UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 21, 2004 UNIT CORPORATION (Exact Name of Registrant as Specified in Charter) Delaware 1-9260 73-1283193 (State of Incorporation) (Commission File (IRS Employer Number) Identification No.) 1000 Kensington Tower, 7130 South Lewis, Tulsa, Oklahoma 74136 (Address Of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (918) 493-7700 (Not Applicable) (Former Name Or Former Address, If Changed Since Last Report)ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 99 Press Release of Unit Corporation dated July 21, 2004 Item 9. REGULATION FD DISCLOSURE On July 21, 2004, Unit Corporation announced that it has reached an agreement to acquire the 60% of Superior Pipeline Company LLC that it does not own for $19.8 million. Superior Pipeline LLC is a mid-stream company engaged in the buying, gathering, processing and treating of natural gas. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The following information is furnished pursuant to Item 9, "Regulation FD Disclosure" and Item 12, "Results of Operations and Financial Condition." On July 21, 2004, Unit Corporation announced its earnings for the quarter ended June 30, 2004. The press release regarding this announcement is furnished as Exhibit 99. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: July 21, 2004 -------------- UNIT CORPORATION By: /s/ David T. Merrill ------------------------ David T. Merrill Chief Financial Officer and Treasurer 1 Exhibit Index - ------------- Exhibit No. Description ----------- ----------- 99 Press Release, issued by Unit Corporation on July 21, 2004 announcing its earnings for the quarter ended June 30, 2004 and the agreement reached to acquire Superior Pipeline Company LLC. 2
news UNIT CORPORATION 1000 Kensington Tower, 7130 South Lewis Avenue, Tulsa, Oklahoma 74136 Telephone 918 493-7700, Fax 918 493-7714 Contact: David T. Merrill Chief Financial Officer and Treasurer (918) 493-7700 For Immediate Release... July 21, 2004 UNIT CORPORATION REPORTS SECOND QUARTER AND FIRST SIX MONTH RESULTS IN 2004 Tulsa, Oklahoma . . . Unit Corporation (NYSE - UNT) announced today its financial and operational results for the second quarter and first six months of 2004. Consolidated net income for the second quarter was $20.2 million, or 44 cents per diluted share, on revenues of $114.4 million, compared to 2003's net income of $11.7 million, or 27 cents per diluted share, on revenue of $72.7 million. Revenues increased 57% while net income increased 73% between the comparative quarters. The dramatic improvement in net income comes from all sectors: higher oil and natural gas production and prices, more contract drilling rigs being utilized and increased dayrates. For the six-month period, the Company reported consolidated net income of $35.7 million, or 78 cents per diluted share, on revenues of $216.3 million, compared to 2003's net income of $25.7 million, or 59 cents per diluted share, on revenues of $141.2 million. The increases were due to a marked improvement in oil and natural gas production, rig utilization and dayrates. UNIT DRILLING RESULTS Contract drilling revenues increased 48% between the comparative second quarters to $67.1 million, primarily due to an increase in dayrates and the number of rigs utilized. The average rig utilization was 83.7 rigs in the second quarter of 2004, up 34% from 2003's second quarter. Currently, Unit has 86 of its 89 active rigs operating. Our 90th rig should be in service in early August 2004, and the 91st is currently scheduled to be placed into service in September 2004. Daywork rates for the second quarter averaged $8,751 per day, which was 15% above the comparable quarter of 2003.Between the comparative first six months, contract drilling revenues increased 63% to $130.3 million with rig utilization increasing to an average of 82.6 rigs operating during the first six months of 2004 as compared to an average 56.8 rigs operating in the first six months of 2003. Contract drilling operating margins (per drilling rig) averaged $2,353 per day during the first six months of 2004, compared to $1,784 for the same period in 2003. UNIT PETROLEUM RESULTS Revenues from Unit's oil and natural gas operations increased 72% in the second quarter to $46.3 million due to significantly higher oil and natural gas prices and production. During the first six months of 2004, oil and natural gas revenues were $84.3 million, an increase of 40% over the same period in 2003. Natural gas production was 6,614 million cubic feet (MMcf) in the second quarter of 2004, while oil production for the same period was 278,000 barrels. Natural gas production was 12,908 MMcf in the first six months of 2004, while oil production for the same period was 494,000 barrels. Equivalent barrel production was up 18% on a year-over-year basis, excluding the acquisition of PetroCorp Incorporated in February 2004. Including the PetroCorp production, the first six months equivalent barrel production for 2004 increased 41%. Average natural gas prices received during the second quarter of 2004 increased 18% to $5.57 per Mcf compared to $4.74 per Mcf during the second quarter of 2003. The average oil price received was $31.12 per barrel in the second quarter of 2004 and $25.51 per barrel in the 2003 comparative quarter, a 22% increase. For the first six months of 2004, average natural gas prices received decreased 2% to $5.24 per Mcf compared to $5.34 per Mcf during the first six months of 2003. The average oil price received was $30.91 per barrel in the first six months of 2004 compared to $27.86 per barrel in 2003, an 11% increase. During the first six months of 2004, Unit completed 73 wells with a success rate of 86%, compared to 62 wells completed during the first six months of 2003 with an 85% success rate. OTHER BUSINESS ACTIVITY Unit has reached an agreement to acquire the 60% of Superior Pipe Line Company LLC that it does not own for $19.8 million. Superior Pipeline is a mid-stream company engaged primarily in the gathering, processing and treating of natural gas. The company owns one natural gas treatment plant, two processing plants, 12 active gathering systems and 375 miles of pipeline. Cash flow (net income plus depreciation) for the company was $4.5 million in 2003. Superior operates in western Oklahoma and the Texas Panhandle and has been in business for 8 years. This transaction is expected to close on July 29. MANAGEMENT COMMENTS "Favorable commodity prices and current industry conditions are presenting more growth opportunities for Unit," said John Nikkel, Chairman and Chief Executive Officer. "We recently announced that Unit signed an agreement to acquire Sauer Drilling Company for $34.7 million in cash and an amount equal to Sauer's working capital at closing. The acquisition includes 9 drilling rigs, a fleet of trucks, and an equipment and repair yard with associated inventory, located in Casper, Wyoming. Of the 9 rigs, 8 are currently operating under contract in the Wind River Basin in Wyoming and the Paradox Basin in Colorado. The acquisition will expand our operations in the Rocky Mountains where we currently have 10 rigs. At closing, which is expected on or about July 30, 2004, our fleet will total 100 land drilling rigs. Our exploration and production operations are on track to drill 165 to 175 wells by year-end. The acquisition of the remaining interest in Superior Pipeline should be a great benefit to our operations. The gas gathering and processing business is a logical extension of our exploration activities. We are pleased with the industry's present conditions and will continue our emphasis on growing our asset base." WEBCAST Unit will webcast its second quarter earnings conference call live over the Internet on July 21, 2004 at 11:00 a.m. Eastern Time. To listen to the live call, please go to www.unitcorp.com at least fifteen minutes prior to the start of the call to download and install any necessary audio software. For those who are not available to listen to the live webcast, a replay will be available shortly after the call and will remain on the site for twelve months. ---------------------------------------------------------------- Unit Corporation is a Tulsa-based, publicly held energy company engaged through its subsidiaries in oil and gas exploration, production and contract drilling. Unit's Common Stock is listed on the New York Stock Exchange under the symbol UNT. For more information about Unit Corporation, visit its website at http://www.unitcorp.com. This news release contains forward-looking statements within the meaning of the Securities Litigation Reform Act that involve risks and uncertainties, including the closing of the pending acquisitions, the productive capabilities of the wells, future demand for oil and natural gas, future rig utilization and dayrates, oil and gas reserve information, anticipated production rates from company wells, the prospective capabilities of offset acreage, anticipated oil and natural gas prices, the number of wells to be drilled by the company, development, operational, implementation and opportunity risks, and other factors described from time to time in the company's publicly available SEC reports, which could cause actual results to differ materially from those expected. Unit Corporation Selected Financial and Operations Highlights (In thousands except per share data) Three Months Ended Six Months Ended June 30, June 30, 2003 2004 2003 2004 - ------------------------------------------------------------------------------- Statement of Income: Revenues: Contract drilling $ 45,221 $ 67,110 $ 79,787 $ 130,324 Oil and natural gas 26,871 46,334 60,119 84,324 Other 572 999 1,317 1,695 ---------- ---------- ---------- ---------- Total revenues 72,664 114,443 141,223 216,343 ---------- ---------- ---------- ---------- Expenses: Contract drilling: Operating costs 33,641 48,364 61,452 94,920 Depreciation and amortization 5,899 7,754 10,793 15,218 Oil and natural gas: Operating costs 5,893 10,662 12,508 20,394 Depreciation, depletion and amortization 6,445 11,535 12,492 21,712 General and administrative 2,070 3,103 4,520 5,874 Other 209 290 529 512 Interest expense 175 514 386 931 ---------- ---------- ---------- ---------- Total expenses 54,332 82,222 102,680 159,561 ---------- ---------- ---------- ---------- Income Before Income Taxes 18,332 32,221 38,543 56,782 ---------- ---------- ---------- ---------- Income Tax Expense: Current 144 1,556 299 2,127 Deferred 6,824 10,751 14,350 19,514 ---------- ---------- ---------- ---------- Total income taxes 6,968 12,307 14,649 21,641 ---------- ---------- ---------- ---------- Equity in Earnings of Unconsolidated Investments Net of Income Tax 327 270 456 550 ---------- ---------- ---------- ---------- Income Before Change in Accounting Principle 11,691 20,184 24,350 35,691 Cumulative Effect of Change in Accounting Principle ---- ---- 1,325 ---- ---------- ---------- ---------- ---------- Net Income $ 11,691 $ 20,184 $ 25,675 $ 35,691 ========== ========== ========== ========== Income Before Change in Accounting Principle Per Common Share: Basic $ .27 $ .44 $ .56 $ .78 Diluted $ .27 $ .44 $ .56 $ .78 Net Income Per Common Share: Basic $ .27 $ .44 $ .59 $ .78 Diluted $ .27 $ .44 $ .59 $ .78 Weighted Average Common Shares Outstanding: Basic 43,521 45,723 43,477 45,697 Diluted 43,749 45,931 43,690 45,887 December 31, June 30, 2003 2004 - ------------------------------------------------------------------------------ Balance Sheet Data: Current assets $ 72,742 $ 95,581 Total assets $ 712,925 $ 889,487 Current liabilities $ 51,811 $ 68,611 Long-term debt $ 400 $ 70,000 Other long-term liabilities $ 17,893 $ 24,146 Deferred income taxes $ 127,053 $ 173,616 Shareholders' equity $ 515,768 $ 553,114 Six Months Ended June 30, 2003 2004 - ------------------------------------------------------------------------------ Statement of Cash Flows Data: Cash Flow From Operations before Changes in Working Capital (1) $ 63,550 $ 92,849 Net Change in Working Capital (2,895) 1,325 ----------- ----------- Net Cash Provided by Operating Activities $ 60,655 $ 94,174 =========== =========== Net Cash Used in Investing Activities $ 44,082 $ 164,410 Net Cash Provided by (Used in) Financing Activities $ (15,744) $ 75,417 Three Months Ended Six Months Ended June 30, June 30, 2003 2004 2003 2004 - ------------------------------------------------------------------------------- Contract Drilling Operations Data: Rigs Utilized 62.4 83.7 56.8 82.6 Operating Margins (2) 26% 28% 23% 27% Operating Profit Before Depreciation (2)($MM) $ 11.6 $ 18.7 $ 18.3 $ 35.4 Oil and Natural Gas Operations Data: Production Oil - MBbls 123 278 238 494 Natural Gas - MMcf 4,955 6,614 9,810 12,908 Average Prices Oil -- Bbl $ 25.51 $ 31.12 $ 27.86 $ 30.91 Natural Gas - Mcf $ 4.74 $ 5.57 $ 5.34 $ 5.24 Operating Profit Before DD&A (2)($MM) $ 21.0 $ 35.7 $ 47.6 $ 63.9 - ------------- (1) Unit Corporation considers Unit's cash flow from operations before changes in working capital an important measure in meeting the performance goals of the company. (2) Operating profit before depreciation is calculated by taking operating revenues by segment less operating expenses by segment excluding depreciation, depletion, amortization and impairment, general and administrative and interest expense. Operating margins are calculated by taking operating profit divided by segment revenue.