Unit Corp.

Unit Corp. (UNT - Snapshot Report) recently delivered second-quarter earnings per share of $2.00, eclipsing the previous year’s $1.41 and topping the consensus estimate by a penny. During the past four consecutive quarters, the company’s earnings results were ahead of Street estimates three times and matched the other time.

Company Description

Unit Corporation is a diversified energy company engaged through its subsidiaries in the exploration for and production of oil and natural gas, the acquisition of producing oil and natural gas properties, the contract drilling of onshore oil and natural gas wells, and the gathering and processing of natural gas. Operations are principally located in the Mid-Continent region, including the Anadarko, Arkoma, Permian, Rocky Mountains and Gulf Coast Basins.

Solid Quarterly Results Included a New Record for UNT

The company recently delivered second-quarter earnings per share of $2.00, eclipsing the previous year’s $1.41 and topping the consensus estimate by a penny. During the past four consecutive quarters, the company’s earnings results were ahead of Street estimates three times and matched the other time.

Total revenues of $691.5 million set a six-month record for Unit and jumped 29% on a year-over-year basis.

“This quarter we achieved significant improvements over the same quarter in 2007 in all areas of our operations,” said Larry D. Pinkston, President and Chief Executive Officer. He attributed year-over-year growth to a 21% increase in total oil, natural gas liquids (NGLs) and natural gas production, a 7% increase in the number of drilling rigs working, a 58% increase in natural gas processed per day and a 78% increase in natural gas liquids sold per day by the company’s mid-stream operations.”

Estimates are Higher

Wall Street has full-year 2008 earnings pegged at $7.80 per share. Two months ago, Earnings estimates were at $7.43 per share. |

Value Fundamentals

UNT is trading at 8x its forward earnings. Its price-to-book (P/B) is 1.8, versus the industry average of 2.1. The company’s return on equity (ROE) of 21% is above the industry average of 17%. Earnings per share are expected grow by 21% over the next 3 – 5 years, which also compares favorably to the industry average of 15%.