit’s first foray into the advanced purpose-built rig market. UNT sold two of its 2,000 horsepower drilling rigs in Q3’13 and has now sold four such rigs in 2013. Four additional rigs with 3,000 horsepower are under contract to be sold in 2014. Its current fleet consists of 123 rigs, with 67 under contract and 23 under long-term contracts.
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