Unit Corp. · OTC:UNTC
Unit — EnerCom's The Oil & Gas Conference 2012
30 slides from Unit's conference presentation, Aug 15, 2012
Slide 1: EnerCom's The Oil & Gas Conference
EnerCom’s The Oil & Gas Conference August 15, 2012
Slide 2: Overview of Operations
Overview of Operations 16 Bakken Tulsa based company founded in 18 1963 with long history of operations Casper in the Mid-Continent Office Integrated approach to business Marcellus allows Unit to balance its capital Tulsa Headquarters deployment through the various 73 Arkoma Basin stages of the
Slide 3: Summary of Business Strengths
Summary of Business Strengths Integrated Integrated approach to business allows Unit to balance its capital Approach Enhances deployment through the various stages of the energy cycle Stability and Vertical integration offers key advantages and provides industry intelligence Flexibility on indus
Slide 4: Core Upstream Producing Areas
Core Upstream Producing Areas Bakken Beginning in late 2008, implemented strategy of increasing focus on liquids-rich and oil prospects – Forecast to end 2012 with 42% liquids production Key focus areas include: – Granite Wash (Texas Panhandle) Marmaton – Marmaton (Oklahoma Panhandle oil play) G
Slide 5: Strategic Acquisition
Strategic Acquisition Unit Corporation is acquiring certain oil and natural gas properties and related gathering and processing infrastructure primarily located in Western Oklahoma and the Texas Panhandle from Noble Energy (“Acquisition”) – Immediately accretive to cash flow per share, and accreti
Slide 6: Transaction Rationale
Transaction Rationale Quality, liquids rich oil and gas property set with significant upside – 44 MMboe of proved reserves (80% PD)(1) – 10.0 Mboe/d April 2012 daily production (36% Oil/NGLs) Strategic fit with Unit’s existing E&P assets significantly expanding the geographic footprint of our co
Slide 7: Significant Overlap in Core Operating Area
Significant Overlap in Core Operating Area Material acreage overlap with existing Pro forma Acreage Position in Core Mid-Continent Area properties adding 188,000 gross acres (84,000 net acres) which is 95% HBP Adds 25,000 net acreage in Granite Wash core area in Texas Panhandle 67% of properti
Slide 8: Track Record of Reserve Growth
Track Record of Reserve Growth Proved Reserves (MMBoe) 160 160 Stable and consistent economic growth of oil 2002 – 2011 CAGR: 14% and natural gas reserves of at least 150% of 140 120 116 each year’s production 104 100 95 96 86 79 218% average annual reserve replacement 80 69 58 over last 28 year
Slide 9: Increasing Production while Improving Commodity Mix
Increasing Production while Improving Commodity Mix Annual Production (MBoe/d) 50 39 40 37 38 33 36 29 28 30 27 20 10 55% 0 2008 2009 2010 2011 2012E 2012E Incl. Noble Net Wells Drilled: 134 43 88 82 Oil / NGLs Natural Gas Production Range
Slide 10: Granite Wash Play
Granite Wash Play Noble acquisition increases Granite Wash position 119% to 46,000 net acres in the Texas Panhandle Core Area – Adds 600 potential drilling locations 2011 – Q2 2012 Results – First sales on 33 operated Granite Wash horizontal wells – Average 30-day IP = 5.4 MMcfe/day – Estimated
Slide 11: Marmaton Oil Play
Marmaton Oil Play 2011 – Q2 2012 Results – First sales on 51 operated Marmaton horizontal wells (includes one extended lateral well) – Average 30-day IP (incl. extended lateral) = 311 Boe/day 298 Boe/day (excl. extended lateral) Extended lateral: 960 Boe/day – Estimated reserves: 130 MBoe Extended
Slide 12: Wilcox Liquids Play
Wilcox Liquids Play 2003 - 2011 – Completed 109 wells at 72% success rate Field Discovery – announced July 2012 – Reserve Resource Potential Gross – 229 Bcfe; Net – 159 Bcfe 8% oil, 35% NGL, 57% natural gas Field – Four Wells Completed Discovery Ave. 226’ net potential pay/well 12% pay zones cur
Slide 13: 2012 Capital Program
2012 Capital Program No material increases to current 2012 capital program on a pro forma basis $457 million (57% of 2012 capital budget) allocated to E&P operations $385 million drilling capital budget allocated principally to the liquids-rich Granite Wash, Marmaton, and Wilcox plays – Approx
Slide 14: Significant Drilling Presence in Attractive Producing Regions
Significant Drilling Presence in Attractive Producing Regions 128 rig fleet 16 – Fleet average ~1,200 HP rating; ~16,724 ft depth capacity 60% utilization rate for Q2 2012 – 87% of 47 1,200-1,700 HP rigs under contract 18 Casper Refurbished / upgraded 19 rigs in 2011 Office – 98% of contracted
Slide 15: Average Number of Rigs Utilized
Average Number of Rigs Utilized 100 75 50 25 0 2008 2009 2010 2011 6 mos. 2012
Slide 16: Diverse and Versatile Rig Fleet
Diverse and Versatile Rig Fleet 400-700 h.p. 750-1,000 h.p. 1,200-1,700 h.p. 2,000 h.p. >2,500 h.p. 0 20% Growing demand from increased 40% Utilization shallow 37 of 47 Percentage horizontal drilling working (57% as of 8/3/12) activity 60% 80% 100% Number of Rigs: 29 39 47 7 73% 6 82 rigs equipped w
Slide 17: Average Dayrates and Margins
Average Dayrates and Margins(1) $20,000 120 Average Number of Rigs Utilized $15,000 90 Margins / DayRates ($) $10,000 60 $5,000 30 $0 0 2008 2009 2010 2011 6 mos. 2012 Margins Day Rates Rigs Utilized Nine Consecutive Quarters of Improving Day Rates and Margins (1) Margins are before elimination of i
Slide 18: Superior Pipeline's Core Operations
Superior Pipeline’s Core Operations Three natural gas treatment plants 11 natural gas processing plants 36 active gathering systems 981 miles of pipeline MAJOR SYSTEMS Average Processing Pipeline Volume Capacity (miles) (MMBtu/d) (MMcf/d) Hemphill/Mendota 165 115,000 115 Cashion 160 28,500 5
Slide 19: Historical Performance
Historical Performance Historical Daily Gathering Volumes (MMBtu / d) NGLs Volumes (Bbl / d) 300,000 15,000 200,000 10,000 100,000 5,000 0 0 2008 2009 2010 2011 1st Half 2008 2009 2010 2011 1st Half 2012 2012 Contract Mix (Based on Volume)(1) Contract Mix (Based on Operating Margin)(1) 2011 Q2 2012
Slide 20: Balance Sheet Summary
Balance Sheet Summary 6/30/12 12/31/11 (In Millions) Working Capital $41.5 $15.7 Total Assets 3,353.4 3,256.7 Long-Term Debt Senior Subordinated Notes 250.0 250.0 Bank Facility 82.9 50.0 Total Long-Term Debt 332.9 300.0 Shareholders’ Equity 2,000.4 1,947.0 Credit Line Undrawn 167.1 200.0 Long-Term D
Slide 21: Debt Structure
Debt Structure Senior Subordinated Notes As of June 30, 2012 July 2012 Add-On $250 million, 6.625% $400 million, 6.625% First-time issuer Issued at 98.75% of par Issued in May 2011 10-year, NC5 Unsecured Bank Facility (1) Borrowing Base $600 million Elected Commitment $250 million Outs
Slide 22: Conservative Pro Forma Balance Sheet
Conservative Pro Forma Balance Sheet UNT’s historical commitment to a Actual Pro Forma ($ in millions) 6/30/12 Adj. 6/30/12 strong balance sheet has Cash $1 $1 positioned the business for this Working Capital $42 $37 opportunity Total Assets $3,353 $617 $3,945 Revolver $83 $217 $300 Elective Revol
Slide 23: Hedges
Hedges Target 50–70% of current year projected oil and natural gas production – Crude oil – 77% in 2012 – Natural gas – 40% in 2012 Primarily utilize swaps and collars – Current hedge portfolio consists of swaps & collars Natural Gas Liquids − Hedged 1,966 Bbls/day for 1st quarter of 2012 − He
Slide 24: Segment Contribution
Segment Contribution Revenues ($ millions) EBITDA ($ millions)(1) $1,358 $754 $1,400 $800 $1,208 $1,200 $604 $600 $1,000 $862 $442 $800 $710 $662 $371 $400 $337 $600 $400 $200 $200 $0 $0 2008 2009 2010 2011 6 mos. 2012 2008 2009 2010 2011 6 mos. 2012 Unit Petroleum Unit Drilling Superior Pipeline Ot
Slide 25: Adjusted Earnings per Share
Adjusted Earnings per Share(1) $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2008 2009 2010 2011 6 mos. 2011 6 mos. 2012 (1) See Adjusted EPS reconciliation to EPS.
Slide 26: Capital Expenditures
Capital Expenditures (In Thousands) $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 2007 2008 2009 2010 2011 2012 Budget Unit Petroleum Unit Drilling Superior Pipeline
Slide 27: Forward-Looking Statement
Forward-Looking Statement This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that addres
Slide 28: Non-GAAP Financial Measures – EBITDA
Non-GAAP Financial Measures – EBITDA Twelve mos. Six months ended ended June 30, Years ended December 31, June 30, ($ in Millions) 2011 2012 2008 2009 2010 2011 2012 Net Income $91 $33 $144 ($56) $146 $196 $127 Income Taxes 57 21 82 (32) 91 123 80 Depreciation, Depletion and Amortization 129 163 245
Slide 29: EPS Reconciliation
EPS Reconciliation 6 mos. 6 mos. 6 mos. 6 mos. 2011 2011 2012 2012 (in millions except per share amounts) Amount Per Share Amount Per Share Net income before impairment of oil and natural gas properties $ 90.8 $ 1.89 $ 105.3 $ 2.19 Impairment of oil and natural gas properties --- --- (72.1) (1.50) N
Slide 30: Strength Ingenuity Agility
i STRENGTH INGENUITY \ /_ AGILITY Unit Corporation