In the fourth quarter of 2017, Unit Corporation (ticker: UNT) recorded a net income of $89.2 million, this compares to a net income of $1.7 million for Q4 2016. $81.3 million of the net income was accounted for as a tax benefit associated with the Tax Cuts and Jobs Act enacted during the quarter. Total revenues for the quarter were $204.8 million, compared to $174.3 million for Q4 2016. Adjusted EBITA for the quarter was $91.2 million.
For all of 2017, Unit recorded a net income of $117.8 million, compared to a net loss of $135.6 million for 2016. Total revenues for 2017 were $739.6 million, compared to $602.2 million for 2016. Adjusted EBITA for the year was $315.7 million.
Production
In Q4 2017, Unit’s total equivalent production was 4.3 MMBOE, which was a 6% increase compared to Q3 2017. The total production can be broken down into 7,877 BOPD, 13,713 barrels of NGLs per day and 151.6 MMcf/d.
In the Cherry Creek prospect in the Wilcox area, Unit brought the Trinity #1 discovery well on production with an initial 30-day production rate (IP30) of 6 MMcfe/d. In addition to the Trinity well, Unit is planning to drill a second well in the prospect later in 2018.
In the Brandt prospect, Unit successfully drilled and completed a discovery well, the Engel #1, with an IP30 of 8.3 MMcfe/d. Unit also had 10 new behind pipe recompletions, increasing combined production from those wells 16 MMcf/d and 500 BOPD at a cost of $3 million. For 2018, Unit is planning 13-15 recompletions, eight new vertical wells and two horizontal wells.
During the quarter, Unit completed the Dixon 5554 CXL #5H well and the Dixon 5554 CXL #6H well in the Texas Panhandle Granite Wash area. The Dixon 5554 CXL #6H is the company’s first extended lateral well targeting the B interval of the Granite Wash, and it had an IP30 of 9.4 MMcfe/d. In addition, Unit drilled three of its longest laterals to date, ranging from 8,700-9,700 feet, targeting the C1 interval of the Granite Wash. The three well were completed in January and just recently were put on flowback.
In Q4 2017, in the southern Oklahoma Hoxbar Oil Trend, Unit completed two new Marchand horizontal wells. Both wells were brought on production in November 2017. Both wells performed above expectations, with the Nina #1-22H recording an IP30 of 1,114 BOEPD, whereas the Schmidt #1-10H had an IP30 of 691 BOEPD. Also in late November, Unit began drilling its first extended lateral in the Marchand – the Schenk Trust 1-17HXL. The well was brought on production in late January with an IP20 of 2,468 BOEPD.
Unit Corporation Map of Operations
Proved reserves
Estimated year-end 2017 proved oil and natural gas reserves were 149.8 MMBOE, or 898.6 Bcfe, as compared with 117.8 MMBOE, or 706.6 Bcfe, at year-end 2016. Estimated reserves were 13% oil, 30% NGLs and 57% natural gas.
The following details the changes to Unit’s proved oil, NGLs and natural gas reserves during 2017:
|
Oil |
NGLs |
Natural Gas |
Proved Reserves (MMBoe) |
|||||||||
| Proved Reserves, at December 31, 2016 | 15.7 | 34.5 | 405.6 | 117.8 | ||||||||
| Revisions of previous estimates | 0.7 | 4.3 | 38.4 | 11.4 | ||||||||
| Extensions, discoveries, and other
additions |
3.9 | 10.3 | 101.6 | 31.1 | ||||||||
| Purchases of minerals in place | 2.0 | 1.2 | 15.3 | 5.8 | ||||||||
| Production | (2.7 | ) | (4.7 | ) | (51.3 | ) | (16.0 | ) | ||||
| Sales | (0.1 | ) | (0.1 | ) | (0.9 | ) | (0.3 | ) | ||||
| Proved Reserves, at December 31, 2017 | 19.5 | 45.5 | 508.7 | 149.8 | ||||||||
Total year-end 2017 proved oil and natural gas reserves increased 27% over 2016.
Drilling rigs
Unit’s average number of drilling rigs working during the quarter was 31.2, a decrease of 10% from Q3 2017. The per day drilling rate averaged $16,645, which is a 1% increase from Q3 2017. Average per day operating margin for the quarter was $5,550, which compares to an average operating margin for Q3 2017 of $5,495.
BOSS Drill Rig
2018 CapEx
Unit’s 2018 capital expenditure budget is $352 million. The budget is broken down into the following:
- $272 million for the oil and natural gas segment
- $47 million for the contract drilling segment
- $32 million for the midstream segment
The budgets have increased 26%, 30% and 44%, respectively, compared to 2017.
