Tulsa’s Unit Corporation reported an increase in oil and natural gas production in 2018 but it also lost net income in both the fourth quarter of 2018 and for all of 2018.
Net loss attributable to Unit for the quarter was $77.8 million, or $1.49 loss per diluted share, compared to net income attributable to Unit of $89.2 million, or $1.71 per diluted share, for the fourth quarter of 2017.
For 2018, net loss attributable to Unit was $45.3 million, or $0.87 loss per diluted share, compared to net income of $117.8 million, or $2.28 per diluted share, for 2017.
Total revenues for the year were $843.3 million (50% oil and natural gas, 23% contract drilling, and 27% mid-stream), compared to $739.6 million (48% oil and natural gas, 24% contract drilling, and 28% mid-stream) for 2017. Adjusted EBITDA attributable to Unit for 2018 was $349.7 million, or $6.73 per diluted share.
The company reported its oil and natural gas segment production grew by 7% from 2017. Its total year-end 2018 proved oil and natural gas reserves were up 7% over 2017 and 158% of 2018 production was replaced with new reserves.
Larry Pinkston, Unit’s Chief Executive Officer and President, said: “During the fourth quarter, as part of our periodic evaluation process, we removed 41 drilling rigs from our fleet as well as some other equipment. Those rigs included our 29 remaining mechanical drilling rigs and 12 of our SCR drilling rigs that were not considered to be economic to upgrade to meet market demands. Our remaining rig fleet includes 13 BOSS AC drilling rigs as well as upgraded SCR rigs that are well suited for current operator requirements. Additionally, we have other SCR rigs that are available to return to service as market conditions and demand improve or are good candidates for upgrade to meet future customer demands and requirements. Our drilling rig fleet now totals 57 rigs.”
He said the company continues building a position in western Oklahoma to add drilling inventory in areas where there is believed to be a greater concentration of oil.
In December, Unit acquired 8,700 net acres in the Penn sands play for $29.6 million, a move that will provide 20 to 30 horizontal drilling locations.
In the Texas Panhandle Granite Wash play, Unit continued its one rig drilling program. The results from its first two Granite Wash “G” extended lateral wells in the field have been good with initial rates from each well exceeding 10 MMcfe per day. Unit is continuing with its Granite Wash drilling program through the first quarter of 2019 before moving the rig to its western Oklahoma assets that are likely to have a higher oil cut. Unit’s land position in the Texas Panhandle area is largely held by production allowing it to drill when pricing is most optimal.