Previous Statements by UNT
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In our E&P segment, over the last 10 years we’ve grown our oil and gas reserves, we’ve averaged replacing 191% of our annual production with new oil and gas reserves. In our contract drilling segment in the last 10 years, we grown our rig fleet by 120%. And in the midstream segment we really consider 2004 as our genesis in the midstream segment, but since then we’ve seen our natural gas volumes that we process increased over 500%. We’re seeing natural gas liquid volumes that we sold, increased over a 1000%. And we’ve been able to achieve all this growth and maintain a very conservative balance sheet. We finished the third quarter with a 14% debt-to-capitalization ratio.In our E&P segment, as I mentioned we finished last year with 104 million barrels equivalent reserves, we’re 80% proved developed and we’re not an aggressive [book to] reserves. And we basically replace the PUD reserves we drill each year with new PUDs. We’ve been 79% to 80% proved undeveloped relationship for the last 15 years. In 2008, with the meltdown in the economy and in the industry with the commodity prices plunging, we brought our drilling operations almost to a standstill like 2008, early 2009, during that timeframe we became much more comfortable that the price of oil coming back quicker than the price of natural gas, mainly because of all the shales that have been just recently discovered, and all the drilling that we knew that would occur in those fields just to hold leasehold. So we’ve begun look into our prospect inventory to where we could increase our liquids production luckily by the areas that we’ve been developing for years and years. We had a lot of good acreage that had good oil potential, good rich natural gas drilling potential. So we didn’t have to go out and completely reinvent the wheel.
We made good progress towards increasing our liquids production, our three core areas today that we spend most of our E&P budget in, is in the Granite Wash in the Texas Panhandle and the Marmaton in Oklahoma Panhandle and then Wilcox play in Southeast Texas.Our goal for the last 27 years now has been each and every year replace at least 150% of our annual production with new reserves. We’ve met that objective each and every year for the last 27 years. Last year we replaced a 176% of our production with new reserves. This year we will achieve somewhere in that 170% to 200% replacement ratio about the time year-end gets here. We’ve met our objective each and every year of those 27 years, which I don’t think another E&P company can say that. Over those 27 years, we replaced on average of 218% of our annual production. We’ve not done that with acquisitions, we made acquisitions during the year, but we don’t want overly dependent on acquisitions in order to meet our annual objectives. Our basis for doing that is through the drill bit, through our prospect inventory and through our drilling operations. On the production, as you see on the left hand part of the slide, between 2004 and 2008, we were on a nice trajectory for growing production. Production was growing on average of about 16% per year with a slow down in late 2008-2009. You see the drop-off of the production in 2009. We are fully aware that the production would be decreasing, but with the state of the economy and the industry at that time, we still feel like that was the right thing to do is slow down our drilling operation. Read the rest of this transcript for free on seekingalpha.com