Natural gas price drop pushes Unit Corp. to loss
BY ROD WALTON World Staff Writer
Wednesday, August 01, 2012
8/01/12 at 3:13 AM
Lower natural gas prices sent Unit Corp. to a $19.3 million net loss in the second quarter, the Tulsa-based contract drilling, production and pipeline company reported Tuesday.
Unit Corp. took a $115.9 million non-cash writedown on the carrying value of its oil and gas properties due to "significantly lower" prices. Profits would have topped $52 million if not for the accounting writedown, according to a company news release.
Overall, Unit contracted more drilling rigs and produced 3.3 million barrels of oil equivalent in the second quarter. The production was up 12 percent from the same period last year.
"We are pleased with the results that our contract drilling segment has been able to attain," CEO Larry Pinkston said in a statement. "As the industry has continued to transition to drilling horizontal or directional wells, we have been able to respond to that demand by refurbishing our existing drilling rigs or adding new drilling rigs."
The number of Unit rigs in use averaged 76.7 per day with daily rates at $20,128 for the three-month period, both increases over 2011's second quarter. The operating margin on rigs increase by 18 percent compared with the same time last year.
The midstream segment improved its liquids sales, processing and gathering volumes in the second quarter compared with last year. Unit also completed and began operating the new Bellmon gathering and processing system in Noble and Kay counties of northern Oklahoma.
The company's other segments, however, were hurt as its average natural gas price, including hedges, fell 30 percent in a year's time to $3.03 per thousand cubic feet. Natural gas liquids prices also decreased 28 percent compared to the first quarter of this year, Pinkston said.
Unit Corp. generated $33.1 million in net income for the first six months of the year, compared with $90.8 million for the same period in 2011.
Unit Corp. is one of Tulsa's biggest energy employers, with nearly 500 employees locally. Revenues totaled $1.2 billion last year.
Unit Corp. Earnings
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Original Print Headline: Natural gas drop pushes Unit Corp. to loss
Rod Walton 918-581-8457