Unit Corporation (NYSE: UNT) reported net income of $52.4 million, or $1.09 per diluted share, for the three months ended March 31, 2012. For the same period in 2011, net income was $41.0 million, or $0.86 per diluted share. Total revenues for the first quarter of 2012 were $332.4 million (42% contract drilling, 40% oil and natural gas, and 17% mid-stream), compared to $247.4 million (40% contract drilling, 44% oil and natural gas, and 16% mid-stream) for the first quarter of 2011.
CONTRACT DRILLING SEGMENT INFORMATION
The average number of drilling rigs used in the first quarter of 2012 was 81.5, an increase of 16% over the first quarter of 2011, and a decrease of 1% from the fourth quarter of 2011. Per day drilling rig rates for the first quarter of 2012 averaged $19,838, an increase of 12%, or $2,134, from the first quarter of 2011, and an increase of 3%, or $508, from the fourth quarter of 2011. Average per day operating margin for the first quarter of 2012 was $9,414 (before elimination of intercompany drilling rig profit of $4.3 million). This compares to $8,077 (before elimination of intercompany drilling rig profit of $5.0 million) for the first quarter of 2011, an increase of 17%, or $1,337. As compared to the fourth quarter of 2011 ($9,037 before elimination of intercompany drilling rig profit and bad debt expense of $4.9 million) first quarter 2012 operating margin increased 4% or $377 – in each case with regard to the elimination of intercompany drilling rig profit see Non-GAAP Financial Measures below.
Larry Pinkston, Unit’s Chief Executive Officer and President, said: “We are pleased with the results that our contract drilling segment has been able to attain. The first quarter of 2012 was the eighth consecutive quarter of increased per day operating margins. 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. Approximately 96% of our drilling rigs working today are drilling for oil or natural gas liquids (NGLs) and approximately 97% are drilling horizontal or directional wells. During the first quarter of 2012, we sold an idle 600 horsepower mechanical drilling rig to an unaffiliated third party and placed a new 1,500 horsepower, diesel-electric drilling rig into service in Wyoming under a three-year contract. Additionally, we are building another new 1,500 horsepower, diesel-electric drilling rig to be used in North Dakota. The drilling rig will be under a three-year contract and should be completed during the second quarter of 2012. On completion of the new drilling rig, we will have 128 drilling rigs in our fleet. Currently, 77 of our drilling rigs are under contract. Long-term contracts (contracts with original terms ranging from six months to two years in length) are in place for 53 of those 77 drilling rigs. Of these contracts, 11 are up for renewal during the second quarter of 2012, 18 during the third quarter of 2012, eight during the fourth quarter of 2012, and 16 in 2013 and beyond. These contracts include the term contract for the new drilling rig.”