Unit Corp. · OTC:UNTC
Unit — Investor Presentation (January 2016)
33 slides from Unit's investor presentation, Jan 20, 2016
Slide 1: Corporate Investor Presentation
Corporate Investor Presentation January 20, 2016
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation contains forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that addres
Slide 3: Unit Corporation: A Diversified Energy Company
Unit Corporation: A Diversified Energy Company • Tulsa based, incorporated in 1963 12 • We have consistently grown throughout many commodity cycles 10 • Integrated approach to Casper business allows Unit to Marcellus Pittsburgh capture margin from each business segment Tulsa Headquarters Anadarko Ar
Slide 4: Lower for Longer?
Lower for Longer? Unit Petroleum has asset packages that can earn strong returns in the current commodity price environment Unit Drilling’s new BOSS rigs have been very well received by customers Superior Pipeline cash flow has improved in stability and reliability with increased emphasis on f
Slide 5: Key Growth Points
Key Growth Points Exploration & Production – 203% average production replacement since 2005 – Liquids production has grown 258% since the fourth quarter of 2009 – Proved reserves: 179 MMBoe (1) – 76% Proved Developed Drilling – Eight BOSS rigs under contract – 94 drilling rig fleet Mid‐Stream
Slide 6: EBITDA Margins
Segment EBITDA Margins (1) in Line with Pure Play Peers 90% 80% 70% EBITDA Margins 60% E&P Company 50% Peer Average 40% 30% Land Drilling 20% Peer Average Midstream 10% Peer Average 0% 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 TTM O
Slide 7: Conservative Debt Structure – No Near-Term Maturities
Conservative Debt Structure – No Near‐Term Maturities Senior Subordinated Notes Ratings S&P Moody’s Fitch $650 million, 6.625% Corporate BB‐ Ba3 BB Senior Subordinated Notes BB‐ B1 BB‐ 10‐year, NC5; maturity 2021 Key Covenants Coverage ratio ≥ 2.25x (1) Actual ratio 9.27x (1,2) Unsecured Bank
Slide 8: Track Record of Reserve Growth
Track Record of Reserve Growth Proved Reserves (MMBoe) 179 180 150 160 Stable and consistent economic growth 150 116 of oil and natural gas reserves of at least 120 104 150% of each year’s production 95 96 86 90 79 69 60 221% average annual production 30 replacement over last 30 years 0 Reserv
Slide 9: Consistent Production Growth
Consistent Production Growth Average Production (MBoe/d) 60 6%‐8% growth 50 50 46 40 39 33 30 27 20 10 0 2010 2011 2012 2013 2014 2015 est. Natural Gas Oil / NGLs Prod. Range Net Wells Drilled: 88 82 80 91 121 9
Slide 10: Core Upstream Producing Areas
Core Upstream Producing Areas Key focus areas include: Mid Continent Region Gulf Coast: Mississippian – Wilcox (Southeast Texas) Mid‐Continent: SOHOT − Hoxbar (Western Oklahoma) Granite Wash − Granite Wash (Texas Panhandle) Upper Gulf Coast Region − Mississippian (Kansas) Wilcox Upside resource
Slide 11: Wilcox (Southeast Texas)
Wilcox (Southeast Texas) Overall Highlights: Drilled 146 operated wells since 2003 (143 vertical, 3 horizontal) TYLER POLK 92% average working interest Q3 ‘15 net avg. production: 82 MMcfe/d 43% liquids (11% oil) Historical ROR: 112% 3D AREA 494 mi.² JASPER Gilly Field Highlights: Gilly Fi
Slide 12: Gilly Field Cross Section
Gilly Field Cross Section Daily Production by Zone A 3.8 miles A’ Mcfed* Segno A 13 Mcfed U. Gil 23 Mcfed L. Gil 24 Mcfed Blackwood 30 Mcfed *Q3 ‘15 Exit Rate 2016 Recompletions Perforations Future Recompletions 12
Slide 13: Hoxbar (Medrano Sand)
Hoxbar (Medrano Sand) Mary 1‐18PH Historical Medrano Highlights: IP30: 7,400 Mcfe/d Ellen 1‐20H Completed 15 operated wells 3/15 IP30: 9,800 Mcfe/d Hiram 1‐13H 12/14 Avg. IP30: 7.0 MMcfe/d IP30: 9,500 Mcfe/d 2/15 78% avg. working interest Ellen 2‐20H IP30: 9,800 Mcfe/d Medrano Core Case: 12/14
Slide 14: Hoxbar (Marchand Sand)
Hoxbar (Marchand Sand) Historical Marchand Highlights: Completed 7 operated wells Avg. IP30: 1,426 Boe/d Harper 1‐19H 88% avg. working interest Brown 1‐11H IP30: 2,467 Boe/d IP30: 867 Boe/d 1/15 Marchand Core Case: Extensional Area 1/15 EUR: 480 Mboe Rosey 1H IP30: 1,195 Boe/d HOXBAR 3,000
Slide 15: Granite Wash (Liquids)
Granite Wash (Liquids) Historical Highlights: Buffalo Wallow Potential: Completed 115 operated Contiguous operated HBP horizontal wells since 2008 acreage position with average WI above 90% Buffalo Average WI: ~80% Wallow Saltwater gathering system Q3 ‘15 avg. production: coupled with wate
Slide 16: Operating Expense / Boe
Expertise in Areas of Operations $16 Unit has experienced management and operating teams and is a leader in minimizing operating expenses Operating Expense / Boe (1) $12 Average: $10.21 $8 $4 $0 Peer 1 Unit Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 (1) Data in table is as of Q3
Slide 17: Significant Drilling Presence in Attractive Producing Regions
Significant Drilling Presence in Attractive Producing Regions Bakken 94 rig fleet – Fleet average ~1,260 HP rating; – Almost all of contracted rigs drilling horizontal wells Pinedale Anticline Niobrara 33% utilization rate for Q3 2015 – 41% of the 49 1,200‐1,700 HP rigs under contract Refurbis
Slide 18: Average Rig Utilization
Average Dayrates and Margins (1) $20,000 100% $15,000 75% Average Rig Utilization Margins and Dayrates $10,000 50% $5,000 25% $0 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 9 mos. 2015 Margins Dayrates Average Rig Utilization (1) See Reconciliation of Average Daily Operating Margin Before E
Slide 19: Rig Fleet Snap Shot
Rig Fleet Snap Shot 82% of Total Fleet < 800 HP 800‐1,000 HP 1,200‐1,700 HP ≥ 2,000 HP 18% 41% 100% 82% 59% 100% M: 8 M: 18 M: 3 M: ‐ SCR: 5 SCR: 10 SCR: 38 SCR: 4 A/C: ‐ A/C: ‐ A/C: 8 A/C: ‐ 13 28 49 4 Utilization by Type: % Utilized % Unutilized Mechanical: 0 SCR: 18 A/C: 7 19
Slide 20: The BOSS Drilling Rig
The BOSS Drilling Rig Optimized for Pad Drilling Multi‐direction walking system Faster Between Locations Quick assembly substructure 32‐34 truck loads More Hydraulic Horsepower (2) 2,200 horsepower mud pumps 1,500 gpm available with one pump Environmentally Conscious Dual‐fuel capable en
Slide 21: Midstream Core Operations
Midstream Core Operations Brook Field Pittsburgh Mills Snow Shoe Texas Panhandle Northern Oklahoma and Kansas 50,100 dedicated acres 1,972,000+ dedicated acres Pittsburgh 135 MMcf/d processing capacity 193 MMcf/d processing capacity Regional office 343 miles of gathering pipeline 565 mil
Slide 22: Midstream Segment Contract Mix
Midstream Segment Contract Mix 2010 Q3 2015 Contract Mix Based on Volume 33% 49% 51% 67% Fee Based Commodity Based Contract Mix Based on Margin 15% 37% 85% Fee Based 63% Commodity Based Unit vs. 3rd Party Margin Contribution 41% 44% 59% 3rd Party 56% Unit 22
Slide 23: Appalachian Growth Projects
Appalachian Growth Projects APPALACHIAN PROJECTS • Constructing Snowshoe Gathering System in Centre County, PA – Estimated Total Capital: $97 million – Initial 2015 Capital: $30 million • Expansion of Pittsburgh Mills gathering system into Butler County, PA – Constructing compression station – estim
Slide 24: Segment Contribution
Segment Contribution Revenues ($ millions) Adjusted EBITDA ($ millions)(1) $1,573 $800 $1,600 $758 $1,400 $1,315 $1,352 $657 $640 $1,208 $603 $1,200 $600 $1,000 $800 $400 $682 $311 $600 $400 $200 $200 $0 $0 2011 2012 2013 2014 9 mos. 2015 2011 2012 2013 2014 9 mos. 2015 Oil and Natural Gas Contract
Slide 25: Capital Expenditures
Capital Expenditures (In Millions) $1,500 $1,000 $500 $0 2011 2012 2013 2014 2015 Original 2015 Revised Forecast Forecast Oil and Natural Gas Contract Drilling Midstream Acquisitions 25
Slide 26: Investment Considerations
Investment Considerations In a commodity price challenged world: Unit Petroleum has asset packages that can earn strong returns in the current commodity price environment Unit Drilling’s new BOSS rigs have been very well received by customers Superior Pipeline cash flow has improved in stabili
Slide 27: Appendix
APPENDIX UNIT ZF CORPORATION
Slide 28: Segment EBITDA Margin
Segment EBITDA Margin 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 TTM Revenues Oil and Gas (Including Cash Flow Derivatives Settled) $318,208 $357,599 $391,480 $552,696 $362,245 $399,771 $514,614 $567,944 $649,718 $740,079 $474,847 Dr
Slide 29: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Adjusted EBITDA Nine months ended September 30, Years ended December 31, ($ in Millions) 2014 2015 2011 2012 2013 2014 Net Income (Loss) $179 $(728) $196 $23 $185 $136 Income Taxes 112 (439) 123 16 117 87 Depreciation, Depletion and Amortization 294 280 281 319 334 405 Im
Slide 30: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Reconciliation of Average Daily Operating Margin Before Elimination of Intercompany Rig Profit and Bad Debt Expense (In thousands except for operating days Nine months ended September 30, Years ended December 31, and operating margins) 2014 2015 2011 2012 2013 2014 Contra
Slide 31: Derivative Summary
Derivative Summary Crude Weighted Weighted Weighted Weighted Volume Average Average Average Average Period Structure Bbl/Day Fixed Price Floor Price Subfloor Price Ceiling Price Jan'16 ‐ Jun'16 3‐Way Collar 700 $46.50 $35.00 $57.00 Jan'16 ‐ Jun'16 Collar 2150 $46.36 $55.62 Jul'16 ‐ Dec'16 3‐Way Coll
Slide 32: Q4 2015 Economic Prices
Q4 2015 Economic Prices October 27, 2015 Strip Case Crude Natural Gas MB C2 MB C3 MB NC4 MB iC4 MB C5+ CW C2 CW C3 CW NC4 CW iC4 CW C5+ 2015 $44.235 $2.293 $0.208 $0.420 $0.583 $0.592 $0.977 $0.178 $0.390 $0.550 $0.613 $0.967 2016 $47.182 $2.604 $0.242 $0.455 $0.627 $0.639 $1.049 $0.185 $0.429 $0.59
Slide 33: Corporate Investor Presentation
Corporate Investor Presentation January 20, 2016