Unit Corp. (UNT, Financial) filed Quarterly Report for the period ended 2009-03-31.
UNIT CORP. is engaged in the land contract drilling of oil and natural gas wells the development acquisition and production of oil and natural gasproperties and the marketing of natural gas. Its principal areas ofoperations are located in the Anadarko and Arkoma Basins which coverportions of Oklahoma Texas Kansas and Arkansas and has additionalproducing properties located in other states including but not limited toNew Mexico Louisiana North Dakota Colorado Wyoming Montana Alabama and Mississippi. Unit Corp. has a market cap of $1.47 billion; its shares were traded at around $31.01 with a P/E ratio of 4.6 and P/S ratio of 1. Unit Corp. had an annual average earning growth of 29.9% over the past 10 years. GuruFocus rated Unit Corp. the business predictability rank of 2.5-star.
First quarter 2009 production from our oil and natural gas segment averaged 181,000 Mcfe per day, a 1% decrease from the average for the fourth quarter of 2008 and a 12% increase from the average for the first quarter of 2008. The decrease from the fourth quarter 2008 resulted from the slowdown of drilling new wells due to the economic downturn. The increase from the first quarter 2008 resulted from production from new wells completed throughout 2008.
Oil and natural gas revenues decreased 17% from the fourth quarter of 2008 and decreased 32% from the first quarter of 2008. Our oil, natural gas and NGL prices in the first quarter of 2009 decreased 35%, 2% and 29%, respectively, from the fourth quarter of 2008 and our oil, natural gas and NGL prices decreased 46%, 29% and 64%, respectively, from the first quarter of 2008. Direct profit (oil and natural gas revenues less oil and natural gas operating expense) decreased 21% from the fourth quarter of 2008 and decreased 37% from the first quarter of 2008. The decrease from the fourth quarter 2008 and the first quarter 2008 primarily resulted from the impact of lower natural gas prices. Operating cost per Mcfe produced decreased 1% from the fourth quarter of 2008 and decreased 19% from the first quarter of 2008. For 2009, we have hedged 66% of our average daily oil production (based on our first quarter 2009 production) and approximately 70% of our average daily natural gas production (based on our first quarter 2009 production). Currently, for 2010, we have hedged approximately 39% of our average daily oil production (based on our first quarter 2009 production) and approximately 48% of our average daily natural gas production (based on our first quarter 2009 production).
First quarter 2009 liquids sold per day increased 11% from the fourth quarter of 2008 and increased 19% from the first quarter of 2008. Liquids sold per day increased from the fourth quarter of 2008 primarily due to the fourth quarter 2008 operating the processing plants in an ethane rejection mode due to an extremely low ethane price, and increased from the first quarter of 2008 primarily as the result of upgrades and expansions to existing plants. Gas processed per day remained unchanged over the fourth quarter of 2008 and increased 21% over the first quarter of 2008, respectively. Gas gathered per day increased 3% from the fourth quarter of 2008 and decreased 4% from the first quarter of 2008 primarily from our Southeast Oklahoma gathering system experiencing natural production declines associated with connected wells.
NGL prices in the first quarter of 2009 decreased 35% from the price received in the fourth quarter of 2008 and decreased 58% over the price received in the first quarter of 2008. The price of liquids as compared to natural gas affects the revenue in our mid-stream operations and determines the fractionation spread which is the difference in the value received for the NGLs recovered from natural gas in comparison to the amount received for the equivalent MMBtu s of natural gas if unprocessed. In 2008, we had hedged approximately 50% of our average fractionation spread volumes to help manage our cash flow from this segment. We currently do not have any fractionation spread hedges in place for 2009 and beyond due to the unfavorable current market condition of futures prices.
Direct profit (mid-stream revenues less mid-stream operating expense) decreased 61% from the fourth quarter of 2008 and decreased 84% from the first quarter of 2008. The decrease from the fourth quarter 2008 and the first quarter 2008 resulted primarily from decreased commodity prices which resulted in declines in processing margins. Total operating cost for our mid-stream segment decreased 17% from the fourth quarter of 2008 and decreased 41% from the first quarter of 2008. Our anticipated capital expenditures for 2009 for this segment are $13.0 million. Commodity prices started to decline in the third quarter of 2008 and continued to decrease through the first quarter of 2009. Prices may continue to decrease or remain at their current lower levels for an indeterminable period of time, which could result in fewer wells being connected to existing gathering systems and lower fractionation spreads resulting in possible future declines in volumes or margins.
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UNIT CORP. is engaged in the land contract drilling of oil and natural gas wells the development acquisition and production of oil and natural gasproperties and the marketing of natural gas. Its principal areas ofoperations are located in the Anadarko and Arkoma Basins which coverportions of Oklahoma Texas Kansas and Arkansas and has additionalproducing properties located in other states including but not limited toNew Mexico Louisiana North Dakota Colorado Wyoming Montana Alabama and Mississippi. Unit Corp. has a market cap of $1.47 billion; its shares were traded at around $31.01 with a P/E ratio of 4.6 and P/S ratio of 1. Unit Corp. had an annual average earning growth of 29.9% over the past 10 years. GuruFocus rated Unit Corp. the business predictability rank of 2.5-star.
Highlight of Business Operations:
Our first quarter 2009 utilization rate was 40%, compared to 74% and 78% in the fourth quarter 2008 and first quarter 2008, respectively. Dayrates for the first quarter of 2009 averaged $18,638, a decrease of 4% from the fourth quarter of 2008 and an increase of 4% from the first quarter of 2008. Direct profit (contract drilling revenue less contract drilling operating expense) decreased 50% from the fourth quarter of 2008 and 47% from the first quarter of 2008, primarily due to the decrease in utilization. Operating cost per day increased 20% from the fourth quarter of 2008 and increased 30% from the first quarter of 2008 primarily attributable to certain indirect drilling costs being spread over fewer utilization days. In the third quarter of 2008, prices for oil and natural gas started to decrease and continued to decrease throughout the first quarter of 2009 and we anticipate will continue at depressed levels for an unknown period of time which will further reduce our dayrates and utilization.First quarter 2009 production from our oil and natural gas segment averaged 181,000 Mcfe per day, a 1% decrease from the average for the fourth quarter of 2008 and a 12% increase from the average for the first quarter of 2008. The decrease from the fourth quarter 2008 resulted from the slowdown of drilling new wells due to the economic downturn. The increase from the first quarter 2008 resulted from production from new wells completed throughout 2008.
Oil and natural gas revenues decreased 17% from the fourth quarter of 2008 and decreased 32% from the first quarter of 2008. Our oil, natural gas and NGL prices in the first quarter of 2009 decreased 35%, 2% and 29%, respectively, from the fourth quarter of 2008 and our oil, natural gas and NGL prices decreased 46%, 29% and 64%, respectively, from the first quarter of 2008. Direct profit (oil and natural gas revenues less oil and natural gas operating expense) decreased 21% from the fourth quarter of 2008 and decreased 37% from the first quarter of 2008. The decrease from the fourth quarter 2008 and the first quarter 2008 primarily resulted from the impact of lower natural gas prices. Operating cost per Mcfe produced decreased 1% from the fourth quarter of 2008 and decreased 19% from the first quarter of 2008. For 2009, we have hedged 66% of our average daily oil production (based on our first quarter 2009 production) and approximately 70% of our average daily natural gas production (based on our first quarter 2009 production). Currently, for 2010, we have hedged approximately 39% of our average daily oil production (based on our first quarter 2009 production) and approximately 48% of our average daily natural gas production (based on our first quarter 2009 production).
First quarter 2009 liquids sold per day increased 11% from the fourth quarter of 2008 and increased 19% from the first quarter of 2008. Liquids sold per day increased from the fourth quarter of 2008 primarily due to the fourth quarter 2008 operating the processing plants in an ethane rejection mode due to an extremely low ethane price, and increased from the first quarter of 2008 primarily as the result of upgrades and expansions to existing plants. Gas processed per day remained unchanged over the fourth quarter of 2008 and increased 21% over the first quarter of 2008, respectively. Gas gathered per day increased 3% from the fourth quarter of 2008 and decreased 4% from the first quarter of 2008 primarily from our Southeast Oklahoma gathering system experiencing natural production declines associated with connected wells.
NGL prices in the first quarter of 2009 decreased 35% from the price received in the fourth quarter of 2008 and decreased 58% over the price received in the first quarter of 2008. The price of liquids as compared to natural gas affects the revenue in our mid-stream operations and determines the fractionation spread which is the difference in the value received for the NGLs recovered from natural gas in comparison to the amount received for the equivalent MMBtu s of natural gas if unprocessed. In 2008, we had hedged approximately 50% of our average fractionation spread volumes to help manage our cash flow from this segment. We currently do not have any fractionation spread hedges in place for 2009 and beyond due to the unfavorable current market condition of futures prices.
Direct profit (mid-stream revenues less mid-stream operating expense) decreased 61% from the fourth quarter of 2008 and decreased 84% from the first quarter of 2008. The decrease from the fourth quarter 2008 and the first quarter 2008 resulted primarily from decreased commodity prices which resulted in declines in processing margins. Total operating cost for our mid-stream segment decreased 17% from the fourth quarter of 2008 and decreased 41% from the first quarter of 2008. Our anticipated capital expenditures for 2009 for this segment are $13.0 million. Commodity prices started to decline in the third quarter of 2008 and continued to decrease through the first quarter of 2009. Prices may continue to decrease or remain at their current lower levels for an indeterminable period of time, which could result in fewer wells being connected to existing gathering systems and lower fractionation spreads resulting in possible future declines in volumes or margins.
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