Unit Corp. · OTC:UNTC
Unit — Investor Presentation (January 2015)
29 slides from Unit's investor presentation, Jan 28, 2015
Slide 1: Corporate Presentation
Corporate Presentation January 28, 2015
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: Overview of Operations
Overview of Operations – Tulsa based diversified energy company incorporated in 1963 – Integrated approach to business allows Unit to balance its capital deployment through the various stages of the energy cycle 14 16 Casper Marcellus Pittsburgh Tulsa Headquarters Anadarko Arkoma Basin Basin 73 Okla
Slide 4: Key Growth Points
Key Growth Points Exploration & Production – 211% average production replacement since 2004 – Liquids production has grown 162% since the end of 2009 – Proved reserves: 160 MMBoe (1) Drilling – Grown rig count 21% since 2004 – Sold 22 rigs since 2009 – 121 drilling rig fleet Mid-Stream – 132%
Slide 5: First 9 Months YOY Accomplishments
First 9 Months YOY Accomplishments Unit Corporation Revenue increased 20% Adjusted EBITDA increased 26% (1) Oil and Natural Gas Segment • Production has increased 9% • Liquids production (oil and NGLs) have increased 18% Contract Drilling Segment • Average per day operating margins, before
Slide 6: Strong Capital Discipline
Strong Capital Discipline • Debt to market capitalization of 22% • Strong access to capital • No near-term maturities • Consistent growth profile for all segments • Oil and natural gas exploration not driven by lease expirations 6
Slide 7: Track Record of Reserve Growth
Track Record of Reserve Growth Proved Reserves (MMBoe) 160 160 150 Stable and consistent economic growth 140 120 116 of oil and natural gas reserves of at 104 100 86 95 96 least 150% of each year’s production 80 79 69 60 58 221% average annual reserve 40 replacement over last 30 years 20 0 2004
Slide 8: Increasing Production While Improving Commodity Mix
Increasing Production While Improving Commodity Mix Annual Production (MBoe/d) 60 50 46 9%-10% 40 39 33 30 28 27 20 10 0 2009 2010 2011 2012 2013 2014E Net Wells Drilled: 43 88 82 80 91 Oil / NGLs Natural Gas Production Range 8
Slide 9: Core Upstream Producing Areas
Core Upstream Producing Areas Key focus areas include: Mid Continent Region Gulf Coast: – Wilcox (Southeast Texas) Mississippian Mid-Continent: SOHOT − Hoxbar (Western Oklahoma) Granite − Granite Wash (Texas Panhandle) Wash − Mississippian (Kansas) Upper Gulf Coast Region Wilcox Upside resource
Slide 10: Wilcox (Liquids)
Wilcox (Liquids) Overall Highlights: TYLER JASPER NEWTON Drilled 126 operated vertical POLK wells since 2003 (11 years) 92% average WI Q3 ‘14 avg. production: 65 MMcfe/d 3D AREA 494 mi.² 43% liquids (11% oil) Gilly Field Historical ROR: 112% HARDIN 3D AREA Historical finding cost: $10.59
Slide 11: Hoxbar (Oil/Liquids)
Hoxbar (Oil/Liquids) SOHOT – Medrano & Marchand Sands Medrano Marchand Claiborne #1‐4H Allen 16‐1H Rosey Havenstrite 1‐30H Discovery 2011 (2013) (2014) IP30: 897 boe/d IP30: 1,312 boe/d Extensional Extensional Area Area Cody 1‐36H (2014) IP30: 5,090 mcfe/d Core Area Core Area Marchand Horizontal EOG
Slide 12: Granite Wash (Liquids)
Granite Wash (Liquids) Historical Highlights: Buffalo Wallow Highlights: Completed 93 operated Completed 9 “H” wells horizontal wells since 2008 GW [B, C(3), D, E(3), F] zones Average WI: 80% Average WI: 100% Buffalo Q3 ‘14 avg. production: Average IP30: 4.2 MMcfe/d Wallow 112 MMcfe/d
Slide 13: Mississippian (Oil)
Mississippian (Oil) Central Kansas Horizontal Wells by Uplift Core Leasehold Operator Highlights: UNIT TAPSTONE CHESAPEAKE Q3 ‘14 avg. production: 1,860 Boe/d DEVON RANGE 71% liquids (61% oil) SANDRIDGE OTHER Avg. working interest: 100% Kansas UNIT LEASEHOLD Developed geologic model Acquir
Slide 14: Significant Drilling Presence in Attractive Producing Regions
Significant Drilling Presence in Attractive Producing Regions Bakken 121 rig fleet – Fleet average ~1,100 HP rating; – Almost all of contracted rigs drilling horizontal wells 67% utilization rate for Q3 2014 Pinedale Anticline – 67% of 48 1,200-1,700 HP rigs under contract Refurbished 48 rigs
Slide 15: Average Dayrates and Margins
Average Dayrates and Margins (1) $20,000 90 Average Number of Rigs Utilized $15,000 Margins / DayRates ($) 60 $10,000 30 $5,000 $0 0 2010 2011 2012 2013 9 mos. '14 Margins Dayrates Rigs Utilized (1) 15 Margins are before elimination of intercompany rig profit and bad debt expense.
Slide 16: Rig Fleet Snap Shot
Rig Fleet Snap Shot 72% of Total Fleet <800 HP 800‐1,000 HP 1,200‐1,700HP ≥2,000 HP 23% 46% 33% 54% 67% 100% 77% 30 39 48 4 % Utilized % Unutilized 86 rigs equipped with integrated top drives 16
Slide 17: Introducing the New BOSS Drilling Rig
Introducing the New 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
Slide 18: Midstream Core Operations
Midstream Core Operations Pittsburgh Mills Texas Panhandle Northern Oklahoma and Kansas 32,000 dedicated acres 1,750,000+ dedicated acres Pittsburgh Regional office 135 MMcf/d processing capacity 188 MMcf/d processing capacity 318 miles of gathering pipeline 551 miles of gathering pipeli
Slide 19: Midstream Segment Historical Performance
Midstream Segment Historical Performance – 34% compound growth rate in assets since year-end 2004 – Operating 14 processing plants at eight different locations with combined processing capacity of 335 MMcf per day – Increased from 12 to over 146 employees since 2004 Cumulative Invested Capital Segme
Slide 20: Midstream Segment Contract Mix
Midstream Segment Contract Mix 2010 Contract Mix Based on Volume Q3 2014 32% 49% 51% Fee Based 68% Commodity Based Contract Mix Based on Margin 15% Fee Based 56% 44% 85% Commodity Based Unit vs. 3rd Party Margin Contribution 41% 28% 59% 3rd Party 72% Unit 20
Slide 21: Appalachian Growth Opportunities
Appalachian Growth Opportunities • Constructing Snowshoe Gathering System in Centre County, PA – Estimated Total Capital: $97 million – Initial 2015 Capital: $40 million • Additional extensions of Pittsburgh Mills gathering system 21
Slide 22: Balance Sheet Summary
Balance Sheet Summary 9/30/14 12/31/13 (In Millions) Total Assets 4,431.8 4,022.4 Long-Term Debt Senior Subordinated Notes 646.0 645.7 Bank Facility 30.8 Total Long-Term Debt 676.8 645.7 Shareholders’ Equity 2,367.5 2,173.4 Credit Line Undrawn 469.2 500.0 Long-Term Debt to Total Capitalization 22% 2
Slide 23: Segment Contribution
Segment Contribution Revenues ($ millions) Adjusted EBITDA ($ millions)(1) $1,400 $1,315 $1,352 $800 $1,208 $1,194 $1,200 $657 $657 $602 $587 $600 $1,000 $871 $800 $441 $400 $600 $400 $200 $200 $0 $0 2010 2011 2012 2013 9 mos. '14 2010 2011 2012 2013 9 mos. '14 Oil and Natural Gas Contract Drilling
Slide 24: Capital Expenditures
Capital Expenditures (In Millions) $1,500 $1,000 $500 $0 2010 2011 2012 2013 2014 Forecast Oil and Natural Gas Contract Drilling Midstream Acquisitions 24
Slide 25: Current Debt Structure
Current Debt Structure Senior Subordinated Notes $650 million, 6.625% Ratings S&P Moody’s Fitch Corporate BB‐ Ba3 BB 10-year, NC5; maturity 2021 Senior Subordinated Notes BB‐ B1 BB‐ Unsecured Bank Facility Current Borrowing Base $900 million Elected Commitment $500 million Outstanding (1)
Slide 26: Appendix
APPENDIX 26
Slide 27: Non-GAAP Financial Measures – Adjusted EBITDA
Non-GAAP Financial Measures – Adjusted EBITDA Nine months ended September 30, Years ended December 31, ($ in Millions) 2013 2014 2010 2011 2012 2013 Net Income $133 $179 $146 $196 $23 $185 Income Taxes 84 112 91 123 16 117 Depreciation, Depletion and Amortization 243 294 205 281 319 334 Impairment o
Slide 28: Hedges
Hedges Natural Gas Weighted Average Price Period Type MMBTU/Day Floor Ceiling Swap Oct – Dec ’14 Swap 80,000 $4.24 Oct – Dec ’14 Collar 10,000 $3.75 $4.37 Jan – Mar ’15 Collar 30,000 $4.20 $5.03 Jan – Dec ’15 Swap 40,000 $3.98 Crude Weighted Average Price Period Type Bbl/Day Floor Ceiling Swap Oct –
Slide 29: Corporate Presentation
Corporate Presentation January 28, 2015