Unit Corporation (NYSE: UNT) announced today that the estimated year-end 2012 proved oil and natural gas reserves for its wholly owned subsidiary, Unit Petroleum Company, were 150 million barrels of oil equivalents (MMBoe), or 899 billion cubic feet of natural gas equivalents (Bcfe), as compared with 116 MMBoe, or 696 Bcfe, at year-end 2011, a 29% increase in its estimated proved reserves. From all sources, Unit replaced approximately 337% of its 2012 production. Estimated reserves were 15% oil, 23% natural gas liquids (NGLs), and 62% natural gas.
The present value of the estimated future net cash flows from the 2012 estimated proved reserves (before income taxes and using a 10% discount rate (PV-10)), was approximately $1.5 billion. The present value was determined using the 12 month 2012 average price received. The aggregate price used for all future reserves was $91.57 per barrel of oil, $30.57 per barrel of NGLs, and $2.58 per thousand cubic feet (Mcf) of natural gas. Unit’s 2012 year-end proved reserves were independently audited by Ryder Scott Company, L.P. Their audit covered properties which accounted for 82% of the discounted future net cash flow (PV-10). See below for the reconciliation of PV-10 to the standardized measure of discounted future net cash flows as defined by GAAP.
Unit anticipates it will incur a non-cash ceiling test write down between $165 million to $180 million ($103 million to $112 million, after tax) in the fourth quarter of 2012. The ceiling test write down is required to reduce the carrying value of the company’s oil and natural gas properties because of the impact of significantly lower net 12-month commodity prices. From December 31, 2011 to December 31, 2012, the net 12-month average prices received decreased $0.43 per barrel of oil (1%), $15.58 per barrel of NGLs (34%), and $1.25 per Mcf of natural gas (33%). The depreciation, depletion and amortization rate for the fourth quarter of 2012 is estimated to be $13.80 per Boe, a 10% increase over the third quarter of 2012 and a 12% reduction over the fourth quarter of 2011.
Source: Business Wire
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