Energy Prospectus

My forecast was for net income of $1.16 per share on revenues of $415.3 million. Updating forecast model now. Other Sweet 16 reporting late today are EOG, OAS, SN and XEC. - Dan
---------------------------------------
Unit Corporation (UNT) today reported its financial and operational results for the third quarter of 2014. Highlights include:
• Revenue of $401.0 million, an increase of 20% over the third quarter of 2013.
• Oil and natural gas segment’s total equivalent production increased 9% over the third quarter of 2013.
• Oil and natural gas liquids (NGLs) production increased 19% and 4% over the third quarter of 2013 and the second quarter of 2014, respectively.
• Three additional BOSS drilling rigs contracted for third-party operators.
• Average drilling rigs working increased 5.6 drilling rigs over the second quarter of 2014.
• Midstream segment’s per day gas processed volumes and liquids sold volumes increased 17% and 32%, respectively, over the third quarter of 2013.

Net income for the quarter was $67.5 million, or $1.37 per diluted share, compared to $34.2 million, or $0.70 per diluted share, for the third quarter of 2013. Adjusted net income for the quarter, which excludes the effect of non-cash commodity derivatives, was $54.7 million, or $1.11 per diluted share, compared to $41.2 million, or $0.85 per diluted share, for the same period in 2013 (see Non-GAAP Financial Measures below). Total revenues for the quarter were $401.0 million (47% oil and natural gas, 30% contract drilling, and 23% mid-stream), compared to $333.8 million (47% oil and natural gas, 30% contract drilling, and 23% mid-stream) for the third quarter of 2013.

What CLR and NFX are calling "SCOOP" and "STACK", Unit Corp. is calling "SOHOT". Here is why I am so high on what is going on in central Oklahoma. - Dan

Per Unit press release:
"In the SOHOT area, production increased 56% during the quarter as compared to the second quarter of 2014, primarily because of two new operated horizontal Marchand completions. The Unit Earl # 2-30H (80% working interest) started producing on August 3, 2014. The 30-day, 60-day and 90-day initial rate for that well was approximately 1,581 barrels of oil equivalent (Boe) per day, 1,342 Boe per day, and 1,151 Boe per day, respectively. The second well, the Unit Rosey Havenstrite #1H (80% working interest), started production on September 11, 2014. The 30-day initial rate for that well was approximately 1,414 Boe per day. The average production mix of the two wells is 86% oil, 4% NGLs, and 10% natural gas. Currently, there are five new operated Hoxbar wells scheduled to be fracture stimulated during the fourth quarter. The majority of the production impact from these wells will not be realized until the first quarter 2015."

Unit Corp. (UNT): An updated Net Income & Cash Flow Forecast model has been posted under the Sweet 16 Tab.

Just for the heck of it, I took the crude oil price to $50/bbl for 2015 and my Fair Value Estimate for UNT went from $89.20 to $83.09. This company has a lot of natural gas production, which is going to be a good thing during the 4th quarter.

All of my forecast models start with the assumption that natural gas will average $3.50/mcf for 2015 and WTI will average $80/bbl for 2015. Regional differentials and hedges are taken into consideration in the forecast models.

REMINDER: All of the forecast models on the website are driven by formula ("macros") that are built into the Excel spreadsheets. Therefore, you can download the forecast models from the website and change the production volumes and commodity prices to see how it will impact the earning per share, cash flow per share and Fair Value Estimates.

2nd REMINDER: The market seems to be ignoring the hedges each company has in place. At the bottom of each forecast model, I show a summary of the hedges in place for each company.