UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 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 26, 2005 Unit Corporation (Exact name of registrant as specified in its charter) Oklahoma 1-9260 73-1283193 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 7130 South Lewis, Suite 1000, 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: Written communications pursuant to Rule 425 under the Securities Act - --- (17 CFR 230.425) Soliciting material pursuant to Rule 14a-12 under the Exchange Act - --- (17 CFR 240.14a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the - --- Exchange Act (17 CFR 240.14d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the - --- Exchange Act (17 CFR 240.13e-4(c))Section 2 - Financial Information. Item 2.02 Results of Operations and Financial Condition. ---------------------------------------------- On July 26, 2005, the Company issued a press release announcing its results of operations for the three and six month periods ending June 30, 2005. A copy of that release is furnished with this filing as Exhibit 99.1. The press release furnished as an exhibit to this report includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by the Company from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, the Company's actual results may differ materially from those indicated or implied by such forward-looking statements. Section 9 - Financial Statements and Exhibits. Item 9.01 Financial Statements and Exhibits. ---------------------------------- (a) Financial Statements of Businesses Acquired. -------------------------------------------- Not Applicable. (b) Pro Forma Financial Information. -------------------------------- Not Applicable. (c) Exhibits. --------- 99.1 Unit Corporation press release dated July 26, 2005. SIGNATURES 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. Unit Corporation Date: July 26, 2005 By: /s/ David T. Merrill ---------------------- Name: David T. Merrill Title: Chief Financial Officer & Treasurer 2 EXHIBIT INDEX ------------- Exhibit No. Description 99.1 Unit Corporation press release dated July 26, 2005
news UNIT CORPORATION - ------------------------------------------------------------------------------- 7130 South Lewis Avenue, Suite 1000, 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 26, 2005 UNIT CORPORATION REPORTS 2005 SECOND QUARTER AND FIRST SIX MONTH RESULTS Second Quarter Net Income Up 96% Tulsa, Oklahoma . . . Unit Corporation (NYSE - UNT) announced today its financial and operational results for the second quarter and first six months of 2005. Consolidated net income for the second quarter was $39.6 million, or 86 cents per diluted share, on revenues of $189.9 million, compared to 2004's net income of $20.2 million, or 44 cents per diluted share, on revenue of $114.0 million. Revenues increased 67% while net income increased 96% between the comparative quarters. Both net income and revenues are all-time quarterly records for Unit. The dramatic improvement in revenue and net income was attributable to increases in the number of drilling rigs utilized and dayrates, increases in the production of natural gas, and in the prices received for oil and natural gas. For the six-month period, the Company reported consolidated net income of $70.3 million, or $1.53 per diluted share, on revenues of $361.4 million, compared to 2004's net income of $35.7 million, or 78 cents per diluted share, on revenues of $215.6 million. The increases were due to a marked improvement in oil and natural gas production and prices, as well as rig utilization and dayrates. UNIT DRILLING RESULTS Contract drilling revenues increased 58% between the comparative second quarters to $105.8 million, primarily due to an increase in dayrates and the number of rigs utilized. The average rig utilization was 100.3 rigs in the second quarter of 2005, up 20% from 2004's second quarter of 83.7 rigs. Currently, Unit has 103 operational rigs, 102 of which are operating under contract. Unit's 104th rig, which is completing construction, is committed to a customer and should be working by the end of July. Unit's 105th rig is under construction and should be operational by the end of the third quarter. Currently, Unit is in the process of securing major components to build its 106th and 107th rigs, both 1,500 horsepower SCR rigs, and has ordered two newrigs, which also will be 1,500 horsepower SCR rigs, to be delivered during the first quarter of 2006. Drilling rig rates for the second quarter averaged $11,298 per day, which was 29% above the comparable quarter of 2004. Operating margins for the second quarter averaged $4,724 per day before elimination of intercompany rig profit of $1.6 million as compared to $2,604 per day before elimination of intercompany rig profits of $1.1 million for 2004. Unit's average dayrate at the end of the second quarter was $11,900. Between the comparative first six months, contract drilling revenues increased 55% to $202.5 million with rig utilization increasing to an average of 99.8 rigs operating during the first six months of 2005 as compared to an average 82.6 rigs operating in the first six months of 2004. UNIT PETROLEUM RESULTS Revenues from Unit's oil and natural gas operations increased 34% in the second quarter to $62.0 million due to higher oil and natural gas prices and natural gas production. During the first six months of 2005, oil and natural gas revenues were $118.8 million, an increase of 41% over the same period in 2004. Natural gas production was 7,861 million cubic feet (MMcf) in the second quarter of 2005, while oil production for the same period was 257,000 barrels. Natural gas production was 15,514 MMcf in the first six months of 2005, while oil production for the same period was 537,000 barrels. Equivalent Mcf production was up 18% over the comparative six month periods. Average natural gas prices received during the second quarter of 2005 increased 13% to $6.27 per Mcf compared to $5.57 per Mcf during the second quarter of 2004. The average oil price received was $45.79 per barrel in the second quarter of 2005 and $31.12 per barrel in the 2004 comparative quarter, a 47% increase. For the first six months of 2005, average natural gas prices received increased 14% to $5.98 per Mcf compared to $5.24 per Mcf during the first six months of 2004. The average oil price received was $45.15 per barrel in the first six months of 2005 compared to $30.91 per barrel in 2004, a 46% increase. During the first six months of 2005, Unit completed 83 wells with a success rate of 90%, compared to 73 wells completed during the first six months of 2004 with an 86% success rate. SUPERIOR PIPELINE RESULTS On July 29, 2004, Unit purchased the 60% of Superior Pipeline Company LLC that it did not already own for $19.8 million. The operations of Superior Pipeline and Unit's previously existing gas gathering activities are now reflected in the gas gathering and processing segment. Before this acquisition, Unit's 40% interest in the operations of Superior Pipeline was shown as equity in earnings of unconsolidated investments. Superior Pipeline is a mid-stream company engaged primarily in the purchasing, gathering, processing and treating of natural gas. The company operates one natural gas treatment plant, owns four processing plants, 35 active gathering systems and 480 miles of pipeline. For the second quarter of 2005, Superior Pipeline gathered 121,611 MMBtu's of natural gas per day and processed 31,670 MMBtu's per day. For the first six months of 2005, Superior gathered 114,472 MMBtu's of natural gas per day and processed 31,005 MMBtu's per day. MANAGEMENT COMMENTS "Favorable commodity prices and industry conditions are producing great results and more growth opportunities for Unit," said Larry Pinkston, Chief Executive Officer and President. "In our contract drilling operations, we have ordered two new rigs and continue to construct new rigs while searching for opportunities to acquire rigs to meet the increases in customer demand. Our drilling rig fleet continues to operate at nearly 100% utilization. Our exploration and production operations are on track to drill 220 to 230 wells by year-end, providing rigs are available to drill the wells. On June 15th, we announced the closing of an acquisition of 14.0 Bcfe of proved oil and natural gas reserves. The properties are located in Oklahoma and currently produce 2.5 MMcfe per day. We will continue to consider acquisition opportunities during the remainder of the year. Long-term debt increased by $16.9 million from the first quarter to $94.9 million due primarily to the recent producing property acquisition. Our debt to capitalization ratio remains at a conservative 12%. 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 26, 2005 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, contract drilling and gas gathering and processing. 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 productive capabilities of the wells, future demand for oil and natural gas, future rig utilization and dayrates, the timing of the completion of rigs currently under construction, oil and gas reserve information, anticipated production rates from company wells, anticipated gas gathering and processing rates, 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 and operations data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 - -------------------------------------------------------------------------------- Statement of Income: Revenues: Contract drilling $ 105,825 $ 67,110 $ 202,506 $ 130,324 Oil and natural gas 61,976 46,334 118,840 84,324 Gas gathering and processing 21,104 58 39,334 88 Other 962 526 767 902 ---------- ---------- ---------- ---------- Total revenues 189,867 114,028 361,447 215,638 ---------- ---------- ---------- ---------- Expenses: Contract drilling: Operating costs 64,298 48,364 127,729 94,920 Depreciation 10,381 7,754 19,991 15,218 Oil and natural gas: Operating costs 12,590 10,496 25,003 20,128 Depreciation, depletion and amortization 14,845 11,535 29,277 21,712 Gas gathering and processing: Operating costs 19,387 20 36,221 35 Depreciation 727 21 1,365 38 General and administrative 3,160 3,103 7,131 5,874 Interest expense 585 514 1,272 931 ---------- ---------- ---------- ---------- Total expenses 125,973 81,807 247,989 158,856 ---------- ---------- ---------- ---------- Income Before Income Taxes 63,894 32,221 113,458 56,782 ---------- ---------- ---------- ---------- Income Tax Expense: Current 12,140 1,556 21,557 2,127 Deferred 12,140 10,751 21,557 19,514 ---------- ---------- ---------- ---------- Total income taxes 24,280 12,307 43,114 21,641 ---------- ---------- ---------- ---------- Equity in Earnings of Unconsolidated Investments Net of Income Tax --- 270 --- 550 ---------- ---------- ---------- ---------- Net Income $ 39,614 $ 20,184 $ 70,344 $ 35,691 ========== ========== ========== ========== Net Income Per Common Share: Basic $ 0.86 $ 0.44 $ 1.53 $ 0.78 Diluted $ 0.86 $ 0.44 $ 1.53 $ 0.78 Weighted Average Common Shares Outstanding: Basic 45,859 45,723 45,829 45,697 Diluted 46,094 45,931 46,063 45,887 June 30, December 31, 2005 2004 - -------------------------------------------------------------------------------- Balance Sheet Data: Current assets $ 130,732 $ 118,601 Total assets $ 1,139,134 $ 1,023,136 Current liabilities $ 99,761 $ 77,176 Long-term debt $ 94,900 $ 95,500 Other long-term liabilities $ 37,760 $ 37,725 Deferred income taxes $ 226,003 $ 204,466 Shareholders' equity $ 680,710 $ 608,269 Six Months Ended June 30, 2005 2004 - -------------------------------------------------------------------------------- Statement of Cash Flows Data: Cash Flow From Operations before Changes in Working Capital (1) $ 144,729 $ 92,849 Net Change in Working Capital (43,362) 1,325 -------------- ------------- Net Cash Provided by Operating Activities $ 101,367 $ 94,174 ============== ============= Net Cash Used in Investing Activities $ 109,961 $ 164,410 Net Cash Provided by Financing Activities $ 9,545 $ 75,417 Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 - -------------------------------------------------------------------------------- Contract Drilling Operations Data: Rigs Utilized 100.3 83.7 99.8 82.6 Operating Margins (2) 39% 28% 37% 27% Operating Profit Before Depreciation (2) ($MM) $ 41.5 $ 18.7 $ 74.8 $ 35.4 Oil and Natural Gas Operations Data: Production Oil - MBbls 257 278 537 494 Natural Gas - MMcf 7,861 6,614 15,514 12,908 Average Prices Oil -- Bbl $ 45.79 $ 31.12 $ 45.15 $ 30.91 Natural Gas - Mcf $ 6.27 $ 5.57 $ 5.98 $ 5.24 Operating Profit Before DD&A (2) ($MM) $ 49.4 $ 35.8 $ 93.8 $ 64.2 Gas Gathering and Processing Operations Data: Gas Gathering - MMBtu/day 121,611 25,331 114,472 23,719 Gas Processing - MMBtu/day 31,670 63 31,005 63 - ------------------ (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 dividing operating profit by segment revenue.