Unit Corp. · OTC:UNTC
Unit — Raymond James Institutional Investors Conference 2018
34 slides from Unit's conference presentation, Mar 6, 2018
Slide 1: Raymond James Institutional Investors Conference
Raymond James Institutional Investors Conference March 6, 2018
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation contains forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that addres
Slide 3: Unit Corporation: A Diversified Energy Company
Unit Corporation: A Diversified Energy Company 10 • Tulsa based, incorporated in 1963 10 Casper Marcellus Pittsburgh • Integrated approach to business allows Unit to capture margin from each business segment Anadarko Tulsa Headquarters Basin 55 Arkoma Basin Oklahoma Permian City North La/ 95 Unit Ri
Slide 4: Company Highlights
Company Highlights • Highly economic • Midstream segment opportunities for our E&P EBITDA poised for growth segment • Fiscally conservative • Contract drilling segment • Capital spending in line activity rebounding with cash flow 4
Slide 5: 2017 Accomplishments
2017 Accomplishments Exploration & Production Acquired certain oil and natural gas assets located in our core Hoxbar play in western Oklahoma for $54.3 million. Total year end 2017 proved oil and natural gas reserves increased 27% over 2016. Replaced 300% of 2017 production with new reserves.
Slide 6: Core Upstream Producing Areas
Core Upstream Producing Areas Key focus areas include: Mid Continent Region Gulf Coast: Wilcox (Southeast Texas) Hoxbar/STACK Mid‐Continent: Granite Wash Granite Wash (Texas Panhandle) Upper Gulf Coast Region Hoxbar (Western Oklahoma) STACK (Western Oklahoma) Wilcox • 2017 year end total pro
Slide 7: Unit's STACK and STACK Extension Positions
Unit’s STACK and STACK Extension Positions STACK Extension STACK 12,000+ acres 87% HBP 80% in Over Pressured Window Upper, Middle and Lower Meramec also Woodford and Osage targets Operators are testing 15‐20 wells per section in Meramec & WDFD * 84‐126 operated locations * 484‐726 non‐
Slide 8: STACK Acreage Proven Across Multiple Targets
STACK Acreage Proven Across Multiple Targets Anderson Half 1‐30‐19XH (CLR) Lorene 1‐8‐5XH (CLR) Privott 17_20‐16N‐9W 1H (DVN) Geronimo 1207 6‐2MH (89 Eng) Carpenter 1‐20H (XEC) IP30: 17.1 Mmcfepd (99% Gas) IP30: 31.8 Mmcfepd (70% Gas) IP30: 4,308 Boepd (57% Oil) IP30: 895 Boepd (58%Oil) Waiting on C
Slide 9: STACK Extension Pushing Boundary of STACK
STACK Extension Pushing Boundary of STACK Howard 5‐19‐17 1H (Tapstone) McConnell 19‐1H (Comanche) Moss 30‐1H (Corlena) Schoeppel 16‐20‐12 (CHK) Medrill 2015 1‐27H (SD) IP30: 2,494 Boepd (62% Oil) 1 IP30: 532 Boepd (46% Oil) 11 IP30: 491 Boepd (9% Oil) 12 IP30: 865 Boepd (54% Oil) 13 IP30: 1,164 Boep
Slide 10: Buffalo Wallow Field – Economic Advantages
Buffalo Wallow Field – Economic Advantages Geology 11 Granite Wash lenses Sands present across acreage Land ~9,000 net acres Operated and ~90% HBP Average working interest ~ 90% 200 ‐ 230 potential XL locations Continuing to expand position Operations Running one rig Drilled 9,500’
Slide 11: Granite Wash Extended Lateral Potential Reserve Range
Granite Wash Extended Lateral (~7,500’) Potential Reserve Range ROR uses the 02/01/2018 Strip Price Deck with 1st Production Starting 04/01/2018 and includes the midstream margin. See Q1 2018 Economic Prices in Appendix (also available at www.unitcorp.com/investor/reports/html)
Slide 12: Hoxbar (Marchand Sand)
Hoxbar (Marchand Sand) Nina #1‐22H Schmidt #1‐10H McConnell #1‐11H Schenk Trust #1‐17HXL IP30: 1,116 Boepd (77 % Oil) IP30: 685 Boepd (80% Oil) IP30*: 1,395 Boepd (62% Oil) IP30*: 2,469 Boepd (79% Oil) 87% WI 98% WI 87% WI *16 Days Online 68% WI *26 days online Hoxbar (Marchand) Core Area EUR ~540
Slide 13: Wilcox (Southeast Texas)
Wilcox (Southeast Texas) Wilcox Strategy for Future Growth POLK TYLER Over 100 stacked pay recompletion and workover opportunities in existing wells (e.g. Gilly Field/Cherry Creek/Brandt) Drill exploratory prospects with large upside (e.g. Cherry Creek/Brandt prospects) 3D AREA Build horizonta
Slide 14: Wilcox Activity Map for 2018
Wilcox Activity Map for 2018 TYLER JACK’S CREEK SEGNO NE HICKWOOD POLK PAVEY GILLY VILLAGE MILLS WING CHERRY CREEK HARDIN LIBERTY Scheduled for 2018 14 (1 well scheduled for Brandt)
Slide 15: 2017 Wilcox Recompletions & Workover Results
2017 Wilcox Recompletions & Workover Results Composite Gross Production from Recompletions and Workovers 28 Recompletions & 13 Workovers Total Cost: $15MM End of Year 34.0 MMcfd 900 bopd Start of Year 9.0 MMcfd 300 bopd 15
Slide 16: Wilcox Exploration Activity
Wilcox Exploration Activity 16
Slide 17: Rig Fleet Presence in Key Regions
Rig Fleet Presence in Key Regions 95 rig fleet 20 ≤800 HP: 21% 10 71 1,000‐1,700 HP: 75% 4 ≥2,000 HP: 4% 69% electric 10 54% 1,500 HP or greater 34 equipped with skidding or walking systems 27 additional can be skidded 34% total fleet utilization at present All ten BOSS rigs operating
Slide 18: SCR Rigs Continue to Make an Important Contribution
SCR Rigs Continue to Make an Important Contribution 40 35 • At industry trough – 13 26 30 22 drilling rigs operating 21 25 • Currently, 32 drilling rigs 20 operating 12 15 • All BOSS rigs operating 10 7 10 10 10 9 • 22 SCR rigs operating 5 6 0 May 5, 2016 Dec. 31, 2016 Sept. 4, 2017 Dec. 31, 2017 Ma
Slide 19: Average Dayrates and Margins
Average Dayrates and Margins (1) $20,000 100% $15,000 75% • Decline in dayrates lagged Average Rig Utilization utilization decrease due to Margins and Dayrates long‐term contract roll‐off $10,000 50% • Utilization increased from low in Q2 2016 $5,000 25% • Margins improved from Q2 2017 forward $0 0%
Slide 20: The BOSS Drilling Rig
The BOSS Drilling Rig Optimized for Pad Drilling Multi‐direction walking system Faster Between Locations Quick assembly substructure 32‐34 truck loads More Hydraulic Horsepower (2) 2,200 horsepower mud pumps 1,500 gpm available with one pump Environmentally Conscious Dual‐fuel capable en
Slide 21: Midstream Core Operations
Midstream Core Operations Brook Field Pittsburgh Mills Snow Shoe Texas Panhandle Northern Oklahoma and Kansas 47,000+ dedicated acres 2,000,000+ dedicated acres Pittsburgh 135 MMcf/d processing capacity 193 MMcf/d processing capacity Regional office 347 miles of gathering pipeline 593 mi
Slide 22: Midstream Segment Contract Mix
Midstream Segment Contract Mix 2010 2017 Contract Mix Based on Volume 29% 49% 51% 71% Fee Based Commodity Based Contract Mix Based on Margin 15% 38% 85% Fee Based 62% Commodity Based Unit vs. 3rd Party Margin Contribution 41% 35% 59% 3rd Party 65% Unit 22
Slide 23: Effect of Evolving Contract Mix
Effect of Evolving Contract Mix Midstream Revenue vs. Operating Profit(1) $500,000 $100,000 $400,000 $80,000 Profit Margin Revenues $300,000 $60,000 $200,000 $40,000 $100,000 $20,000 $0 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Revenues Operating Profit (1) Operating profit is defined as total
Slide 24: Debt Structure – No Near-Term Maturities
Debt Structure – No Near‐Term Maturities Senior Subordinated Notes Ratings S&P Moody’s Fitch Corporate B+ B2 B+ $650 million, 6.625% Senior Subordinated Notes BB‐ B3 BB‐ 10‐year, NC5; maturity 2021 12/31/2017 Key Covenants Interest coverage ratio ≥ 2.25x(1) 5.82x(1,2) Secured Bank Facility (Re
Slide 25: Segment Contribution
Segment Contribution Revenues ($ millions) Adjusted EBITDA ($ millions)(1) $1,573 $800 $1,600 $787 $1,352 $1,400 $667 $1,200 $600 $1,000 $854 $410 $800 $740 $400 $316 $602 $600 $252 $400 $200 $200 $0 $0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Oil and Natural Gas Contract Drilling Midstream
Slide 26: Operating Segment Capital Expenditures
Operating Segment Capital Expenditures (1) (In Millions) $1,500 $1,000 $500 $0 2013 2014 2015 2016 2017 2018 Forecast Oil and Natural Gas Contract Drilling Midstream (1) Net of acquisitions and plugging liability revisions. 26
Slide 27: Investment Considerations
Investment Considerations • E&P segment core areas provide compelling economics • Contract drilling segment activity level rebounding • Midstream segment positioned to benefit from increased activity levels and liquids price improvement • We maintain fiscal discipline • Solid balance sheet with ampl
Slide 28: Appendix
AU) APPENDIX
Slide 29: Non-GAAP Financial Measures - Corporate
Non‐GAAP Financial Measures ‐ Corporate Adjusted EBITDA Years ended December 31, (In millions) 2013 2014 2015 2016 2017 Net Income (Loss) $185 $136 ($1,037) ($136) $118 Income Taxes 117 87 (627) (71) (58) Depreciation, Depletion and Amortization 334 405 355 210 212 Impairments — 158 1,635 162 — Inte
Slide 30: Non-GAAP Financial Measures - Segments
Non‐GAAP Financial Measures ‐ Segments Adjusted EBITDA Years ended December 31, (In millions) 2013 2014 2015 2016 2017 Unit Petroleum Income (Loss) Before Income Taxes (1) $239 $199 ($1,631) ($102) $125 Depreciation, Depletion and Amortization 226 276 252 114 102 Impairment of Oil and Natural Gas Pr
Slide 31: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Reconciliation of Average Daily Operating Margin Before Elimination of Intercompany Rig Profit and Bad Debt Expense Years ended December 31, (In thousands except for operating days and operating margins) 2013 2014 2015 2016 2017 Contract drilling revenue $414,778 $476,517
Slide 32: Derivative Summary
Derivative Summary 2018 2019 2020 Q1 Q2 Q3 Q4 Q1 Q1 CRUDE: Collars Volume (Bbl) 45,000 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ Weighted Avg Floor $55.00 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ Weighted Avg Ceiling $59.50 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ 3‐Way Collars Volume (Bbl) 180,000 182,000 184,000 184,000 ‐‐ ‐‐ Weighted Avg Floor $47.50 $47.50 $47.50 $47.50 ‐‐
Slide 33: Q1 2018 Economic Prices
Q1 2018 Economic Prices Strip Case* BBL MB Crude Natural Gas MB C2 MB C3 C3 MB NC4 MB iC4 MB C5+ CW C2 CW C3 CW NC4 CW iC4 CW C5+ 2018 $63.253 $2.939 $0.262 $0.842 $35.378 $0.951 $1.048 $1.381 $0.202 $0.772 $0.900 $0.995 $1.336 2019 $58.405 $2.833 $0.253 $0.778 $32.667 $0.878 $0.968 $1.275 $0.194 $0
Slide 34: Raymond James Institutional Investors Conference
Raymond James Institutional Investors Conference March 6, 2018
Unit — Raymond James Institutional Investors Conference 2018 on 6ix