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Unit Corp. Reserves Hit Record

Posted on: Sunday, 12 February 2006, 12:00 CST

By RUSSELL RAY World Staff Writer

The company drilled 192 wells and paid more than $100 million for Midcontinent properties last year.

In 2005, the oil and natural gas reserves of Tulsa-based Unit Corp. rose to a record high, thanks to a series of acquisitions and a strong drilling program, the company announced Wednesday.

The company's year-end reserves totaled 412 billion cubic feet of gas equivalent -- 10 million barrels of oil and gas liquids and 353 billion cubic feet of gas. That's a 19 percent increase over 2004.

Natural gas accounts for 86 percent of the company's reserves.

Last year, Unit drilled 192 wells and paid more than $100 million for oil and gas properties in the Midcontinent.

As a result, the company replaced 261 percent of its 2005 production with new reserves, well above its annual goal of 150 percent. Unit said it has met that goal 22 straight years.

Unit places the value of its reserves, discounted 10 percent, at $1.3 billion as of Dec. 31. The value is based on $61 oil and $8 gas.

Last June, Unit finalized its $23 million purchase of oil and gas properties in Oklahoma from an undisclosed firm. In October, the company agreed to pay $82.4 million for another set of properties from another undisclosed group of companies.

Unit's exploration and production business has budgeted $240 million for capital expenditures in 2006, including $215 million for new drilling projects.

In addition to producing oil and gas, Unit provides contract drilling rigs to producers.

Rig rates averaged $14,626 a day in the fourth quarter, 12 percent higher than the previous quarter, Unit said. Rig rates now are averaging more than $17,000 a day.

"This increase in the company's dayrates from the third quarter to the fourth quarter is the result of the strong demand for drilling rigs," said Unit President and CEO Larry Pinkston. "Strong demand for drilling rigs is still evident by the continued increase in dayrates into 2006."

Unit said it plans to add 10 rigs to its 111-rig fleet in 2006. Two of those rigs are under construction, the company said.

Shares of Unit fell 7 cents Wednesday to close at $54.80 on the New York Stock Exchange. The 52-week high is $61.88, which was set Jan. 23.

Russell Ray 581-8380

russell.ray@tulsaworld.com

Source: Tulsa World

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