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): January 22, 2008
(Exact
name of registrant as
specified in its charter)
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Oklahoma
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1-9260
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73-1283193
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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7130
South Lewis,
Suite 1000, Tulsa, Oklahoma
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74136
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(Address
of principal executive
offices)
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(Zip
Code)
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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:
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Section
8 - Other
Events.
Item
8.01 Other
Events.
On January 22, 2008, Unit Corporation issued a press release announcing its
2007
year end reserves, 2008 capital expenditure budget and a summary of its current
hedging position for Unit Petroleum and Superior Pipeline Company. Unit
Corporation also announced certain operations data for 2007 and an acquisition
completed in January 2008.
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. Except as required
by
law, we disclaim any obligation to publicly update or revise forward looking
statements after the date of this report to conform them to actual
results.
A
copy of the press release is filed as Exhibit 99.1 to this Current Report
on Form 8-K and is incorporated herein by reference.
Section
9 - Financial Statements and
Exhibits
Item
9.01 Financial
Statements and
Exhibits.
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(a)
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Financial
Statements
of Businesses Acquired.
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Not
Applicable.
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(b)
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Pro
Forma Financial
Information.
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Not
Applicable.
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(c)
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Shell
Company
Transactions.
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Not
Applicable
1
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(d)
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Exhibits.
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Exhibit
No.
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Description
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99.1
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Press
release announcing Unit Corporation's total proved reserves, 2008
capital
expenditure
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budget,
hedging activity and operations
update.
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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.
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Unit
Corporation
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Date:
January 22, 2008
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By:
/s/
Mark E.
Schell
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Mark E. Schell
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Senior Vice President
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2
EXHIBIT
INDEX
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Description
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99.1
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Press
release announcing Unit Corporation's total proved reserves, 2008
capital
expenditure
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|
budget,
hedging activity and operations
update.
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| news |
UNIT
CORPORATION
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7130
South Lewis Avenue, Tulsa, Oklahoma 74136
Telephone
918 493-7700, Fax 918 493-7714
Contact: David
T. Merrill
Chief
Financial Officer &
Treasurer
(918)
493-7700
For
Immediate Release…
January
22, 2008
UNIT
ANNOUNCES
TOTAL
PROVED RESERVES, 2008 CAPITAL
EXPENDITURE BUDGET, HEDGING ACTIVITY AND OPERATIONS UPDATE
Tulsa,
Oklahoma….Unit
Corporation (NYSE - UNT), today
announced the following information regarding its wholly-owned
subsidiaries:
Unit
Petroleum
Company
Reserves
At
December 31, 2007, Unit’s net proved oil and natural gas reserves, as reviewed
by its independent petroleum engineers, were 514.6 Bcfe of natural gas,
consisting of 9.7 million barrels of oil, 6.1 million barrels of natural gas
liquids and 419.6 Bcf of natural gas. This represents an 8% increase
over the company’s 2006 year-end total proved reserves.
During
2007, the company participated in the drilling of 253 gross wells, with an
87%
success rate. Seventy-eight percent of the company’s oil and natural
gas reserves are proved developed, with the remaining 22% comprising total
proved undeveloped reserves. Natural gas comprises 82% of the
company’s total proved reserves.
The
company replaced approximately 171% of its 2007 oil and natural gas production,
almost all through the drill bit. The year ended 2007 is the 24th
consecutive year that the company has replaced more than 150% of its annual
production with new oil and natural gas reserves. Over this 24-year
period, the company’s average annual reserve replacement percentage is 226%, of
which 144% was through the drill bit.
Future
net cash flow from the company’s
total proved reserve base as of December 31, 2007, before income taxes, is
estimated to be $2.65 billion. The net present value of the company’s
total proved reserve base (discounted at 10%) is approximately $1.48
billion. These calculations are based on
2008
Budget
The
company’s 2008 budget for
capital expenditures is $360 million, excluding acquisitions, of which $297
million is planned for exploration and development drilling. This
budget represents a 23% increase over the company’s estimated 2007 capital
expenditures. During 2007 the company commenced drilling operations
on 254 new wells, 235 of which were completed by year end. In
addition, 18 wells which were started but not completed in 2006 were completed
in 2007 for a total of 253 wells completed during 2007. Of the 253
completed wells, 220 were completed as producing for a success rate of
87%.
The
company currently plans to participate in the drilling of approximately 280
wells during 2008, an increase of 11% over 2007. Unit’s preliminary
2008 annual production guidance is approximately 59.0 to 61.0 Bcfe.
Hedging
Positions
The
company has approximately 40% of its current daily natural gas production hedged
through NYMEX plus basis at several delivery points for 2008. Of the
natural gas hedges, 16% are swaps at a comparable NYMEX average price of $8.46
and 24% are collars with a comparable NYMEX average floor of $7.76 and a
comparable NYMEX average ceiling of $9.17. The average basis
differentials for the swaps are ($0.94) and for the collars
($0.54). Approximately 77% of the company’s current daily crude
production is hedged for 2008 with 31% under a swap contract at $91.32 and
46%
under collar contracts with an average floor of $86.67 and an average ceiling
of
$100.00. Additionally, the company has approximately 75% of its
monthly ethane and propane liquids production hedged through swaps at its
delivery points for the period January through April 2008 at an average ethane
price of $0.97 per gallon and a propane price of $1.54 per gallon.
Acquisition
and New Wells
During
January 2008, the company
completed its purchase from a private company of the 50% interest in a 6,800
gross-acre leasehold in the company’s Segno area located in Hardin County, Texas
that the company did not already own. Included in the purchase were
five producing wells with 4.9 Bcfe of estimated proved reserves and current
production of 2.8 million cubic feet (MMcf) of natural gas per day and 88.2
barrels of condensate. The purchase price was $16.8 million which
consisted of $15.8 million allocated to the reserves of the wells and $1.0
million allocated to the leasehold acreage. The production and
reserves acquired in this purchase will be included in the company’s 2008
results.
The
Panola Field in Latimer County,
Oklahoma continues to yield prolific natural gas wells. The Cox # 7
(63.47% Working Interest) was testing natural gas from a Lower Atoka sand at
a
post fracture rate of 12.9 MMcf per day with 5,500 PSI flowing tubing
pressure. The well’s current production is limited to 2.0 MMcf
per day until additional pipeline capacity is added in
early
February. The company currently plans to drill approximately 10
additional wells in this field during 2008. In Unit’s
Yoakum Field, located in Lavaca County, Texas, the Freude # 2H (100% Working
Interest) tested natural gas at a rate of 7.3 MMcf per day with 5,733 PSI
flowing casing pressure from a horizontal section of the Edwards
formation. Initial natural gas sales from this well are expected to
occur in early March 2008. The company’s leasehold covers four
potential offset well locations to the Freude # 1 with the first offset well
planned to start drilling in the second quarter of 2008.
Unit
Drilling
Company
2007
Fourth Quarter
Information
Unit
Drilling Company’s drilling rig
utilization for the fourth quarter of 2007 averaged 80%, a 2% increase over
its
78% rate for the third quarter of 2007. Dayrates for the fourth
quarter averaged $18,114 per day, which is $356 per day or 2% lower than the
2007 third quarter average. The company ended 2007 with a record 129
drilling rigs, 12 of which were added to its fleet in 2007. Of the
129 drilling rigs, 107 are currently under contract.
2008
Budget and Rig Additions
The
company’s capital expenditures
budget for 2008 is $119 million, excluding acquisitions, a 32% decrease over
estimated 2007 capital expenditures, excluding acquisitions. The
company is constructing two new drilling rigs which it plans to place into
service in its Rocky Mountain division during May 2008. Both of these
rigs will be 1500 horsepower, diesel electric drilling rigs. When
these rigs are completed, the company will own 131 drilling rigs.
Superior
Pipeline
Company
2007
Operational Highlights and 2008
Budget
During
2007, the company completed the
installation of three natural gas processing plants, increasing processing
capacity by approximately 90%, from 50 MMcf per day to 95 MMcf per
day. In addition, the company also completed the construction of
three new gathering systems in 2007, including one system with a 5 MMcf per
day
processing plant. The company added an additional 78 miles of
pipeline in 2007, which is an approximate 13% increase in total miles of
pipeline, and connected an additional 56 wells to its gathering
systems. Currently, the company’s asset base consists of four natural
gas treatment plants, eight operated natural gas processing plants, 36 active
gathering systems and approximately 676 miles of pipeline. The
company also consolidated several small gathering systems into larger systems
in
2007 resulting in reduced operating costs and expanding its competitive presence
in those operational areas.
The
company’s capital expenditures
budget for 2008 is $32 million.
Hedging
Positions
A
portion of the company’s operating
profit is derived from the difference between natural gas purchases and natural
gas liquid sales which is referred to as the frac
spread. Approximately 45% of the company’s total anticipated natural
gas liquids volumes for 2008 is subject to frac spreads. The company
has locked in frac spreads for 32% (71% of frac spread volumes) of its
anticipated monthly processing volumes for the period January through April
2008
at $9.27 per MMBtu. The comparative frac spread for 2007 averaged
$7.21. For the period May through July 2008, approximately 20% of its
monthly ethane gallons and 35% of monthly propane gallons, along with the
associated natural gas purchases, are swapped at $5.47 and $8.00 per MMBtu
frac
spreads, respectively. In 2007, ethane and propane frac spreads
averaged $5.01 and $6.97, respectively. For the period August through
December 2008, approximately 11% of monthly propane gallons, along with the
associated natural gas purchases, are swapped at $8.75 per MMBtu frac
spreads.
Management
Comments
Larry
Pinkston, President and Chief
Executive Officer
of Unit Corporation, said: "We are pleased with the 2007 operating results for
each of our segments. We are particularly pleased that the company’s
exploration and production segment achieved its longstanding objective of
replacing at least 150% of the year’s production with new
reserves. Meeting our production replacement objective for the
24thconsecutive
year is a testament to the
quality of our prospect inventory and the ability of our exploration and
production personnel to continue to generate new and exciting
prospects.
"Our
recently completed acquisition
involving our Segno area is significant to us as that area represents one of
our
key development areas. We plan to begin drilling operations on a new well in
the
acreage block in approximately two months.
"Our
drilling segment’s current 80%
utilization rate is a positive reflection of the quality of our drilling rig
fleet and the relationships we have with our customers. Superior
Pipeline continues to aggressively grow and establish itself as a significant
Mid-Continent pipeline company.”
Fourth
Quarter and Year-End
2007Webcast
Unit
will release its fourth quarter and
year-end 2007 earnings and host a conference call on Tuesday, February 26,
2008. The webcast will be broadcast live over the Internet at 11:30
a.m. Eastern time at http://www.unitcorp.com
______________________________________________
Unit
Corporation is a Tulsa-based,
publicly held energy company engaged through its subsidiaries in oil and gas
exploration, production, contract drilling and natural 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 our 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 amount and value
of the company’s oil and natural gas reserves, the number of future wells the
company’s exploration and production segment plans to drill, productive
capabilities of the wells, future demand for oil and natural gas, oil and
natural gas reserve information, anticipated production rates from company
wells, the prospective capabilities of offset acreage, anticipated oil and
natural gas prices, anticipated operational dates for drilling rigs under
construction, future rates to be paid for the company’s drilling rigs as well as
other 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.