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Profit of Tulsa, Okla.-Based Provider of Drilling Rigs Rises 96 Percent

Posted on: Wednesday, 27 July 2005, 21:00 CDT

Jul. 27--Demand for drilling rigs was strong in the quarter.

High oil and natural gas prices, increased production and a strong demand for drilling rigs fueled a 96 percent increase in second-quarter earnings at Tulsa-based Unit Corp.

Net income totaled $39.6 million, or 86 cents a share, up from $20.2 million, or 44 cents a share, in last year's second quarter, Unit reported Tuesday.

Revenue rose 67 percent to $190 million.

The results in both net income and revenue mark new quarterly highs for the company.

In addition to producing oil and gas, Unit is a leading provider of contract drilling rigs. Of the company's 103 operational rigs, 102 are now under contract, and Unit is adding four more rigs to its fleet.

"Rig demand remains very strong in all areas that we operate," CEO Larry Pinkston said during a conference call with analysts. "Oil and gas production continues to grow, and commodity prices have remained very strong this summer.

"There appears to be good opportunities for economic growth for the foreseeable future."

Contract drilling revenue rose 58 percent in the second quarter to $105.8 million compared with the same period last year.

The number of utilized rigs averaged 100.3 during the quarter, up 20 percent. Rig rates averaged $11,298 a day for the quarter, a 29 percent increase from last year's second quarter.

The company's rig rates are expected to rise even more, Pinkston said.

"We could see day rates up another $1,200 to $1,400 in the third quarter," he said.

Revenue from Unit's oil and gas business rose 34 percent in the second quarter to $62 million. Executives attributed the improvement to higher oil and gas prices.

The company received, on average, $6.27 per thousand cubic feet (mcf) for its gas, up from $5.57 per mcf a year ago. The average oil price during the quarter was $45.79 a barrel, up from $31.12 a barrel last year.

Oil and gas production in the second quarter was up 14 percent compared with the same quarter last year.

In addition, the company drilled 57 wells, with a success rate of 89 percent. Unit still expects to drill 220 to 230 wells by the end of the year, Pinkston said.

During the first half of 2005, Unit has generated net income of $70.3 million, or $1.53 per share. That's up from $35.7 million, or 78 cents a share, during the same period last year.

Shares of Unit rose 54 cents, or 1.18 percent, to close at $46.41 in trading Tuesday on the New York Stock Exchange.

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Copyright (c) 2005, Tulsa World, Okla.

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UNT,

Source: Tulsa World

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