UNIT CORP

UNIT CORP

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Company Overview
Unit Corp is a publicly quoted energy company engaged in onshore contract drilling of oil and gas wells, exploration, and production of oil and gas, and the gathering and transportation of natural gas in the United States. Unit Corp was formed in 1986 to become the parent company of Unit Drilling and Exploration Company, a firm that consisted of three rigs engaged in contract drilling of oil and natural gas wells, which was founded in 1963 by King Kirchner and Don Bodard. Unit Corp is headquartered in Tulsa, Oklahoma and its shares are traded on the New York Stock Exchange.
Unit Corp’s drilling operations are located in Oklahoma and Texas areas of the Anadarko and Arkoma Basins, the north Texas Barnett Shale, the Texas Gulf Coast and east Texas, and the Rocky Mountain regions of Wyoming, Colorado, Utah, and Montana oil. The company’s natural gas properties, undeveloped leaseholds, and related assets are located primarily in Oklahoma, Texas, Louisiana, and New Mexico. It operates three natural gas treatment plants, six operating processing plants, 37 active gathering systems, and 600 miles of pipeline in Oklahoma, Texas, Louisiana, and Kansas.
Unit Corp’s wholly owned subsidiary companies include Unit Drilling Company, Unit Petroleum Company, and Superior Pipeline Company, LLC. The Unit Drilling Company is one of the largest onshore drilling companies in the United States. It operates 128 onshore drilling rigs in the Anadarko and Arkoma Basins, the Rocky Mountains and the Texas and Louisiana Gulf Coast. The Unit Petroleum Company focuses on the natural gas projects. It owns 476 Bcfe (Billions of Cubic Feet Equivalent) of reserves, primarily in the Anadarko and Arkoma Basins, and operates or owns an interest in more than 6,400 wells. The Superior Pipeline Company, LLC is a midstream company engaged in the gathering, processing and treating of natural gas. It owns two natural gas treatment plants, five processing plants, and 36 active gathering systems, consisting 450 miles of pipe. It has operations throughout the state of Oklahoma, as well as Texas, Kansas and Louisiana.
Business Summary
Unit Corporation (Unit) is a contract drilling company. Its operations are conducted through its subsidiaries, Unit Drilling Company, Unit Petroleum Company and Superior Pipeline Company, L.L.C (Superior). Unit Drilling Company is engaged in drilling onshore oil and natural gas wells for others and for the Company’s own account. Unit Petroleum Company is engaged in the exploration, development, acquisition and production of oil and natural gas properties for the Company’s own account (oil and natural gas), and Superior Pipeline Company, L.L.C. buys, sells, gathers, processes and treats natural gas for third parties and for its own account (mid-stream). During the year ended December 31, 2009, Unit acquired interests in approximately 60,000 net undeveloped acres in the Marcellus Shale Play.
Description and history
Unit Corporation (Unit) is a contract drilling company. Its operations are conducted through its subsidiaries, Unit Drilling Company, Unit Petroleum Company and Superior Pipeline Company, L.L.C (Superior). Unit Drilling Company is engaged in drilling onshore oil and natural gas wells for others and for the Company’s own account. Unit Petroleum Company is engaged in the exploration, development, acquisition and production of oil and natural gas properties for the Company’s own account (oil and natural gas), and Superior Pipeline Company, L.L.C. buys, sells, gathers, processes and treats natural gas for third parties and for its own account (mid-stream). During the year ended December 31, 2009, Unit acquired interests in approximately 60,000 net undeveloped acres in the Marcellus Shale Play.

Contract Drilling

The Company’s contract drilling business is conducted through Unit Drilling Company and its subsidiary Unit Texas Drilling L.L.C. Effective January 30, 2009, Leonard Hudson Drilling Co., Inc. another subsidiary of Unit Drilling Company was merged into Unit Texas Drilling L.L.C. Through these companies, Unit drills onshore natural gas and oil wells for its own account, as well as for a range of other oil and natural gas companies. Its drilling operations are mainly located in Oklahoma, Texas, Louisiana, Wyoming, Colorado, Utah and North Dakota. It also owns additional equipment used in the operation of its drilling rigs, including top drives, skidding systems, large air compressors, trucks and other support equipment. During 2009, 82 of its 130 available drilling rigs were used in drilling services. During 2009, Unit’s operating divisions consist of Panhandle, Arkoma, Gulf Coast, Mid-continent, Woodward, and Rocky Mountain. In January and February 2010, Unit’s contract drilling segment entered into contracts to sell eight of its idle mechanical drilling rigs.

Oil and Natural Gas

The Company’s wholly owned subsidiary, Unit Petroleum Company, conducts the exploration and production activities. Unit’s producing oil and natural gas properties, undeveloped leaseholds and related assets are located mainly in Oklahoma, Texas, Louisiana and New Mexico and, to a lesser extent, in Arkansas, North Dakota, Colorado, Wyoming, Montana, Alabama, Kansas, Mississippi, Michigan, Pennsylvania, Maryland and a small portion in Canada. Its operations include Segno Wilcox, Haynesville shale, Marcellus Shale and Granite Wash (GW) drilling.

Segno Wilcox is located primarily in Polk, Tyler and Hardin counties, Texas. The Company focuses on drilling three Wilcox wells. During 2009, it completed eight wells at an average working interest of 86% and a 75%. In the Haynesville shale, Unit has two areas of activity located in Shelby and Harrison counties, East Texas. During 2009, Unit drilled 15 gross vertical wells and one gross horizontal well. It owns an average of 65% working interest in the vertical wells. In Harrison County, Unit drilled and operated a horizontal Haynesville well. In the Marcellus Shale, 94% is located in Somerset County. During 2009, it participated with a 25% working interest in three vertical wells and two horizontal wells. The vertical wells were drilled in three distinct prospect areas to gather core and log data. Granite Wash (GW) drilling program is concentrated primarily in the Texas Panhandle portion of the play. During 2009, Unit drilled and operated 13 vertical wells and one horizontal well.

Mid-Stream

Superior is a mid-stream company engaged primarily in the buying, selling, gathering, processing and treating of natural gas and operates three natural gas treatment plants, eight operating processing plants, 33 active gathering systems and 839 miles of pipeline. Superior and its subsidiary operate in Oklahoma, Texas, Kansas and Pennsylvania. Unit’s mid-stream segment provides its customers with a range of gathering, processing and treating services. These services are provided to each customer under long-term contracts, and have some short-term contracts, as well. The types of contracts include fee-based contracts, percent of proceeds (POP) contracts and percent of index contracts (POI).

Fee-Based Contracts provide for a set fee for gathering and transporting raw natural gas. Percent of Proceeds Contracts provide for its mid-stream segment to retain a negotiated percentage of the sale proceeds from residue natural gas and natural gas liquid (NGL’s) it gathers and processes, with the remainder being remitted to the producer. Under the Percent of Index Contracts, the mid-stream’s segment, as the processor, purchases raw well-head natural gas from the producer at a stipulated index price and, after processing the natural gas, sells the processed residual gas and the produced NGL’s to third parties.

Formed to become the parent company of Unit Drilling and Exploration Company

Business Line
Engaged in onshore contract drilling of oil and gas wells, exploration, and production of oil and gas, and the gathering and transportation of natural gas
Subsidiary
SERVICE DRILLING SOUTHWEST, L.L.C.
Advisor
PRICEWATERHOUSECOOPERS LLP
IPO date
11/18/1981
US SIC Code
1381
Company Address
1000 Kensington Tower
7130, South Lewis
City province or state postal code
74136, TULSA, OK
Phone: +1 918 493 7700
Fax: +1 918 493 7714
Country address: UNITED STATES OF AMERICA
Website url: www.unitcorp.com