I taking a hard look at UNT today and should send out an updated profile tomorrow. It is going to be a tough year for their drilling division, but they have a very strong balance sheet and will generate close to $8.00/share cash flow from operations this year. Unit is a rock solid 50+ year old company that has survived much worse periods than this. Take a look at the 52-week range and you will get an idea of the potential upside on this one.
They have a lot of rigs running in Oklahoma, which should be one of the first areas to ramp back up if oil prices keep improving.
Unit Corp. (UNT)
Unit Corp. (UNT)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Unit Corp. (UNT)
I have update the profile (including the forecast) for Unit Corp. and posted it to the website.
Right now I have to rate UNT as a "HOLD", not because there is anything wrong with the company. The market will not be keen on the onshore drillers until investors see some sign that drilling budgets will be increased. That said UNT is selling at a deep discount to my valuation.
This is much more than an onshore drilling company. More than 50% of its revenues now come from the E&P division and they have a growing a very profitable midstream business.
UNT closed at $29.61 today. Nine months ago, First Call's Price Target was over $74/share. Today my valuation is $45.25/share, based on 4X CFPS.
Unit has a very conservative and "seasoned" management team. They have survived much worse than the current dip in the price of oil. Although their drilling fleet is smaller (90 rigs), the quality of their equipment is much better today than it was a couple years ago. Their BOSS rigs are a good fit for drilling horizontal wells from pads in the shale plays.
When oil & gas prices do improve (and they will) the high quality onshore drillers (HP, PTEN, PDS, NBR, UNT) can make some very nice runs. Accumulating them on the dips now, should be a very profitable strategy.
Right now I have to rate UNT as a "HOLD", not because there is anything wrong with the company. The market will not be keen on the onshore drillers until investors see some sign that drilling budgets will be increased. That said UNT is selling at a deep discount to my valuation.
This is much more than an onshore drilling company. More than 50% of its revenues now come from the E&P division and they have a growing a very profitable midstream business.
UNT closed at $29.61 today. Nine months ago, First Call's Price Target was over $74/share. Today my valuation is $45.25/share, based on 4X CFPS.
Unit has a very conservative and "seasoned" management team. They have survived much worse than the current dip in the price of oil. Although their drilling fleet is smaller (90 rigs), the quality of their equipment is much better today than it was a couple years ago. Their BOSS rigs are a good fit for drilling horizontal wells from pads in the shale plays.
When oil & gas prices do improve (and they will) the high quality onshore drillers (HP, PTEN, PDS, NBR, UNT) can make some very nice runs. Accumulating them on the dips now, should be a very profitable strategy.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group