Unit Corporation ( UNT) Q2 2011 Earnings Call August 2, 2011 11:00 am ET Executives Larry D. Pinkston – President and Chief Executive Officer Brad J. Guidry – Executive Vice President, Unit Petroleum Company John Cromling – Executive Vice President , Unit Drilling Company Robert H. Parks, Jr. – Manager of Superior Pipeline Company LLC David T. Merrill – Vice President, Finance Analysts James Rollyson – Raymond James Robert Christensen – Buckingham Research Presentation Operator
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The number of wells to be drilled by the company’s exploration segments; development, operational, implementation, and opportunity risks; possible delays caused by limited availability of third-party services needed in the course of its operations; possibility of future growth opportunities and other factors describe from time-to-time in the company's publicly available SEC reports. The Company assumes no obligation to update publicly such forward-looking statements whether as a result of new information, future events, or otherwise.I’ll now turn the call over to Mr. Larry Pinkston, President and CEO. Mr. Pinkston, you may begin. Larry D. Pinkston Thank you, Sandra. Good morning, everyone. We want to thank you for joining us this morning. With me today are David Merrill, is our CFO; Brad Guidry, our Executive Vice President of our Exploration segment; John Cromling, our Executive Vice President of our Contract Drilling Operations; and Bob Parks, he is President of our Mid-Stream segment. Each of these gentlemen will provide you with updates concerning their segments in a few moments. We will take questions after their comments. We released our second quarter results to the public this morning. We reported a net income of $49.8 million and earnings per share of $1.04 per share. This represents a net income increase of 55% over the second quarter of 2010 and a 21% increase over the first quarter of 2011. We successfully completed our first ever bond offering there in the second quarter. We are very pleased that the high level of investor participation we received and the results of the offering. We feel this bond offering positions Unit to better participate and the opportunities we see in the industry today and diversifies our capital structure to provide better shareholder growth potential in the future. Our contract drilling segment had a good quarter with practically all part showing good growth. And in comparison to the first quarter of 2011, the number of drilling rigs operating was up over 4%, average day work rates were up almost 7%, average daily operating margins were up nearly 4% before elimination of the profits, and we announced contracts to build two additional drilling rigs that should be operating in the fourth quarter of 2011.
This brings our total new build rig count to 7 for 2011. We continue to see a good level of inquiries from operators which indicate strong rig demand is expected to continue through the remainder of 2011.The E&P industry continues to aggressively pursue liquid rich production with many of those opportunities in Western and Northern Oklahoma and the Texas, Panhandle that (inaudible) 1000 horse power rig market very well. Our exploration and production segment continue to production growth trend as started in the third quarter of 2010. All the natural gas production increased 9% from the second quarter of 2011 and early 8% on a per day basis over the first quarter of 2011. Since the second quarter of 2010 are all the natural gas production has increased 28%. We continue to make great progress towards increasing our liquids production. We produced 1.2 million barrels of liquids in the second quarter up 12% over the first quarter of 2011 and up 64% over the second quarter of 2010. Liquids were 39% of our total production in the second quarter of 2011 up from 30% in the second quarter 2010. The Marmaton and Granite Wash prospects continue to deliver good results as Brad will provide you with some details in a few minutes. In July, we closed oil and natural gas acquisition and signed a purchase sale agreement on another group of properties. We’re very pleased with these two transactions. The acquisition we closed consisted of Western Oklahoma properties in areas with good upside potential. We acquired 6.6 bcf equivalents approved, developed reserves and 12,000 held by production net acres for $12.3 million. Read the rest of this transcript for free on seekingalpha.com