Unit Corporation Reports Third Quarter Results

November 10, 2023 at 09:15 AM EST

On November 10, 2023, Unit Corporation (OTCQX: UNTC) (Company) filed unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023 with OTC Markets Group Inc. (OTC). The Company’s current, quarterly, and annual reports may be accessed on the OTC’s website at https://www.otcmarkets.com/stock/UNTC/disclosure, as well as the Company’s website at https://unitcorp.com/investor-relations/otc-sec-filings/.

Third Quarter Results

Net income attributable to Unit Corporation for the three months ended September 30, 2023 was $28.8 million, or $2.94 per diluted share, compared to $55.8 million, or $5.60 per diluted share, for the three months ended September 30, 2022. Total revenues for the three months ended September 30, 2023 was $80.2 million, compared to $120.3 million for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, net income attributable to Unit Corporation was $191.5 million, or $19.55 per diluted share, compared to $89.0 million, or $8.79 per diluted share, for the nine months ended September 30, 2022. Total revenues for the nine months ended September 30, 2023 was $252.7 million, compared to $443.2 million for the nine months ended September 30, 2022.

Phil Frohlich, the Company’s Chief Executive Officer, commented, "We continue to return value to our shareholders with a dividend paid during the quarter of $2.50 per share while also maintaining a strong cash position of $206.6 million. We believe our recently announced agreement to sell certain properties in the Texas Panhandle furthers our approach of streamlining our operations and maximizing the value of our assets.”

Operational highlights for the oil and natural gas and contract drilling segments during the three and nine months ended September 30, 2023 and 2022 include:

	Three Months Ended September 30,						Nine Months Ended September 30,
		2023		2022	% Change			2023		2022	% Change
Oil and Natural Gas:
Avg. oil price ($/Bbl)	$	60.33	$	56.75	6	%	$	61.55	$	57.82	6	%
Avg. oil price excl. derivatives ($/Bbl)	$	80.83	$	91.81	(12	)%	$	75.19	$	97.74	(23	)%
Avg. NGLs price ($/Bbl)	$	17.79	$	29.39	(39	)%	$	17.95	$	32.46	(45	)%
Avg. NGLs price excl. derivatives ($/Bbl)	$	17.79	$	29.39	(39	)%	$	17.95	$	32.46	(45	)%
Avg. natural gas price ($/Mcf)	$	1.75	$	3.57	(51	)%	$	2.44	$	3.72	(34	)%
Avg. natural gas price excl. derivatives ($/Mcf)	$	1.78	$	7.04	(75	)%	$	2.08	$	6.02	(65	)%
Oil production (MBbls)		225		276	(18	)%		775		991	(22	)%
NGL production (MBbls)		429		547	(22	)%		1,277		1,781	(28	)%
Natural gas production (MMcf)		5,185		5,452	(5	)%		15,741		18,788	(16	)%

	Three Months Ended September 30,						Nine Months Ended September 30,
		2023		2022	% Change			2023		2022	% Change
Contract Drilling:
Drilling rigs available (end of the period)		14		21	(33	)%		14		21	(33	)%
Average drilling rigs in use		14.1		17.0	(17	)%		15.5		16.3	(5	)%
Average dayrate on daywork contracts ($/day)	$	32,572	$	23,371	39	%	$	31,220	$	21,550	45	%
BOSS rigs average dayrate ($/day)	$	32,642	$	24,258	35	%	$	32,210	$	22,378	44	%
SCR rigs average dayrate ($/day)	$	20,724	$	19,370	7	%	$	22,944	$	17,900	28	%

Common Stock Dividends

The table below presents information about the dividends paid during the periods indicated:

	Type	Dividend per share		Total Amount		Record Date	Payment Date
*2023*				(In thousands)
First quarter	Special	$	10.00	$	96,131	January 20, 2023	January 31, 2023
Second quarter	Quarterly	$	2.50	$	24,071	June 16, 2023	June 26, 2023
Third quarter	Quarterly	$	2.50	$	24,113	September 15, 2023	September 26, 2023

On August 10, 2023, the Company announced approval of a quarterly dividend of $2.50 per share for the fourth quarter of 2023. The record and payment date for the fourth quarter dividend will be determined at a later date.

The declaration and payment of any future dividend, whether fixed, special, or variable, will remain at the full discretion of the Company’s Board of Directors and will depend upon the Company’s financial position, results of operations, cash flows, capital requirements, business conditions, future expectations, the requirements of applicable law, and other factors that the Company’s Board of Directors finds relevant at the time of considering any potential dividend declaration. Future dividends are expected to be funded by cash on the Company's balance sheet.

Oil and Natural Gas Divestiture

On October 24, 2023, the Company entered into an agreement to sell certain wells and related leases in the Texas Panhandle for a purchase price of $55.0 million, subject to customary closing and post-closing adjustments based on an effective date of October 1, 2023. The sale is expected to close during the fourth quarter of 2023.

About Unit Corporation

Unit Corporation is a Tulsa-based, publicly held energy company engaged through its wholly-owned subsidiaries in oil and gas production and contract drilling. For more information about Unit Corporation, visit its website at http://www.unitcorp.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. All statements, other than statements of historical facts, included in this release that address activities, events, or developments that the Company expects, believes, or anticipates will or may occur are forward-looking statements. Several risks and uncertainties could cause actual results to differ materially from these statements, including changes in commodity prices, the productive capabilities of the Company’s wells, future demand for oil and natural gas, future drilling rig utilization and dayrates, projected rate of the Company’s oil and natural gas production, the amount available to the Company for borrowings, its anticipated borrowing needs under its credit agreements, the number of wells to be drilled by the Company’s oil and natural gas segment, the potential productive capability of its prospective plays, and other factors described occasionally in the Company’s publicly available OTC and SEC reports. The Company assumes no obligation to update publicly such forward-looking statements, whether because of new information, future events, or otherwise.

Unit Corporation Selected Financial Highlights (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023			2022
	(In thousands except per share amounts)
Revenues:
Oil and natural gas	$	35,205		$	80,026		$	114,407		$	257,748
Contract drilling		44,951			40,256			138,259			102,780
Gas gathering and processing		—			—			—			82,673
Total revenues		80,156			120,282			252,666			443,201
Expenses:
Operating costs:
Oil and natural gas		16,823			21,235			49,211			72,329
Contract drilling		27,629			25,823			81,383			77,823
Gas gathering and processing		—			—			—			62,388
Total operating costs		44,452			47,058			130,594			212,540
Depreciation, depletion, and amortization		4,778			3,521			12,493			20,452
General and administrative		4,952			5,601			14,851			19,548
Gain on disposition of assets		(4,149	)		(2,158	)		(13,578	)		(6,399	)
Total operating expenses		50,033			54,022			144,360			246,141
Income from operations		30,123			66,260			108,306			197,060
Other income (expense):
Interest income		2,872			811			7,055			973
Interest expense		(41	)		(37	)		(121	)		(408	)
Gain (loss) on derivatives, net		(3,239	)		(12,381	)		11,856			(73,848	)
Gain (loss) on change in fair value of warrants		—			—			—			(29,323	)
Loss on deconsolidation of Superior		—			—			—			(13,141	)
Gain on sale of Superior investment		—			—			17,812			—
Reorganization items, net		(12	)		(48	)		(163	)		(90	)
Other, net		(146	)		1,213			13			1,983
Total other income (expense)		(566	)		(10,442	)		36,452			(113,854	)
Income before income taxes		29,557			55,818			144,758			83,206
Income tax expense (benefit), net:
Current		532			—			881			—
Deferred		190			—			(47,625	)		—
Total income tax expense (benefit), net		722			—			(46,744	)		—
Net income		28,835			55,818			191,502			83,206
Net loss attributable to non-controlling interests		—			—			—			(5,828	)
Net income attributable to Unit Corporation	$	28,835		$	55,818		$	191,502		$	89,034
Net income attributable to Unit Corporation per common share:
Basic	$	2.98		$	5.70		$	19.81		$	8.94
Diluted	$	2.94		$	5.60		$	19.55		$	8.79

Unit Corporation Selected Financial Highlights (Unaudited) - Continued

	September 30, 2023		December 31, 2022
Balance Sheet Data:	(In thousands)
Cash and cash equivalents	$	206,645	$	213,975
Current assets	$	265,331	$	275,469
Total assets	$	501,060	$	469,255
Current liabilities	$	51,111	$	68,232
Long-term debt	$	—	$	—
Other long-term liabilities	$	34,866	$	33,362
Total shareholders’ equity attributable to Unit Corporation	$	410,743	$	362,626