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Unit Corporation (NYSE:UNT)

Q2 FY08 Earnings Call

August 5, 2008, 11:00 AM ET

Executives

Larry D. Pinkston - President and CEO

Mark Colclasure - Sr. VP of Operations

David T. Merrill - CFO and Treasurer

Analysts

John Fitzgerald - Raymond James

Pierre Connor - Capital One

Michael Salinsky - Energy Directions

Operator

Good morning. My name is Harley. And I'll be your conference operator today. At this time, I'd like to welcome everyone to the Unit Corporation Second Quarter 2008 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions].

This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. All statements, other than the statements of the historical facts included in this call that address activities, events or developments that the company expects or anticipates will or may occur in the future and our forward-looking statements.

A number of risks and uncertainties could cause actual results to differ materially from the statements including the productive capabilities of the company's wealth, future demand for oil and natural gas, future drilling regularization and day rates, the timing of the completion of drilling rates currently under construction, the ability to contract new rate additions to its fleet, projected additions and data service to the company's drilling rig fleet, projected growth of the company's oil and natural gas production, the ability to meet its consecutive quarterly positive net income goals, oil and gas reserved information as well as the ability to meet its future reserved placement goals, anticipated gas gathering, and processing rate and throughput volumes, the prospective capabilities of the reserves associated with the company's inventory of drilling sites, anticipated oil and natural gas prices, the number of wells to be drilled by the company's exploration segment, development, operational, implementation and opportunity risks, and other factors described from time-to-time in the company's publicly available SEC reports. The company assumes no obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise.

Thank you. I would now like to turn the conference over to Larry Pinkston. Please go ahead, sir.

Larry D. Pinkston - President and Chief Executive Officer

Thank you, Harley. Good morning everyone. I want to thank you for calling in to the Unit Corporation second quarter 2008 conference call.

With me today, I have David Merrill our CFO. We have Mark Colclasure, who is our Senior VP of Operations for Unit Petroleum and John Cromling, who is our Executive Vice President of our Rig operations. Brad, who usually joins us on this call, is out supporting our buyers [ph] today and hopefully he'll be back later in the week.

We released our second quarter report to the public this morning. The reference to our news release can be found on our corporate website. I'll spend a few minutes recapping Unit Corporation's second quarter and year-to-date 2008 results versus 2007. Mark will provide details of our E&P operations; David Merrill will discuss key financial facts and figures; and then I'll also provide some comments on our drilling rig and mid-stream operations. We'll take questions after our comments.

Let me say firstly, it was a very good operating and financial quarter for all of Unit's business and for our shareholders. Unit Corporation second quarter revenues of $370 million were an all time record and 29% stronger than the second quarter of 2007. We recorded 15% more revenues in this quarter than we did in the first quarter of this year.

Quarterly net income of $94 million was a little high. It was 23% higher than the first quarter of 2008 and 44% higher than 2007. And interesting note, our second quarter net income was higher than our full year net income for every year, prior to 2005.

Net income per diluted share of $2 was higher about 42% compared to the same quarter last year, and 21% higher than the first quarter. Our growth is coming without any dilutive effect or the need to buy in our shares. For the past six months of this year, net income was $3.65 per diluted share, 31% better than the $2.79 per diluted share recorded for the same period in 2007.

Cash flow from operating activities, the tough GAAP calculation was $162 million, corporate CapEx for the quarter was $145 million. EBITDA for the second quarter of 2008 was $209 million, up 39% from the second quarter of '07, and up 18% from the first quarter of 2008.

Production in the quarter was a company record 16 Bcf equivalents, which was 8% higher than the first quarter of 2008. Year-to-date we produced almost 31 Bcf equivalents, which was 18% more than the 26 Bcf we produced during the first six months of 2007. We also announced in our news release that they have increased our annual production estimate. We believe our year-over-year production will be up in the 13% to 15% range, well over 2007. Our previous production growth estimate was in the range of 10% to 12%.

We are very pleased with the performance of our E&P group. They have nearly 1,500 potential gross wells in our inventory with the best related 687 Bcf met unrisk reserve potential, giving us a good inventory of growing our production in the coming years. At this time, I think it's a good time to turn the call over to Mark for his comments about our exploration and production operations.

Mark Colclasure - Senior Vice President of Operations

Good morning everyone. The number of gross wells completed during the second quarter increased 26% over the first quarter, with 72 new wells being completed for a 90% success rate. The corresponding net well count also increased significantly by 41%, as we continue to drill a greater number of our own operative properties.

For June, we have completed 129 wells and have 38 additional wells in various phases of drilling or completing. We anticipate completing approximately 300 wells at year end, which would be an 18.5% increase over 2007. Here are several of the operational highlights that occurred during the second quarter.

In our Granite Wash and Morrow Play in the Texas Panhandle, we have added a fifth unit rig in June with plans to add a sixth rig by year end. Net daily production for the second quarter of 2008, increased to an average of 17.6 million cubic feet of gas equivalent or a 52% increase as compared to the first quarter of 2008, and 252% increase over the second quarter of 2007.

We've continued that growth into July and have achieved a company record net daily production averaging 20.7 million cubic feet of gas equivalent for the month, which is an 18% over the second quarter 2008 average.

We have first gas sales on 12 Granite Wash and four Morrow vertical wells during the second quarter. And plan to drill our first horizontal Granite Wash well in the third quarter. We anticipate that under our current plans, we will drill approximately 47 vertical and 3 horizontal Granite Wash wells in 2008 at an approximate net cost of $75 million.

In addition to successfully increasing our drilling activity, we are pleased that we have also increased our undeveloped leasehold position in the Granite Wash Play by 12,000 net acres during the first half of this year, which should allow us to maintain our drilling program into future years.

In our Segno prospect area located in the Texas, Gulf Coast, we have continued to increase our leasehold positions in this Well COGS [ph] Play during the second quarter. Our total acreage position in the Segno area is now approximately 80,150 gross acres and 63,350 net acres.

Our drilling activity for the first half of this year has been slightly below expectations as we have been concentrating on finalizing our leasehold acquisition and some delays with the arrival of an additional drilling rate. We had one unit rig drilling person in this prospect during the first half of this year, with plans to add a second unit rig in early August 2008, and a third unit rig near the end of this year or the beginning of next year.

On the completion side we had great results from the fracture stimulation of the BPC number three well, which we own a 100%. The well was drilled late last year and has been producing naturally at an average rate of approximately 3.2 million cubic feet and 180 barrels of condensate per day for the last several months, prior to fracture stimulation.

After the fracture stimulation performed in May 2008, the well has been producing at an average rate of approximately 6 million cubic feet and 300 barrels of condensate per day with very little decline during June and July. For 2008, we currently expect to drill approximately 15 wells and spend $50 million to $60 million net in the Segno area in 2008.

Development drilling in our Panola Field in Southeast, Oklahoma is progressing at a steady pace. We drilled three wells during the second quarter and anticipate all three will be gas producers. One of those wells, the Lively No. 9, is a 40 acre in-field location for the Cecil formation that looks very encouraging with initial flow rates in excess of 5 million cubic feet per day.

Currently, we are drilling two wells in the field with unit rigs with plans to drill approximately ten wells and spend approximately $33 million net in 2008. In our Panola expansion area to the East, the first well utilising 3D seismic has been drilled and completed and completion casing set. The well encountered a Spiro sand that appears to be gas productive from well log evaluation. Completion of this well has started and initial results should be known during the upcoming month.

There have been some delays in acquiring seismic permits to shoot the second phase of 3D seismic, which is now scheduled to be delivered at the end of this year. The merged data set from both 3Ds will be available in the summer of 2009.

With respect to the shale plays that we discussed in the July 2008 press release; here is the latest information. In the Marcellus, we are continuing to increase our leasehold positions and expect to close on several additional acreage blocks in the next month. Our current plans are to expose a total of approximately $40 million to $50 million net in the Marcellus play for leasehold acquisition. That will be divided between several different core areas and be approximately 180,000 gross and 52,000 net acres.

We expect drilling to commence on the Somerset county block later this year. An estimated drilling start date for the other acreage blocks will be discussed at a later date.

In our Bojer Haynesville shale play, we are moving ahead to test our first vertical Bojer Haynesville well drilled in Shelby County, Texas which we own 100%... excuse me 60% working interest. The well and encouraging net log, natural gas shows in both intervals and we anticipate test results will be available in the next several months. We also plan on starting a second vertical well in this prospect in the late third quarter. After evaluation of these two wells, we will formulate a drilling program for the play that will most likely include horizontal drilling.

Currently, we own approximately 27,200 gross acres and 11,500 net acres in the Bojer Haynesville play. In the Arkoma Basin of Southeast Oklahoma, we have drilled a total depth and set production casing on our initial horizontal Woodford well. The Crissure number 5H which we own 100% had good net log, natural gas shows throughout the 2,800 foot horizontal lateral and anticipate testing result in the upcoming month. We will begin drilling operations on a second Woodford well in the third quarter 2008.

Currently, we own approximately 97,000 gross acres and 18,100 net acres in the Woodford Play in the southeast Oklahoma. Development drilling in our horizontal Bakken shale play in North Dakota is continuing at a steady pace.

In the second quarter 2008, we participated in four horizontal wells that have all been completed as oil wells and currently have three additional horizontal wells drilling. Although the development of this leasehold is in its early stages, we are encouraged with results and expect drilling in the area to remain at a steady pace for the next several years. In 2008, we anticipate participating in 12 wells located within our 27,000 gross acre and 5,400 net acre prospect area.

In conclusion, we are pleased with the second quarter. Drilling activity in our core properties is fuelling dip production growth and we've demonstrated our ability to expand these core properties so that drilling can continue in the future years. We have been consistently adding shale play leasehold to our development program and although we don't have any well past to report at this time, we are confident that our leasehold position in these major shale plays will significantly contribute toward the company's future growth.

Back to Larry.

Larry D. Pinkston - President and Chief Executive Officer

Thank you, Mark. On the rig side, you will realize some increased demand for our drilling rigs in each of the basins where we operate. We have 131 rigs at the moment; 112 are working and another 3 are in the process of being contracted.

Since the beginning of the year, we have seen U.S. rig count rise by 169 rigs to 1951 in response to the high commodity prices. Not all rigs are equal in demand. Demand for rigs, capable of drilling deeper and longer horizontal laterals are the most sought after. Two-thirds of our fleet are 89 rigs have power ratings ranging from 750 to 2,000 horse power, capable of meeting the needs of today's most active operators.

Our customers drilling programs are larger. The pace of their drilling activity is accelerating. They need rigs that can drill faster, deeper, that can drill longer horizontal well bores, and they need rigs with larger mud pumps and top drives.

Second quarter 2008 average rig rates came in at $17,890 a day, are only $107 less than our day rates in the first quarter of '08. We averaged 104.5 rigs working in the quarter and 80% utilization rate. Year-to-date, our average day rate was $17,943. We have been increasing our day rates on the 750 to 1,500 horse power rigs 5% to 8% when existing contracts roll-off. It's very important for us to keep rigs working and keep our day rates at levels that reflect our capital investments and our rig crew experience.

Regarding margins, cash flow in the second quarter was $8,339 per day per rig, down 5% for the first quarter of '08. Year-to-date margins averaged $8,551 a day which is 13% less than the margins posted in the first half of '07.

We talked in the last quarter of advising two new bill 1,500 SGR rigs in the Pinedale Basin to drill for a very active customer. Those rigs are currently working under three year contracts. With the delivery of these two rigs, we now have 300 rigs working in Pinedale.

We have 11 new built rigs in various stages of construction. All 11 rigs are committed to customers under two to three years commitments. The day rates for these rigs range from $20,000 to $27,000 per day, depending on where they will be operating and whether they are include to top drive. We expect two other rigs to begin operations in the fourth quarter and the remaining nine rigs will be delivered throughout 2009.

I highlighted in our last conference call that second quarter day rates will be flat to slightly down from first quarter. We were only down $107 per day. I believe Unit is well positioned to meet customer's current and future demands for rigs in the 750 to 1,500 horsepower class. Based on our experience and our observations, we believe it's a good time to bring more customer ordered rigs to this market.

The mid-stream segment continued its strong operational financial results for the second quarter. Record volumes or gas process, the liquid recovered continued to be achieved in several of our facilities. Two potential plant expansion projects are being evaluated or as a result of gas volume growth.

As mentioned in the first quarter conference call, Superior is on track to start up. During the third quarter, an additional $30 million Mcf per day processing plant at an existing site in the Texas, Panhandle. Superior continues to negotiate two possible construction projects in the mid-continent and is optimistic these negotiations will reach a successful conclusion.

One of the projects would include the construction of the new processing plant, Superior's recently opened business development office in Pittsburgh is actively engaged in multiple conversations about relation based producers regarding the potential construction and pipelines to serve the area's increasing drilling activity. Superior's efforts in Appalachia are directed to both the coal bed methane gas production and the new shale plays such as the Marcellus and Iran.

Superior's 2008 capital expenditure budget was increased from $32 million to $48 million at mid-year due to the increasing pace of investment opportunities available to Superior. Superior pipeline continues to pose strong results. Second quarter liquid volumes was up 78% for the second quarter of '07 and up 10% for the first quarter of this year. Superior processed an average of 67,545 MMBtu per day in the second quarter, also a new company record.

David Merrill, will now provide you the detail of our finances and our operating metrics.

David T. Merrill - Chief Financial Officer and Treasurer

Thank you, Larry and good morning everyone. EBITDA for the second quarter of 2008 was $209.4 million, an increase of 39% from $151 million in the second quarter of 2007 and an increase of 18% from a $177.9 million in the first quarter of 2008.

For the second quarter of 2008, the oil and natural gas segment contributed 62% of EBITDA; contract drilling contributed 34% and mid-stream contributed 4%. Capital expenditures, excluding acquisitions for the second quarter of 2008 were $145.4 million, a 31% increase from the second quarter of 2007.

On July 1, we reported the results of the mid-year review of our 2008 capital budget, increasing our original budget by 35% to $692 million. The petroleum segment budget is now $470 million, an increase of 31% from the original budget; the drilling segment budget is $173 million, an increase of 45%; and the mid-stream budget is $48 million, an increase of 50% as Larry has just mentioned.

In the first six months of 2008, we have spent $292.7 million or 42% of our 2008 capital budget. Larry previously discussed second quarter day rates and margins for the drilling segment and production growth with the petroleum segment. I want to highlight our second quarter 2008 to first quarter 2008 expense trend.

Contract drilling operating cost per day increased 1% or $93 per day from the first quarter of 2008 to the second quarter of 2008. And our... for the second quarter were $8,229 per day. Petroleum segment operating cost per Mcf equivalent, before production taxes and work over expense decreased 5% or $0.05 from the first quarter of 2008 to the second quarter of 2008 at $1.03.

The industry is continuing to see increases in cost and Unit is certainly not exempt from this trend. But I am pointing out that we have and will continue to work diligently to efficiently operate all our businesses and staying disciplined in watching costs as something all our personnel are focused on.

For the second quarter of 2008 basis differentials for our natural gas production for our E&P business averaged $1.33 reduction from NYMEX, which is not out of the ordinary where NYMEX prices have risen to high level such as the $11 to $12 Mcf we experienced during the quarter. Approximately, 70% of our natural gas production is delivered at Center Point east and Panhandle east where differentials averaged $1.73 reduction from NYMEX during the second quarter of 2008.

Just recapping our hedging, we have hedged approximately 48% of our current daily natural gas production through September 2008 and 34% of our current daily natural gas production from October through December 2008. And we have had 73% of our current daily crude oil productions for 2008. These hedges consist of a combination of swaps and collars and are at prices in excess of the prices we realized for 2007.

Our natural gas swaps are at an equivalent NYMEX price of $8.46 and are executed at our delivery points with an average differential of $0.94. The natural gas collars through September 2008 are at an equivalent NYMEX floor of $9.16 and ceiling of $10.41 and are also executed at our delivery points with an average differential of $0.98. The natural gas collars from October 2008 through December 2008 are at an equivalent NYMEX floor of $7.76 in the ceiling of $9.17 and are also executed at our delivery points with an average differential at $0.54.

The crude oil swaps are at $91.32 and the collars for our crude oil average of floor of $86.67 and a ceiling of $100. For 2009, the hedges we had in place our collars for only natural gas and cover the period January through December and approximately 14% of our current daily natural gas production... and cover approximately 14% of our current hedging natural gas production.

The collars are at an equivalent NYMEX price of $8.53 and are executed at our delivery points with an average basis differential at $0.50. More detail on our hedges is in our form 10-Q, which you can take a look at.

The effective income tax rate for the second quarter of 2008 was 37%, and is what we currently estimate for the year. The percentage of tax expense to be deferred increase from the first quarter primarily due to expected increase in tangible drilling costs and bonus depreciation on equipment and we currently estimate the deferral rate for the year to be approximately 75%.

Unit has a debt to capitalization ratio as of June 30, 2008 of 6% with $102.8 million in long-term debt outstanding. The borrowing base associated with our credit facility is currently $500 million based on a recent re-determination by our bank group. However, in order to save commitment fee charges, we have elected a current commitment amount of $275 million.

Our working capital at the end of the second quarter was $26.7 million and our balance sheet remain strong and we have adequate cash flow and available credit to fully fund our 2008 capital program.

I'll now turn it back to Larry for some closing remarks.

Larry D. Pinkston - President and Chief Executive Officer

Thank you, David. I've talked in the past about how Unit is very unique, having three very profitable business segments. Mark discovered some of the new projects that we're very excited about. The drilling rigs are in great demand and we have the right fleet for leading the growing market for horizontal drilling programs.

Superior pipeline is processing greater and greater volumes, including and expanding into different market areas. I believe we have a very clear growth path for the remainder of 2008 and into 2009.

Harley, I would like now to open up the call for questions.

Question And Answer

Operator

Yes, sir. [Operator Instructions]. Your first question comes from the line of John Fitzgerald, Raymond James.

John Fitzgerald - Raymond James

Good morning guys.

Larry D. Pinkston - President and Chief Executive Officer

Hi John.

John Fitzgerald - Raymond James

On the contract drilling side, are you guys ... are the pricing increasing offsetting the cost inflation you understand do you margins to go up next quarter?

Larry D. Pinkston - President and Chief Executive Officer

Yes. I mean our increasing... we are seeing on a process is exceeding the inflation on our cost without question, yes.

John Fitzgerald - Raymond James

Okay. And, I guess out of your 131 rigs you have now, how many of that are stacked, if any?

Larry D. Pinkston - President and Chief Executive Officer

Permanently, stacked all we have two or three that we would consider into that category, maybe three or four. The rest of them are very marketable that there might be three or four that we would consider that we are not gainfully trying to market everyday, the smaller end of the rig fleet.

John Fitzgerald - Raymond James

Those are the ones that wouldn't be going back to the smaller horsepower ones like below 750?

Larry D. Pinkston - President and Chief Executive Officer

Those are the ones that are going to be the hardest to work, the 400 horsepower type rigs.

John Fitzgerald - Raymond James

Okay. And then on your new builds, what type of customers are you seeing or demanding these new build rigs you depend on contracts. So these independent private guys are and are any of those going to Unit or so?

Larry D. Pinkston - President and Chief Executive Officer

One of them right now is 11 we've got kind of satisfied for our own operations. The other TN, it varies all the way from large independents Sam to guys who will just keep one or two rigs running year in, year out. No majors.

John Fitzgerald - Raymond James

Okay. Those from me. Thanks.

Operator

Your next question comes from the line of Pierre Connor, Capital One.

Pierre Connor - Capital One

Good morning gentlemen.

Larry D. Pinkston - President and Chief Executive Officer

Hello Pierre.

Pierre Connor - Capital One

Larry, first on the drilling side, what is your current number of top drives that you had, you mentioned that being a primary driver of demand from your customers? How many top drives do you have on rigs with top drives, I guess?

Larry D. Pinkston - President and Chief Executive Officer

We currently have 25, Pierre that are running in the fleet. And we have nine ordered for our new rigs that are coming out.

Pierre Connor - Capital One

And, I'm assuming that other rigs that is available direct height [ph] for the customer to employ a rental top drive if necessary?

Larry D. Pinkston - President and Chief Executive Officer

Yes. We can... if... in that situation yes, almost all of our rigs have the capacity to top drivers on.

Pierre Connor - Capital One

Larry, you look into... continue to put more top drives in your existing fleet. Will you... you've got nine for the new rigs, what about for existing new rigs. Will you order additional?

Larry D. Pinkston - President and Chief Executive Officer

Well, we would love to Pierre. I mean the margins we make on the rigs... on the top drives are out now is very nice. But that's a customer driven. If the operations call for top drives on pipe wells that they are drilling, yes without question, we'd love to top drives on them that they'll, conventional type vertical wells, so it's their several skill being drilled in Oklahoma that operator doesn't require top or doesn't demand top drives that any place that it looks like top drives are going to be used for any of the length of time at all, definitely consider top drives on those rigs.

Pierre Connor - Capital One

Still on that side, the number of rigs working for Unit will go up by one sometime or did go up by one in June, if I've got that right. Until what I'm trying to get a handle on, with $ 6.4 million in company elimination, does that go up sequentially or basically how many more rigs will you think going to work for Unit?

Larry D. Pinkston - President and Chief Executive Officer

Well, it will continue to grow. I mean as we grow our E&P program, we'll continue to put more rigs to the work. During this year, I mean its times it gets down to as low as nine or ten and at times it will be running 13 or 14. But on a continual program, we are planning on building two more to work in Segno later this year that we may have had an average of half to one during the first half of this year. And then one of the new rigs that will be out in, I think it's play of '09, it will be moving to Unit Petroleum full time. The Texas Panhandle we're going to be running six rigs out there. We pretty much average five... four to five this year. So, it will be continually growing number.

David T. Merrill - Chief Financial Officer and Treasurer

Pierre, this is David. That will be a combination of two things, one you are adding Unit Petroleum, adding a few rigs here and there and also as day rates continue to increase, we'll see... that level cause that and elimination number to grow a little bit too.

Pierre Connor - Capital One

Sure.

Larry D. Pinkston - President and Chief Executive Officer

And directionally I think we're growing it one to two a quarter, I would think that.

Pierre Connor - Capital One

Okay. May be to David, just a little good overview on all your acreage positions and activities and maybe I may have missed it, but the timing on the one I didn't get was the Marcella's. When you think you'd be up there with some drilling operations?

David T. Merrill - Chief Financial Officer and Treasurer

We've got one well that will be... one rig that will be starting later this year.

Pierre Connor - Capital One

Okay.

David T. Merrill - Chief Financial Officer and Treasurer

For sure and then we are looking at additional operations but at least rig this year.

Pierre Connor - Capital One

Okay.And just going back to the other one update on the Haynesville, if I heard you right, you first is vertical well and the second vertical well plant in 3Q. You don't have a horizontal currently on the design. Is that right?

Larry D. Pinkston - President and Chief Executive Officer

We've got a target identified, but we're going to look at our results from the first two vertical tests. And we anticipate that it would probably warrant drilling horizontal well but we're going to wait to decide until we see those results.

Pierre Connor - Capital One

So that's probably next year?

Larry D. Pinkston - President and Chief Executive Officer

Yes.

Pierre Connor - Capital One

Okay.

Larry D. Pinkston - President and Chief Executive Officer

Late this year, or early next year.

Pierre Connor - Capital One

Okay. Okay. I'll let some other guys get a chance. Thanks gentlemen.

Larry D. Pinkston - President and Chief Executive Officer

Thank Pierre.

Operator

[Operator Instructions]. Your next question comes from the line of Michael Salinsky, Energy Directions.

Michael Salinsky - Energy Directions

Good morning gentlemen.

Larry D. Pinkston - President and Chief Executive Officer

Hello, Michael.

Michael Salinsky - Energy Directions

Your natural gas liquids production has more than doubled. The current quarter versus the year ago versus 11% for natural gas, 28% for crude oil, where did that come from? Were you producing a lot less of your potential liquids a year ago and now are you up at say 100% of what's possible? Or can there be big gains relative to crude and particularly natural gas in the future?

Larry D. Pinkston - President and Chief Executive Officer

Okay. You are talking about the liquids in our mid-stream business or liquids on our E&P side?

Michael Salinsky - Energy Directions

Liquids in E&P.

Unidentified Company Representative

I think that increase is reflective of... we've significantly increased volumes in the Granite Wash and the Texas Panhandle that we talked about and also our Segno area down in the Gulf Coast. Both of those areas have very good NGL recoveries and so, we significantly increase gas production and correspondingly NGL production. Most of our growth is come from...

Larry D. Pinkston - President and Chief Executive Officer

Mike that should say it will continue the exact same pattern or same amounts that we've seen in the last six months. But that should continue to grow, and we're going to be drilling more wells in Segno, we're adding additional rig in the Texas Panhandle. And both of those areas are areas with both liquids and oil production. So it should continue to grow.

Michael Salinsky - Energy Directions

Okay. Thank you very much.

Operator

Mr. Pinkston, at this time there are no further questions.

Larry D. Pinkston - President and Chief Executive Officer

Alright. Thank you, Harley. I want to thank you for listening to our second quarter conference call. I hope at least some of the information that was provided today in our news release in this conference call will help you understand, how well all three of our segments work together.

On August 12, the next Tuesday, we will be presenting at the Intercom Oil and Gas conference in Denver. Our presentation time is at 10.05 Daylight and Mountain Time. And we hope to see many of you there. Thank you, again.

Operator

: Thank you for participating in today's Unit Corporation conference call. You may now disconnect.

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