i have an investment in UNTC which has tremendous cash flow and this year paid out a 10.00 special dividend and is paying out 2.50/quarterly dividend. the new ceo is also largest shareholder so they are motivated to either sell or spinoff some of the assets with huge dividends in the meantim e.
UNTC reported earnings on August 8. The results looked great. Through the first half of the year, Unit has
generated $80.6MM of free cash flow. In the second quarter, it generated $32MM of free cash flow. Assuming an additional $60MM
of free cash flow in the second half of 2023, and total free cash flow for the year will be $140MM. Unit Corp's market cap is
$474MM and with $200MM of net cash, its enterprise value is $272MM. Thus, the stock is trading at a price to 2023 FCF multiple
of 3.4x and a EV/ 2023 FCF multiple of 1.9x. This continues to look extremely cheap, especially, considering the company has
declared $2.50 per share dividends in Q3 and Q4 while energy prices are rebounding.
interested in thoughts of anyone who may have looked at it.
Unit Corporation
Re: Unit Corporation
I found this on Yahoo..
Key info from UNTC's Q2 10-Q filing:
Dividend of $2.50/share
EPS $2.90 despite low oil and nat gas prices
Sources of earnings: 25% from O&G operations, 45% contract drilling, 30% from cap gain on sale of Superior asset and other
Cash of $200 million
pe ratio of 4.2 but only 2.4 if cash is subtracted
Zero borrowings, outside $2.1 million in letters of credit
Has access to term lending at SOFR + 5.25% and revolving credit at SOFR + 4.25% (about 10%, expensive, not being used)
Compliant with all covenants of loan agreement from bankruptcy, covenants expire on March 1, 2024
Capex and hedging optionality will improve once it exits above loan agreement
Current hedges for H2: 39% of nat gas volume with swaps at $2.46 and $3.14, and 46% of oil with swaps at $43.60
Compared to Q2 '22, production down of oil -19%, nat gas -24%, NGLs -31% owing to depletion of wells and sale of assets, not offset by new drilling or acquisitions (financing is expensive)
Compared to Q2 '22, contract drilling revenues up 41% thanks to better day rates, even better in Q3
No income tax expense recorded, thanks to use of deferred tax assets
Outlook is good for Unit. Oil prices far higher now than in Q2 and only 46% of oil hedged. Contract drilling is a strong insurance against low oil and nat gas prices; in Q2 it profited 2x as much from contract drilling than o&g. It is free of debt, mindful to exit the bankruptcy loan agreement in compliance. Then it will be free to access far cheaper financing and restart capex in o&g.
The company has a bankruptcy loan agreement that ends in March 2024.
Key info from UNTC's Q2 10-Q filing:
Dividend of $2.50/share
EPS $2.90 despite low oil and nat gas prices
Sources of earnings: 25% from O&G operations, 45% contract drilling, 30% from cap gain on sale of Superior asset and other
Cash of $200 million
pe ratio of 4.2 but only 2.4 if cash is subtracted
Zero borrowings, outside $2.1 million in letters of credit
Has access to term lending at SOFR + 5.25% and revolving credit at SOFR + 4.25% (about 10%, expensive, not being used)
Compliant with all covenants of loan agreement from bankruptcy, covenants expire on March 1, 2024
Capex and hedging optionality will improve once it exits above loan agreement
Current hedges for H2: 39% of nat gas volume with swaps at $2.46 and $3.14, and 46% of oil with swaps at $43.60
Compared to Q2 '22, production down of oil -19%, nat gas -24%, NGLs -31% owing to depletion of wells and sale of assets, not offset by new drilling or acquisitions (financing is expensive)
Compared to Q2 '22, contract drilling revenues up 41% thanks to better day rates, even better in Q3
No income tax expense recorded, thanks to use of deferred tax assets
Outlook is good for Unit. Oil prices far higher now than in Q2 and only 46% of oil hedged. Contract drilling is a strong insurance against low oil and nat gas prices; in Q2 it profited 2x as much from contract drilling than o&g. It is free of debt, mindful to exit the bankruptcy loan agreement in compliance. Then it will be free to access far cheaper financing and restart capex in o&g.
The company has a bankruptcy loan agreement that ends in March 2024.
Re: Unit Corporation
Solid company that I used to follow closely. I actually interviewed for a job at Unit multiple decades ago; before I went to work at Hess. Their office was only a few blocks away from the old Amerada Hess office in Tulsa.
Unit Corporation, together with its subsidiaries, engages in the exploration, acquisition, development, and production of oil and natural gas properties in the United States. It operates through three segments: Oil and Natural Gas, Contract Drilling, and Mid-Stream. The Oil and Natural Gas segment explores for, acquires, develops, and produces oil and natural gas properties. Its producing oil and natural gas properties, unproved properties, and related assets are primarily located in Oklahoma and Texas, as well as in Arkansas, Kansas, Louisiana, and North Dakota. The Contract Drilling segment is involved in the drilling of onshore oil and natural gas wells for a range of other oil and natural gas companies primarily in Oklahoma, Texas, New Mexico, Wyoming, and North Dakota. The Mid-Stream segment buys, sells, gathers, processes, and treats natural gas for third parties. This segment operates natural gas treatment plants, processing plants, gathering systems, and pipeline in Oklahoma, Texas, Kansas, Pennsylvania, and West Virginia. Unit Corporation was incorporated in 1963 and is headquartered in Tulsa, Oklahoma.
Unit Corporation, together with its subsidiaries, engages in the exploration, acquisition, development, and production of oil and natural gas properties in the United States. It operates through three segments: Oil and Natural Gas, Contract Drilling, and Mid-Stream. The Oil and Natural Gas segment explores for, acquires, develops, and produces oil and natural gas properties. Its producing oil and natural gas properties, unproved properties, and related assets are primarily located in Oklahoma and Texas, as well as in Arkansas, Kansas, Louisiana, and North Dakota. The Contract Drilling segment is involved in the drilling of onshore oil and natural gas wells for a range of other oil and natural gas companies primarily in Oklahoma, Texas, New Mexico, Wyoming, and North Dakota. The Mid-Stream segment buys, sells, gathers, processes, and treats natural gas for third parties. This segment operates natural gas treatment plants, processing plants, gathering systems, and pipeline in Oklahoma, Texas, Kansas, Pennsylvania, and West Virginia. Unit Corporation was incorporated in 1963 and is headquartered in Tulsa, Oklahoma.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Unit Corporation
I have added UNTC to my Watchlist, which is getting too long for an old analyst like me.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Unit Corporation
Point to note for anybody thinking about this one.
Declared dividend of $2.50 per share payable 9/26/23 goes Ex Dividend on 9/14/23.
Declared dividend of $2.50 per share payable 9/26/23 goes Ex Dividend on 9/14/23.