Unit Corporation (NYSE: UNT) today reported its financial and
operational results for the third quarter 2017. Results and recent
highlights include:
- Net income of $3.7 million and adjusted net income of $5.3 million.
-
Oil and natural gas segment production increased 5% over the second
quarter of 2017. -
Contract drilling segment’s average drilling rigs utilized increased
20% over the second quarter of 2017. -
Midstream segment increased gas processed and liquids sold volumes 4%
and 1%, respectively, over the second quarter of 2017. -
Reduced long-term debt by $2.3 million from the end of the second
quarter. -
October redetermination of credit agreement borrowing base amount
maintained at $475 million.
THIRD QUARTER AND FIRST NINE MONTHS 2017 FINANCIAL RESULTS
Unit recorded net income of $3.7 million for the quarter, or $0.07 per
diluted share, compared to a net loss of $24.0 million, or $0.48 per
share, for the third quarter of 2016. Adjusted net income (which
excludes the effect of non-cash commodity derivatives) for the quarter
was $5.3 million, or $0.10 per diluted share (see Non-GAAP financial
measures below). Total revenues were $188.5 million (45% oil and natural
gas, 28% contract drilling, and 27% midstream), compared to $153.4
million (51% oil and natural gas, 17% contract drilling, and 32%
midstream) for the third quarter of 2016. Adjusted EBITDA was $78.9
million, or $1.52 per diluted share (see Non-GAAP financial measures
below).
For the first nine months of 2017, Unit recorded net income of $28.7
million, or $0.56 per diluted share, compared to a net loss of $137.3
million, or $2.75 per share, for the first nine months of 2016. Unit
recorded adjusted net income (which excludes the effect of non-cash
commodity derivatives) of $16.4 million, or $0.32 per diluted share (see
Non-GAAP financial measures below). Total revenues for the first nine
months were $534.8 million (48% oil and natural gas, 24% contract
drilling, and 28% midstream), compared to $427.9 million (48% oil and
natural gas, 21% contract drilling, and 31% midstream) for the first
nine months of 2016. Adjusted EBITDA for the first nine months was
$224.4 million, or $4.35 per diluted share (see Non-GAAP financial
measures below).
OIL AND NATURAL GAS SEGMENT INFORMATION
Total production for the quarter was 4.1 million barrels of oil
equivalent (MMBoe), a 5% increase over the second quarter of 2017. Oil
and natural gas liquids (NGLs) production represented 46% of total
equivalent production. Oil production was 6,884 barrels per day. NGLs
production was 13,506 barrels per day. Natural gas production was 142.2
million cubic feet (MMcf) per day. Total production for the first nine
months of 2017 was 11.7 MMBoe.
Unit’s average realized per barrel equivalent price was $20.63, a 1%
decrease from the second quarter of 2017. Unit’s average natural gas
price was $2.36 per Mcf, a decrease of 4% from the second quarter of
2017. Unit’s average oil price was $47.29 per barrel, an increase of 1%
over the second quarter of 2017. Unit’s average NGLs price was $18.35
per barrel, an increase of 23% over the second quarter of 2017. All
prices in this paragraph include the effects of derivative contracts.
During the quarter, plant outages and delays attributable to hurricane
Harvey reduced quarterly production by approximately 100 MBoe. The
effects of Harvey were principally due to NGL bottlenecks from
fractionation plant partial shut-downs and operational delays on new
wells and recompletions. After the end of the quarter, the third-party
processing plant for the majority of Unit’s natural gas production in
the Gulf Coast area went down due to equipment failure. The plant was
down seven days before operations resumed. Cumulatively, hurricane
Harvey, the Texas Panhandle ice storm in the first quarter, and
third-party plant downtimes will reduce production for the year by
approximately 460 MBoe. Taking these issues into account, Unit
anticipates 2017 production to be approximately 16 MMBoe.
Larry Pinkston, Unit’s Chief Executive Officer and President, said: “As
is our custom, we have focused on keeping our capital expenditures in
line with anticipated cash flows during the year. Much of our total
capital expenditure budget is directed toward our oil and natural gas
segment where we have many highly economic prospects. The pace at which
we develop these prospects is dependent on cash flow; therefore,
unexpected downtime and delays can have an adverse effect on our
production. Despite the outages and delays previously mentioned, we are
pleased to have returned to a pattern of sequential quarterly production
growth.”
This table illustrates certain comparative production, realized prices,
and operating profit for the periods indicated:
Three Months Ended | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
Sep 30, |
Sep 30, |
Change |
Sep 30, |
Jun 30, |
Change |
Sep 30, |
Sep 30, |
Change | ||||||||||||||||||||||
Oil and NGLs Production, MBbl | 1,876 | 1,961 | (4 | )% | 1,876 | 1,851 | 1 | % | 5,466 | 6,005 | (9 | )% | ||||||||||||||||||
Natural Gas Production, Bcf | 13.1 | 13.4 | (2 | )% | 13.1 | 12.0 | 9 | % | 37.3 | 42.4 | (12 | )% | ||||||||||||||||||
Production, MBoe | 4,057 | 4,194 | (3 | )% | 4,057 | 3,852 | 5 | % | 11,686 | 13,068 | (11 | )% | ||||||||||||||||||
Production, MBoe/day | 44.1 | 45.6 | (3 | )% | 44.1 | 42.3 | 4 | % | 42.8 | 47.7 | (10 | )% | ||||||||||||||||||
Avg. Realized Natural Gas Price, Mcf (1) | $ | 2.36 | $ | 2.29 | 3 | % | $ | 2.36 | $ | 2.45 | (4 | )% | $ | 2.50 | $ | 1.98 | 26 | % | ||||||||||||
Avg. Realized NGL Price, Bbl (1) | $ | 18.35 | $ | 12.68 | 45 | % | $ | 18.35 | $ | 14.91 | 23 | % | $ | 17.05 | $ | 10.16 | 68 | % | ||||||||||||
Avg. Realized Oil Price, Bbl (1) | $ | 47.29 | $ | 42.79 | 11 | % | $ | 47.29 | $ | 46.96 | 1 | % | $ | 47.62 | $ | 38.71 | 23 | % | ||||||||||||
Realized Price / Boe (1) | $ | 20.63 | $ | 18.29 | 13 | % | $ | 20.63 | $ | 20.76 | (1 | )% | $ | 21.16 | $ | 16.02 | 32 | % | ||||||||||||
Operating Profit Before Depreciation, Depletion, & Amortization (MM) (2) | $ | 51.6 | $ | 52.8 | (2 | )% | $ | 51.6 | $ | 50.4 | 2 | % | $ | 160.4 | $ | 113.6 | 41 | % |
(1) |
Realized price includes oil, natural gas liquids, natural gas, and associated derivatives. |
|
(2) |
Operating profit before depreciation is calculated by taking operating revenues for this segment less operating expenses excluding depreciation, depletion, amortization, and impairment. (See non-GAAP financial measures below.) |
|
CONTRACT DRILLING SEGMENT INFORMATION
The average number of Unit’s drilling rigs working during the quarter
was 34.6, an increase of 20% over the second quarter of 2017. Per day
drilling rig rates averaged $16,454, a 3% increase over the second
quarter of 2017. For the first nine months of 2017, per day drilling rig
rates averaged $16,120, an 11% decrease from the first nine months of
2016. Average per day operating margin for the quarter was $5,495
(before elimination of intercompany drilling rig profit of $0.6
million). This compares to second quarter 2017 average operating margin
of $4,721 (before elimination of intercompany drilling rig profit of
$0.4 million), an increase of 16%, or $774 (in each case regarding
eliminating intercompany drilling rig profit – see Non-GAAP financial
measures below). Average operating margin for the quarter included no
early termination fees from the cancellation of long-term contracts,
compared to early termination fees of $0.8 million, or $316 per day,
during the second quarter of 2017.
Pinkston said: “Our contract drilling segment has performed in line with
the industry this year. After reaching 36 operating rigs during the
quarter, utilization pared back slightly in keeping with recent industry
trends. We have 95 drilling rigs in our fleet after adding our tenth
BOSS rig during the second quarter. All 10 of our BOSS rigs are under
contract, and we currently have a total of 33 drilling rigs operating.
Long-term contracts (contracts with original terms ranging from six
months to two years in length) are in place for nine of our drilling
rigs. Of the nine, four of these contracts are up for renewal in the
fourth quarter of 2017, four are up for renewal in 2018, and one in
2019.”
This table illustrates certain comparative results for the periods
indicated:
Three Months Ended | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
Sep 30, |
Sep 30, |
Change |
Sep 30, |
Jun 30, |
Change |
Sep 30, |
Sep 30, |
Change | ||||||||||||||||||||||
Rigs Utilized | 34.6 | 16.0 | 116 | % | 34.6 | 28.8 | 20 | % | 29.7 | 16.7 | 78 | % | ||||||||||||||||||
Operating Profit Before Depreciation (MM) (1) | $ | 16.9 | $ | 6.7 | 153 | % | $ | 16.9 | $ | 12.0 | 40 | % | $ | 36.8 | $ | 22.3 | 65 | % |
(1) |
Operating profit before depreciation is calculated by taking operating revenues for this segment less operating expenses excluding depreciation and impairment. (See non-GAAP financial measures below.) |
|
MIDSTREAM SEGMENT INFORMATION
For the quarter, gas processed and liquids sold volumes per day
increased 4% and 1%, respectively, while gas gathered volumes per day
remained relatively the same, as compared to the second quarter of 2017.
Operating profit (as defined in the footnote below) for the quarter was
$13.3 million, an increase of 10% over the second quarter of 2017.
For the first nine months of 2017, per day gas gathered, gas processed
and liquids sold volumes decreased 8%, 16% and 4%, respectively, as
compared to the first nine months of 2016. Operating profit (as defined
in the footnote below) for the first nine months of 2017 was $38.6
million, an increase of 15% over the first nine months of 2016.
This table illustrates certain comparative results for the periods
indicated:
Three Months Ended | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
Sep 30, |
Sep 30, |
Change |
Sep 30, |
Jun 30, |
Change |
Sep 30, |
Sep 30, |
Change | ||||||||||||||||||||||
Gas Gathering, Mcf/day | 383,787 | 429,693 | (11 | )% | 383,787 | 383,440 | – | % | 385,846 | 417,722 | (8 | )% | ||||||||||||||||||
Gas Processing, Mcf/day | 140,246 | 152,651 | (8 | )% | 140,246 | 135,002 | 4 | % | 133,986 | 160,411 | (16 | )% | ||||||||||||||||||
Liquids Sold, Gallons/day | 530,028 | 558,843 | (5 | )% | 530,028 | 525,920 | 1 | % | 518,054 | 536,911 | (4 | )% | ||||||||||||||||||
Operating Profit Before Depreciation & Amortization (MM) (1) | $ | 13.3 | $ | 13.0 | 2 | % | $ | 13.3 | $ | 12.1 | 10 | % | $ | 38.6 | $ | 33.6 | 15 | % |
(1) |
Operating profit before depreciation is calculated by taking operating revenues for this segment less operating expenses excluding depreciation, amortization, and impairment. (See non-GAAP financial measures below.) |
|
Pinkston said: “Our midstream segment continues to show modest
improvement in gas gathering, gas processing, and liquids sold volumes
on a quarter over quarter basis, taking advantage of improvement in
operator activity levels. This segment continues to operate in ethane
rejection mode for the most part.”
FINANCIAL INFORMATION
Unit ended the quarter with long-term debt of $803.8 million. Long-term
debt consisted of $641.7 million of senior subordinated notes net of
unamortized discount and debt issuance costs and $162.1 million of
borrowings under the company’s credit agreement. Recently, Unit’s
borrowing base was re-determined with no resulting change. Under the
credit agreement, the amount Unit can borrow is the lesser of the amount
it elects as the commitment amount ($475 million) or the value of its
borrowing base as determined by the lenders ($475 million), but in
either event not to exceed $875 million.
On April 4, 2017, Unit established an “at the market” equity offering
program under which it may offer and sell, from time-to-time, up to an
aggregate of $100 million for shares of its common stock through “at the
market” transactions. As of September 30, 2017, Unit has sold 787,547
shares for $18.6 million, net of offering costs of $0.4 million.
Approximately $81.0 million remained available for sale under the
program. Net proceeds from the offering will be used to fund (or offset
costs of) acquisitions, future capital expenditures, repay amounts
outstanding under its revolving credit facility, and general corporate
purposes.
WEBCAST
Unit uses its website as a way to disclose material non-public
information and for complying with its disclosure obligations under
Regulation FD. Those disclosures will be included on its website in the
‘Investor Information’ sections. Accordingly, investors should monitor
that portion of the website, in addition to following the press
releases, SEC filings, and public conference calls and webcasts.
Unit will webcast its third quarter earnings conference call live over
the Internet on November 2, 2017 at 10:00 a.m. Central Time (11:00 a.m.
Eastern). To listen to the live call, please go to http://www.unitcorp.com/investor/calendar.htm
at least fifteen minutes before the start of the call to download and
install any necessary audio software. For those who are not available to
listen to the live webcast, a replay will be available shortly after the
call and will remain on the site for 90 days.
Unit Corporation is a Tulsa-based, publicly held energy company engaged
through its subsidiaries in oil and gas exploration, production,
contract drilling, and 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 its website at http://www.unitcorp.com.
FORWARD-LOOKING STATEMENT
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 in the future 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 agreement,
the number of wells to be drilled by the company’s oil and natural gas
segment, the potential productive capability of its prospective plays
including the STACK play, the number of additional shares (if any) it
may sell under its “at the market” offering, and other factors described
from time to time in the company’s publicly available 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 | ||||||||||||||||||||
(In thousands except per share amounts) |
||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Statement of Operations: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Oil and natural gas | $ | 85,470 | $ | 78,854 | $ | 256,241 | $ | 206,318 | ||||||||||||
Contract drilling | 51,619 | 25,819 | 128,059 | 88,786 | ||||||||||||||||
Gas gathering and processing | 51,399 | 48,735 | 150,493 | 132,793 | ||||||||||||||||
Total revenues | 188,488 | 153,408 | 534,793 | 427,897 | ||||||||||||||||
Expenses: | ||||||||||||||||||||
Operating costs: | ||||||||||||||||||||
Oil and natural gas | 33,911 | 26,014 | 95,873 | 92,691 | ||||||||||||||||
Contract drilling | 34,747 | 19,137 | 91,213 | 66,489 | ||||||||||||||||
Gas gathering and processing | 38,116 | 35,738 | 111,862 | 99,185 | ||||||||||||||||
Total operating costs | 106,774 | 80,889 | 298,948 | 258,365 | ||||||||||||||||
Depreciation, depletion, and amortization | 54,533 | 49,969 | 151,545 | 158,437 | ||||||||||||||||
Impairments | – | 49,443 | – | 161,563 | ||||||||||||||||
General and administrative | 9,235 | 8,852 | 26,902 | 25,811 | ||||||||||||||||
Gain on disposition of assets | (81 | ) | (154 | ) | (1,153 | ) | (823 | ) | ||||||||||||
Total operating expenses | 170,461 | 188,999 | 476,242 | 603,353 | ||||||||||||||||
Income (loss) from operations | 18,027 | (35,591 | ) | 58,551 | (175,456 | ) | ||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest, net | (9,944 | ) | (10,002 | ) | (28,807 | ) | (30,225 | ) | ||||||||||||
Gain (loss) on derivatives | (2,614 | ) | 6,969 | 21,019 | (4,774 | ) | ||||||||||||||
Other | 5 | 3 | 14 | (11 | ) | |||||||||||||||
Total other income (expense) | (12,553 | ) | (3,030 | ) | (7,774 | ) | (35,010 | ) | ||||||||||||
Income (loss) before income taxes | 5,474 | (38,621 | ) | 50,777 | (210,466 | ) | ||||||||||||||
Income tax expense (benefit): | ||||||||||||||||||||
Deferred | 1,769 | (14,599 | ) | 22,084 | (73,159 | ) | ||||||||||||||
Total income taxes | 1,769 | (14,599 | ) | 22,084 | (73,159 | ) | ||||||||||||||
Net income (loss) | $ | 3,705 | $ | (24,022 | ) | $ | 28,693 | $ | (137,307 | ) | ||||||||||
Net income (loss) per common share: | ||||||||||||||||||||
Basic | $ | 0.07 | $ | (0.48 | ) | $ | 0.56 | $ | (2.75 | ) | ||||||||||
Diluted | $ | 0.07 | $ | (0.48 | ) | $ | 0.56 | $ | (2.75 | ) | ||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 51,386 | 50,081 | 51,019 | 50,012 | ||||||||||||||||
Diluted | 51,972 | 50,081 | 51,569 | 50,012 |
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
Balance Sheet Data: | ||||||||
Current assets | $ | 128,966 | $ | 121,196 | ||||
Total assets | $ | 2,565,872 | $ | 2,479,303 | ||||
Current liabilities | $ | 191,147 | $ | 164,915 | ||||
Long-term debt | $ | 803,833 | $ | 800,917 | ||||
Other long-term liabilities and non-current derivative liability | $ | 105,750 | $ | 103,479 | ||||
Deferred income taxes | $ | 213,237 | $ | 215,922 | ||||
Shareholders’ equity | $ | 1,251,905 | $ | 1,194,070 |
Nine Months Ended September 30, | ||||||||||
2017 | 2016 | |||||||||
Statement of Cash Flows Data: | ||||||||||
Cash flow from operations before changes in operating assets and liabilities |
$ | 194,912 | $ | 134,138 | ||||||
Net change in operating assets and liabilities | (10,120 | ) | 63,624 | |||||||
Net cash provided by operating activities | $ | 184,792 | $ | 197,762 | ||||||
Net cash used in investing activities | $ | (204,184 | ) | $ | (107,509 | ) | ||||
Net cash provided by (used in) financing activities | $ | 19,321 | $ | (90,175 | ) | |||||
Non-GAAP Financial Measures
Unit Corporation reports its financial results in accordance with
generally accepted accounting principles (“GAAP”). The Company believes
certain non-GAAP measures provide users of its financial information and
its management additional meaningful information to evaluate the
performance of the company.
This press release includes net income (loss) and earnings (loss) per
share excluding impairment adjustments and the effect of the cash
settled commodity derivatives, its reconciliation of segment operating
profit, its drilling segment’s average daily operating margin before
elimination of intercompany drilling rig profit and bad debt expense,
its cash flow from operations before changes in operating assets and
liabilities, and its reconciliation of net income (loss) to adjusted
EBITDA.
Below is a reconciliation of GAAP financial measures to non-GAAP
financial measures for the three and nine months ended September 30,
2017 and 2016. Non-GAAP financial measures should not be considered by
themselves or a substitute for results reported in accordance with GAAP.
This non-GAAP information should be considered by the reader in addition
to, but not instead of, the financial statements prepared in accordance
with GAAP. The non-GAAP financial information presented may be
determined or calculated differently by other companies and may not be
comparable to similarly titled measures.
Unit Corporation | |||||||||||||||||||
Reconciliation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) per Share |
|||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||
(In thousands except earnings per share) | |||||||||||||||||||
Adjusted net income (loss): | |||||||||||||||||||
Net income (loss) | $ | 3,705 | $ | (24,022 | ) | $ | 28,693 | $ | (137,307 | ) | |||||||||
Impairments (net of income tax) | – | 30,778 | – | 100,573 | |||||||||||||||
(Gain) loss on derivatives (net of income tax) | 1,157 | (4,627 | ) | (11,879 | ) | 3,115 | |||||||||||||
Settlements during the period of matured derivative contracts (net of income tax) |
453 | (381 | ) | (412 | ) | 7,656 | |||||||||||||
Adjusted net income (loss) | $ | 5,315 | $ | 1,748 | $ | 16,402 | $ | (25,963 | ) | ||||||||||
Adjusted diluted earnings (loss) per share: | |||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.07 | $ | (0.48 | ) | $ | 0.56 | $ | (2.75 | ) | |||||||||
Diluted earnings per share from impairments | – | 0.61 | – | 2.01 | |||||||||||||||
Diluted earnings per share from (gain) loss on derivatives | 0.02 | (0.09 | ) | (0.23 | ) | 0.06 | |||||||||||||
Diluted earnings (loss) per share from settlements of matured derivative contracts |
0.01 | – | (0.01 | ) | 0.16 | ||||||||||||||
Adjusted diluted income (loss) per share | $ | 0.10 | $ | 0.04 | $ | 0.32 | $ | (0.52 | ) |
________________
The Company has included the net income and diluted earnings per share
including only the cash settled commodity derivatives because:
-
It uses the adjusted net income to evaluate the operational
performance of the company. -
The adjusted net income is more comparable to earnings estimates
provided by securities analysts.
Unit Corporation | |||||||||||||||||||||||||
Reconciliation of Segment Operating Profit | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
June 30, | September 30, | September 30, | |||||||||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Oil and natural gas | $ | 50,415 | $ | 51,559 | $ | 52,840 | $ | 160,368 | $ | 113,627 | |||||||||||||||
Contract drilling | 12,016 | 16,872 | 6,682 | 36,846 | 22,297 | ||||||||||||||||||||
Gas gathering and processing | 12,111 | 13,283 | 12,997 | 38,631 | 33,608 | ||||||||||||||||||||
Total operating profit | 74,542 | 81,714 | 72,519 | 235,845 | 169,532 | ||||||||||||||||||||
Depreciation, depletion and amortization | (50,080 | ) | (54,533 | ) | (49,969 | ) | (151,545 | ) | (158,437 | ) | |||||||||||||||
Impairments | – | – | (49,443 | ) | – | (161,563 | ) | ||||||||||||||||||
Total operating income (loss) | 24,462 | 27,181 | (26,893 | ) | 84,300 | (150,468 | ) | ||||||||||||||||||
General and administrative | (8,713 | ) | (9,235 | ) | (8,852 | ) | (26,902 | ) | (25,811 | ) | |||||||||||||||
Gain on disposition of assets | 248 | 81 | 154 | 1,153 | 823 | ||||||||||||||||||||
Interest, net | (9,467 | ) | (9,944 | ) | (10,002 | ) | (28,807 | ) | (30,225 | ) | |||||||||||||||
Gain (loss) on derivatives | 8,902 | (2,614 | ) | 6,969 | 21,019 | (4,774 | ) | ||||||||||||||||||
Other | 6 | 5 | 3 | 14 | (11 | ) | |||||||||||||||||||
Income (loss) before income taxes | $ | 15,438 | $ | 5,474 | $ | (38,621 | ) | $ | 50,777 | $ | (210,466 | ) |
_________________
The Company has included segment operating profit because:
-
It considers segment operating profit to be an important supplemental
measure of operating performance for presenting trends in its core
businesses. -
Segment operating profit is useful to investors because it provides a
means to evaluate the operating performance of the segments and
Company on an ongoing basis using criteria that is used by management.
Unit Corporation | ||||||||||||||||||||
Reconciliation of Average Daily Operating Margin Before Elimination of Intercompany Rig Profit and Bad Debt Expense |
||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
June 30, | September 30, | September 30, | ||||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
(In thousands except for operating days and operating margins) | ||||||||||||||||||||
Contract drilling revenue | $ | 39,255 | $ | 51,619 | $ | 25,819 | $ | 128,059 | $ | 88,786 | ||||||||||
Contract drilling operating cost | 27,239 | 34,747 | 19,137 | 91,213 | 66,489 | |||||||||||||||
Operating profit from contract drilling | 12,016 | 16,872 | 6,682 | 36,846 | 22,297 | |||||||||||||||
Add: | ||||||||||||||||||||
Elimination of intercompany rig profit and bad debt expense | 376 | 602 | – | 978 | 235 | |||||||||||||||
Operating profit from contract drilling before elimination of intercompany rig profit and bad debt expense |
12,392 | 17,474 | 6,682 | 37,824 | 22,532 | |||||||||||||||
Contract drilling operating days | 2,625 | 3,180 | 1,470 | 8,097 | 4,578 | |||||||||||||||
Average daily operating margin before elimination of intercompany rig profit and bad debt expense |
$ | 4,721 | $ | 5,495 | $ | 4,546 | $ | 4,671 | $ | 4,922 |
________________
The Company has included the average daily operating margin before
elimination of intercompany rig profit and bad debt expense because:
-
Its management uses the measurement to evaluate the cash flow
performance of its contract drilling segment and to evaluate the
performance of contract drilling management. -
It is used by investors and financial analysts to evaluate the
performance of the company.
Unit Corporation | |||||||||
Reconciliation of Cash Flow From Operations Before Changes in Operating Assets and Liabilities |
|||||||||
Nine Months Ended September 30, | |||||||||
2017 | 2016 | ||||||||
(In thousands) | |||||||||
Net cash provided by operating activities | $ | 184,792 | $ | 197,762 | |||||
Net change in operating assets and liabilities | 10,120 | (63,624 | ) | ||||||
Cash flow from operations before changes in operating assets and liabilities |
$ | 194,912 | $ | 134,138 |
________________
The Company has included the cash flow from operations before changes in
operating assets and liabilities because:
-
It is an accepted financial indicator used by its management and
companies in the industry to measure the company’s ability to generate
cash which is used to internally fund its business activities. -
It is used by investors and financial analysts to evaluate the
performance of the company.
Unit Corporation | ||||||||||||||||||||
Reconciliation of Adjusted EBITDA | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
(In thousands except earnings per share) | ||||||||||||||||||||
Net income (loss) | $ | 3,705 | $ | (24,022 | ) | $ | 28,693 | $ | (137,307 | ) | ||||||||||
Income taxes | 1,769 | (14,599 | ) | 22,084 | (73,159 | ) | ||||||||||||||
Depreciation, depletion and amortization | 54,533 | 49,969 | 151,545 | 158,437 | ||||||||||||||||
Amortization of debt issuance costs and debt discount | 540 | 532 | 1,616 | 1,586 | ||||||||||||||||
Impairments | – | 49,443 | – | 161,563 | ||||||||||||||||
Interest expense | 9,944 | 10,002 | 28,807 | 30,225 | ||||||||||||||||
(Gain) loss on derivatives | 2,614 | (6,969 | ) | (21,019 | ) | 4,774 | ||||||||||||||
Settlements during the period of matured derivative contracts | 840 | (457 | ) | (729 | ) | 11,735 | ||||||||||||||
Stock compensation plans | 4,412 | 2,961 | 12,478 | 10,664 | ||||||||||||||||
Other non-cash items | 654 | 634 | 2,112 | 2,147 | ||||||||||||||||
Gain on disposition of assets | (81 | ) | (154 | ) | (1,153 | ) | (823 | ) | ||||||||||||
Adjusted EBITDA | $ | 78,930 | $ | 67,340 | $ | 224,434 | $ | 169,842 | ||||||||||||
Diluted income (loss) per share | $ | 0.07 | $ | (0.48 | ) | $ | 0.56 | $ | (2.75 | ) | ||||||||||
Diluted earnings per share from income taxes | 0.03 | (0.29 | ) | 0.43 | (1.46 | ) | ||||||||||||||
Diluted earnings per share from depreciation, depletion and amortization |
1.06 | 0.99 | 2.93 | 3.14 | ||||||||||||||||
Diluted earnings per share from amortization of debt issuance costs and debt discount |
0.01 | 0.01 | 0.03 | 0.03 | ||||||||||||||||
Diluted earnings per share from impairments | – | 0.98 | – | 3.24 | ||||||||||||||||
Diluted earnings per share from interest expense | 0.19 | 0.20 | 0.56 | 0.60 | ||||||||||||||||
Diluted earnings per share from (gain) loss on derivatives | 0.05 | (0.14 | ) | (0.41 | ) | 0.09 | ||||||||||||||
Diluted earnings per share from settlements during the period of matured derivative contracts |
0.02 | (0.01 | ) | (0.01 | ) | 0.25 | ||||||||||||||
Diluted earnings per share from stock compensation plans | 0.08 | 0.06 | 0.24 | 0.21 | ||||||||||||||||
Diluted earnings per share from other non-cash items | 0.01 | 0.01 | 0.04 | 0.04 | ||||||||||||||||
Diluted earnings per share from gain on disposition of assets | – | – | (0.02 | ) | (0.02 | ) | ||||||||||||||
Adjusted EBITDA per diluted share | $ | 1.52 | $ | 1.33 | $ | 4.35 | $ | 3.37 |
________________
The Company has included the adjusted EBITDA excluding gain or loss on
disposition of assets and including only the cash settled commodity
derivatives because:
-
It uses the adjusted EBITDA to evaluate the operational performance of
the Company. -
The adjusted EBITDA is more comparable to estimates provided by
securities analysts. -
It provides a means to assess the ability of the Company to generate
cash sufficient to pay interest on its indebtedness.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171102005289/en/
Unit Corporation
Michael D. Earl, 918-493-7700
Vice President,
Investor Relations
www.unitcorp.com
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