Unit Corp. · OTC:UNTC
Unit — Investor Presentation (December 2010)
34 slides from Unit's investor presentation, Dec 8, 2010
Slide 1: Unit Corporation Presentation
UNIT CORPORATION Presentation December 8, 2010 3:00 p.m.
Slide 2: Unit Corporation Profile
Unit Corporation Profile • Founded in 1963; public in 1979 (NYSE: UNT) – Current average daily trading volume: 358,529 shares – Added to the S&P MidCap 400 Index in October 2008 • Headquartered in Tulsa, Oklahoma – Current enterprise value of $2.0 billion – 47,899,300 shares outstanding • Integrated
Slide 3: Unit's Strengths
Unit’s Strengths Three consistent growing energy segments: • Unit Petroleum Company – 204% average production replacement since 2000 – 94% success rate for wells drilled during 2009 • Unit Drilling Company – 142% increase in rig count since 2000 – Fifth largest U.S. deep onshore drilling contractor
Slide 4: Unit Petroleum Company Strategy
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: – Maintain aggressive drilling program – Generating most drilling prospects internally – Staying alert for opportunistic acquisitions
Slide 5: Annual Reserve Additions as a Percent of Production
Annual Reserve Additions as a Percent of Production 143% Average Annual Reserve Replacement through drilling over last 26 years 220% Average Annual Reserve Replacement from all sources over last 26 years 350% 300% 250% 200% * 150% 100% 50% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 *Produc
Slide 6: Reserve Growth
Reserve Growth Average annual reserve growth since 2000 of 12% Bcfe Mcfe 600 12 500 10 Mcfe per share 400 8 300 6 200 4 100 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Natural Gas Oil & NGLs
Slide 7: Production Growth
Production Growth Bcfe 70 60 * 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 First Nine Months Year-End *Estimated production for fourth quarter of 2010
Slide 8: Core Producing Areas
Core Producing Areas Tulsa Headquarters Anadarko Basin 48% Arkoma 20% Basin Permian North LA/East Texas Basin 5% Basin 4% Gulf Coast 22% Basin Houston Office Proved Reserves At 12/31/09: 577.0 Bcfe
Slide 9: Wells Drilled (gross)
Wells Drilled (gross) 300 200 100 0 2004 2005 2006 2007 2008 2009 2010 projected Vertical Wells Non-Op Horizontal Wells Operated Horizontal Wells
Slide 10: 2010 Anticipated Drilling Program
2010 Anticipated Drilling Program $299 Million CapX 160 Gross Wells Permian/Denver WEST DIVISION +73% Gulf Coast $107 MM $30 MM +102% Anadarko +275% $40 MM $77 MM +150% +71% Texas $21 MM Arkoma Panhandle $89 MM +133% +83% $36 MM $6 MM -26% -33% CENTRAL Appalachian DIVISION $129 MM EAST DIVISION +100
Slide 11: Segno Extension 3-D Area
Segno Extension 3-D Area 7800’ Upper 9400’ West Segno Expansion (2008) 10500’ Middle 11400’ Lower 12000’ 12900’ 2009 Results: Average W.I. 86.25% 8 wells, 75% success Net Cost: $19.7 MM 2008 Expansion Segno South Net Reserves: 16.04 Bcfe Expansion (2009) Finding Cost: $1.23/Mcfe Segno South Expansio
Slide 12: Granite Wash Play
Granite Wash Play 2010 - Completed 7 operated wells Anticipated avg. per well daily rate for peak month: 3 MMcf, 300 barrels of oil & 400 barrels of NGLs Anticipated Horizontal GW Well: 4000’ Lateral, 11 Frac Stages Well Cost: $5.0 MM Estimated Reserves: 3.2 Bcf, 50 MB oil, 412 MB NGLs Rate of Retur
Slide 13: Marmaton Play
Marmaton Play Since 10/1/10 - Completed 8 wells –326 Bopd average per well 141 Vertical Wells Avg. Reserves: 83 MBls Horizontal Well Estimate: 120 MBO 120 MMcf $2.5 well cost Rate of Return: +49% (using $3.50 gas & $70.00 oil) 102,000 Gross Acres 55,000 Net Acres Unit Acreage Drilled Waiting on Frac
Slide 14: Shale Plays
Shale Plays Bakken 56,400 gross acres 12,750 net acres Marcellus 197,000 gross acres 49,500 net acres Total gross acres: 386,643 Total net acres: 103,216 Haynesville/Bossier 36,243 gross acres Woodford - Arkoma 20,066 net acres 97,000 gross acres 18,100 net acres
Slide 15: Contract Drilling Strategy
Contract Drilling Strategy Unit’s premium service is achieved by supplying: – Top quality equipment – Experienced personnel – Expanding fleet to meet customer demand
Slide 16: Unit Rig Fleet
Unit Rig Fleet 150 125 100 75 50 25 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Current Mechanical Electric
Slide 17: Significant Presence in Oil and Gas Producing Regions
Significant Presence in Oil and Gas Producing Regions 7 20 Casper Office Tulsa Headquarters 62 7 Oklahoma City Office 25 121 Unit Rigs Houston Office
Slide 18: Unit Rig Utilization
Unit Rig Utilization 100% 75% 50% 25% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1st 2nd 3rd Qtr Qtr Qtr '10 '10 '10
Slide 19: Unit Rig Fleet HP Rating & Utilization
Unit Rig Fleet HP Rating & Utilization 450-700 h.p. 750-1000 h.p. 1200-1700 h.p. 2000 h.p. >2500 h.p. 0 20% 40% Utilization Percentage (as of 12/3/10) 60% 80% 100% Number of Rigs: 30 40 38 7 6 66 rigs equipped with integrated top drives Average Depth Capacity: 16,354 feet
Slide 20: Unit's Dayrates & Margins Per Day
Unit’s Dayrates & Margins Per Day (1) $20,000 $15,000 $10,000 $5,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1st Qtr 2nd 3rd '10 Qtr '10 Qtr '10 Margins Dayrates (1) Margins are before elimination of intercompany rig profit.
Slide 21: Superior Pipeline's Core Operations
Superior Pipeline’s Core Operations Tulsa Headquarters • Three natural gas treatment plants • Eight natural gas processing plants • 34 active gathering systems • 853 miles of pipeline
Slide 22: Revenues (in millions)
Revenues (in millions) Year-End Comparison Nine Months Comparison $1,400 $1,200 $1,200 $1,000 $1,000 $800 $800 $600 $600 $400 $400 $200 $200 $0 $0 2005 2006 2007 2008 2009 2006 2007 2008 2009 2010 Unit Petroleum Unit Drilling Superior Pipeline Other Unit Petroleum Unit Drilling Superior Pipeline Oth
Slide 23: EBITDA (in millions)
EBITDA (in millions) (1) Year-End Comparison Nine Months Comparison $800 $600 $600 $400 $400 $200 $200 $0 $0 2005 2006 2007 2008 2009 2006 2007 2008 2009 2010 Unit Petroleum Unit Drilling Superior Pipeline Unit Petroleum Unit Drilling Superior Pipeline (1)See EBITDA reconciliation
Slide 24: Adjusted Earnings per Share
Adjusted Earnings per Share (1) $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2005 2006 2007 2008 2009 2010 First Nine Months Year-End (1)See Adjusted EPS reconciliation to EPS
Slide 25: Balance Sheet Summary
Balance Sheet Summary 9/30/10 12/31/09 (In Millions) Working Capital $35.5 $22.9 Total Assets 2,544.9 2,228.4 Long-Term Debt 135.0 30.0 Shareholders’ Equity 1,682.9 1,565.8 Credit Line Undrawn 190.0 295.0 Long-Term Debt to Total Capitalization 7% 2%
Slide 26: Hedges
Hedges MMBtu/d Natural Gas Bbls/d Crude 100,000 $81.94 3,000 $6.29 $68.11 80,000 2,000 60,000 $82.49 40,000 1,000 $5.42 $5.62 20,000 0 0 2010 2011 2012 2010 2011 2012 Gallons/mo NGLs 800,000 $0.98 $0.97 600,000 400,000 200,000 0 2010 2011
Slide 27: Capital Expenditures
Capital Expenditures (In Thousands) $800,000 $600,000 $400,000 $200,000 $0 2005 2006 2007 2008 2009 Unit Petroleum Unit Drilling Superior Pipeline
Slide 28: 2010 Capital Program
2010 Capital Program Total business segment budget – $514 million • Unit Petroleum - $344 million – $299 million drilling • Unit Drilling - $130 million – $115 million for rig maintenance & additions – $15 million for drill pipe • Superior Pipeline - $40 million
Slide 29: Why Unit?
Why Unit? Three consistent growing energy segments: • Unit Petroleum Company – 204% average production replacement since 2000 – 94% success rate for wells drilled during 2009 • Unit Drilling Company – 142% increase in rig count since 2000 – Fifth largest U.S. deep onshore drilling contractor • Super
Slide 30: Forward-Looking Statement
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,
Slide 31: Appendix
APPENDIX UNIT CORPORATION
Slide 32: EBITDA Reconciliation to Income (Loss) Before Income Taxes
EBITDA Reconciliation to Income (Loss) Before Income Taxes First Nine Months (in Millions) 2009 2008 2007 2006 2005 2010 2009 2008 2007 2006 2005 EBITDA $ 371.2 $ 753.7 $ 615.9 $ 660.6 $ 452.4 $ 309.4 $ 283.9 $ 596.8 $ 449.2 $ 490.0 $ 286.2 Depreciation, Depletion and Amortization (177.2) (244.9) (1
Slide 33: EPS Reconciliation
EPS Reconciliation 1st 9 mos. 1st 9 mos. 2008 2008 2009 2009 2009 2009 (in millions except per share amounts) Amount Per Share Amount Per Share Amount Per Share Net income before impairment of oil and natural gas properties $ 319.1 $ 6.80 $ 119.6 $ 2.52 $ 91.1 $ 1.92 Impairment of oil and natural ga
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