Unit Corporation (NYSE:UNT) Q4 2017 Earnings Conference Call - Preliminary Transcript

Feb 22, 2018 • 11:00 am ET


Unit Corporation (NYSE:UNT) Q4 2017 Earnings Conference Call - Preliminary Transcript


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Welcome to the Unit Corporation's Fourth Quarter 2017 Earnings Call. My name is John, 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 will 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. The reconciliation of these non-GAAP measures to GAAP measures can also be found in today's press release. This document is available on the company's website.

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

Larry Pinkston

Thank you, John. Good morning, everyone. We want to thank you for joining us this morning. With me todayare David Merrill, Les Austin, Brandt Elias, John Cromling and Bob Parks. Les Austin joined us in November as Senior Vice President and Chief Financial Officer and Brandt Elias is filling in for Frank Young, who is unable to participate on the call today. Each of these gentlemen will be providing you with updates concerning their segments and then we will take questions at the end of the call.

I'll now turn the call over to David Merrill.

David Merrill

Good morning. We are pleased to report very solid results for Q4 and 2017. The year was marked by improvements and successes in each of our three business segments. We continue to focus on growth in all three segments while maintaining capital budget in line with cash flow. Despite headwinds from our reduced drilling activity through most of 2016 in our oil and natural gas segment, we were able to begin growing production in the second quarter which continued through the balance of the year.

Additionally, we were able to replace 300% of 2017 production with new reserves, resulting in a 27% increase to total proved reserves. In 2017, our contract drilling segment had a 72% increase in the number of rigs operating over 2016 and we've placed our 10th BOSS rig into service during the second quarter.

Our midstream segment achieved growth in liquids sold volumes and gas processed volumes in the fourth quarter due to increased activity levels around its gathering and gas processing systems. The midstream segment also posted a record operating profit in 2017.

I'll now turn the call over to Les Austin.

Les Austin

Thanks, David. We reported net income for the fourth quarter of $89.2 million or $1.71 per diluted share. This amount includes $81.3 million in tax benefit related to the revaluation of our net deferred tax liability as required under the December 2017