Profile: Unit Corp (UNT.N)
17 May 2013
Unit Corporation (Unit), incorporated on July 28, 1986, is a contract drilling company. In addition to its drilling operations, the Company has operations in the exploration and production and mid-stream areas. The Company operates in three segments: Contract Drilling, which is carried out by its subsidiary Unit Petroleum Company; Oil and Natural Gas, which is carried out by its subsidiary Unit Petroleum Company, and Mid-stream, which is carried out by its subsidiary Superior Pipeline Company, L.L.C. and its subsidiaries. Its Contract Drilling segment contracts to drill onshore oil and natural gas wells for others and for its own account. The Company’s Oil and Natural Gas segment explores, develops, acquires and produces oil and natural gas properties for its own account. Its Mid-stream segment buys, sells, gathers, processes and treats natural gas for third parties and for its own account. In September 2012, its wholly owned subsidiary, Unit Petroleum Company, acquired certain oil and natural gas assets from Noble Energy, Inc. In September 2012, the Company’s subsidiary, Unit Petroleum Company sold its interest in Bakken properties to QEP Energy. During the year ended December 31, 2012, the Company drilled 32 gross wells with an average working interest of 84% in its Marmaton horizontal oil play, located in Beaver County, Oklahoma.
The Company’s contract drilling business is conducted through Unit Drilling Company and its subsidiary Unit Texas Drilling L.L.C. Through these companies it drills onshore oil and natural gas wells for its own account, as well as for a range of other oil and natural gas companies. Its drilling operations are mainly located in Oklahoma, Texas, Louisiana, Wyoming, Colorado, Utah, Montana and North Dakota. An on-shore drilling rig is composed of equipment components, such as engines, drawworks or hoists, derrick or mast, substructure, pumps to circulate the drilling fluid, blowout preventers and drill pipe that are collectively unitized into an operating system commonly referred to as a drilling rig.
During 2012, its Mid-Continent, Panhandle, and Woodward divisions averaged 24.0, 10.0, and 11.6 drilling rigs operating, respectively. Its Arkoma division, which operated in the dry gas producing area of eastern Oklahoma, averaged only 1.0 drilling rig operating for 2012. During 2012, its Arkoma division averaged 7.2 drilling rigs operating.
The Company’s Gulf Coast division provides drilling rigs to the onshore areas of the south Louisiana Gulf Coast and upper Texas Gulf Coast region, as well as the conventional and unconventional gas plays of northwest Louisiana, East Texas and South Texas. The Gulf Coast division averaged 7.2 drilling rigs operating during 2012. Its Rocky Mountain division covers several states, including Colorado, Utah, Wyoming, Montana and North Dakota. Its drilling rig fleet in this division operated an average of 20.2 drilling rigs during 2012.
The Company has drilling rigs operating primarily in the Pinedale Anticline of western Wyoming and the Bakken Shale of North Dakota, as well as other areas throughout this geographical area. Subsequent to the 2012, year-end, it sold an idle 600 horsepower mechanical drilling rig to an unaffiliated third party. Its contract drilling segment also provides drilling services for its oil and natural gas segment. During 2011, it drilled 78 wells, or 10% of the total wells drilled by its drilling segment. As of December 31, 2011, approximately 93% of the Company’s working drilling rigs was drilling for oil or natural gas liquids (NGLs). During 2012, QEP Resources, Inc. was its largest drilling customer, which accounted for for approximately 15% and 10%, respectively, of its total contract drilling revenues.
Oil and Natural Gas
The Company’s wholly owned subsidiary, Unit Petroleum Company, conducts its exploration and production activities. Its producing oil and natural gas properties, undeveloped leaseholds and related assets are located mainly in Oklahoma, Texas, Louisiana, North Dakota and, to a lesser extent, in Arkansas, New Mexico, Wyoming, Montana, Alabama, Kansas, Mississippi, Michigan, Colorado and Pennsylvania and a small portion in Canada. Its Wilcox play is located primarily in Polk, Tyler and Hardin Counties, Texas. During 2011, it operated and completed 11 wells with an average working interest of 88%.
During 2012, the Company drilled 32 wells with an average working interest of 84% in its Marmaton horizontal oil play located in Beaver County, Oklahoma. In its Granite Wash (GW) play located in the Texas Panhandle, it drilled and operated 29 horizontal wells with an average working interest of 87% during 2012. On July 20, 2012, it acquired certain producing properties from an unaffiliated seller. On August 31, 2012, it acquired certain producing oil and gas properties. During 2012, it leased approximately 105,000 net acres of undeveloped oil and gas leasehold located in south central Kansas. During 2012, Valero Energy Corporation and Sunoco Partners Marketing accounted for 26% and 8%, respectively, of its oil and natural gas revenues.
The Company’s mid-stream operations are conducted through Superior Pipeline Company L.L.C. Its operations consist of primarily in the buying, selling, gathering, processing and treating of natural gas. In addition, it operates three natural gas treatment plants, 14 operating processing plants, 39 active gathering systems and 1,300 miles of pipeline. Superior Pipeline Company L.L.C. and its subsidiaries operate in Oklahoma, Texas, Kansas, Pennsylvania and West Virginia. Its mid-stream segment provides its customers with a range of gathering, processing and treating services. During 2012, ONEOK and Gavilon, LLC accounted for approximately 54% and 10%, respectively, of its mid-stream revenues.
Suite 1000, 7130 S. Lewis
TULSA OK 74136