Unit Corporation (NYSE:UNT) Q4 2015 Earnings Conference Call - Final Transcript

Feb 25, 2016 • 11:00 am ET


Unit Corporation (NYSE:UNT) Q4 2015 Earnings Conference Call - Final Transcript


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Welcome to the Unit Corporation Fourth Quarter and Year End 2015 Earnings Conference Call. My name is Cynthia, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

During the course of the conference call today, the speakers may make statements that constitute projections, expectations, beliefs or similar forward-looking statements. The company's actual results could differ materially from the results anticipated or projected in any such forward-looking statements. Additional detailed information concerning the important factors that could cause actual results to differ materially from the information given today is readily available in today's press release under the heading forward-looking statements.

Additionally, during the conference, the company will be discussing certain non-GAAP financial measures. A reconciliation of those non-GAAP measures to GAAP measures can also be found in today's press release. This document is available on the company's website.

I will now turn the call over to Larry Pinkston, President and CEO. Larry Pinkston, you may begin.

Larry Pinkston

Thank you, Cynthia. Good morning everyone. We want to thank you for joining us this morning. With me today are David Merrill, Brad Guidry, John Cromling and Bob Parks. Each of these gentlemen will be providing you with updates concerning their segments. After their comments are concluded I will make a few final comments, after which then we will take questions.

Before we get into the individual reports I would like to take a moment and make a few remarks about the company and where we currently stand with regard to 2016. While we are pleased to close the books on 2015 our job now is to focus on 2016 and beyond. So far this year has not brought us the relief we hoped for from downward prices and increased production. To that extent, this current phase appears longer in duration and severity than previous downward phases at least since then that of the mid-1980s.

Regardless our task is clear, recognize the issues we face and deal with them in a purposeful manner. That is how we have survived in this business for over 50 years. Our first task is balance sheet stewardship. Accordingly, we've made difficult decisions around G&A cost reductions, capital expenditure levels and activity levels. We cannot control commodity prices, but we can exercise control of our cost. This allows us to manage our liquidity.

Our 2016 capital budget represents a 59% to 65% reduction from last year. This budget will be adjusted if it becomes necessary based on the future conditions. Our objective is to keep our capital expenditures below our anticipated cash flow. In addition, we plan to use any excess cash flow and proceeds from any asset sales to pay down our bank debt. Our bank debt at year-end was $281 million, today it is $267.7 million.

In our oil and natural gas segment, although Marchand and Wilcox locations can still exceed our minimum return