Tulsa-based Unit Corp. this month joined a long list of Lower 48 operators whose share values have plummeted this year and has been given six months to regain compliance under New York Stock Exchange (NYSE) rules.
Unit was notified by NYSE earlier this month that its average closing price had fallen below $1.00/share for 30 consecutive days. Under the NYSE rules, Unit was given the standard six months from Dec. 19 to regain compliance.
The notification has not affected Unit’s business operations or its Securities and Exchange Commission reporting requirements, management said. The notice also does “not conflict with or cause an event of default under any of the company’s material debt or other agreements.”
Unit’s three operating segments are oil and gas, drilling and midstream.
Unit reported a net loss of $206.9 million (minus $3.91/share) in 3Q2019, versus year-ago net income of $18.9 million (36 cents). Total revenues were $155.4 million (50% oil and natural gas, 24% contract drilling, and 26% mid-stream), compared with $220.1 million (51% oil and natural gas, 23% contract drilling, and 26% midstream) for 3Q2018.
The results in 3Q2019 included several large writedowns, including nearly $170 million in the carrying value of the oil and natural gas properties and some gathering system assets; $62.8 million in goodwill associated with the contract drilling segment; and $2.3 million in the carrying value of line-fill associated with the midstream segment.
“The loss is primarily attributable to the deterioration in realized natural gas liquids (NGL) prices and natural gas prices experienced during the quarter,” management said.
For 3Q2019, total production was 4.4 million boe, a 6% sequential increase. Oil and NGLs production represented 49% of total equivalent production. Oil production was 10,074 b/d in 3Q2019, an increase of 26% over the second quarter. NGL production was 13,480 b/d, a 1% sequential increase, while natural gas production was 145.2 MMcf/d, a 1% decrease.
"The quarter's early focus was on completion activities for wells drilled in the prior quarter,” CEO Larry Pinkston said. “While third quarter production resulted in a significant increase over the second quarter, we anticipate annual production to be in line with our projection of approximately 17.0 million boe as we continue to have no rigs currently running for this segment."
During 3Q2019, production by the Unit Petroleum segment increased 6% sequentially while capital expenditures decreased by 56%. Oil output was up 28% over the second quarter, with lease operating expenses falling by 11%.
In the contract drilling segment Unit Drilling, the Boss drilling rigs continued to be 100% contracted, management Construction of a 14th Boss drilling rig also was “substantially completed,” and the rig was slated to begin working by the end of this year.
Many other operators are facing a financial squeeze as oil and natural gas prices continue to stagnate.
Dallas-based New Concept Energy Inc., which owns oil and gas wells as well as mineral leases in Ohio and in West Virginia, said it was notified earlier in December that it was “below compliance” with continued NYSE listing standards.
New Concept said it had losses from continuing operations in three of its four most recent fiscal years ended Dec. 31, 2018. The company is allowed to submit a plan by Jan. 16 “advising of actions it has taken or will take to regain compliance with the continued listing standards by Dec. 17, 2020.”
New Concept’s plan is to include “specific milestones, quarterly financial projections and details related to any strategic initiatives it plans to complete.” Management said it was in the process of preparing the plan to be in full compliance.
Earlier this month, Lower 48 stalwart Chesapeake Energy Corp. was notified by NYSE that it had six months to remedy its stock performance before its shares were pulled from the market.