UNIT CORP (UNTC)·Q2 2021 Earnings Summary

Executive Summary

• Q2 2021 revenue was $134.1M, up from $120.9M in Q1 2021 and $89.0M in Q2 2020, reflecting higher commodity prices and stronger Mid-Stream volumes/pricing; however, bottom-line was pressured by a $42.4M loss on derivatives, yielding a net loss attributable to Unit of $(13.0)M and diluted EPS of $(1.09) .
• The Board authorized a $25M share repurchase program, and the company repurchased 600,000 shares on June 16 for $9.0M ($15.00/share); long-term debt was $35M as of June 30, 2021, highlighting deleveraging and capital return as key near-term catalysts .
• Segment performance: Mid-Stream revenues rose to $74.0M in Q2 (vs. $50.2M in Q1), Contract Drilling improved sequentially, and Oil & Gas revenues moderated vs. Q1 but were far above Q2 2020; the company emphasized free cash flow, debt reduction, and selective investment across segments .
• No formal quantitative guidance or earnings call transcript was available; management reiterated strategy focus and balance sheet discipline in filings and press releases; fresh-start accounting limits comparability to pre-emergence periods .

What Went Well and What Went Wrong

• What Went Well

  • Mid-Stream revenue accelerated to $74.0M, up sharply from $50.2M in Q1, driven by price tailwinds despite lower YoY volumes; management continues to target predictable free cash flow with limited commodity exposure .
  • Contract Drilling revenue increased sequentially to $18.1M (from $15.7M in Q1) with rigs in use averaging 10.0 (vs. 9.4 in Q1); focus remains on BOSS rig utilization .
  • Capital return and balance sheet: $25M buyback authorization, $9.0M repurchase executed on June 16, and long-term debt at $35M as of quarter end highlight improved financial flexibility. CEO quote: “The board's approval of this stock repurchase program reflects the confidence we have in our company… and reduction in long-term debt…” .

• What Went Wrong

  • Significant hedge headwinds: Q2 loss on derivatives of $(42.4)M materially impacted earnings (Q1: $(22.8)M; Q2 2020: $(6.9)M) .
  • Oil & Gas revenues moderated sequentially (Q2: $42.0M vs. Q1: $55.0M) despite higher YoY price realizations; volumes declined YoY due to natural declines not offset by new drilling/acquisitions .
  • Continued absence of formal guidance and lack of earnings call transcript reduces near-term visibility for investors; fresh-start accounting also constrains YoY comparability .

Financial Results

Segment revenue breakdown (after inter-segment eliminations):

Key operating KPIs:

Notes: Comparability to 2020 periods is affected by fresh-start accounting post-emergence on 9/3/2020 .

Guidance Changes

Earnings Call Themes & Trends

No Q2 2021 earnings call transcript was available; themes below reflect MD&A and press releases.

Management Commentary

• Strategy: “Our strategy is focused on value accretion through generation of free cash flows, repayment of debt, and selective investment in each business segment.”
• Capital returns and confidence: “The board's approval of this stock repurchase program reflects the confidence we have in our company as well as our commitment to optimizing shareholder returns… Our improved operational performance and reduction in long-term debt provide an opportunity… including potential business acquisitions.” — Philip B. Smith, Chairman & CEO .

Q&A Highlights

• No Q2 2021 earnings call transcript was available; therefore, there are no Q&A takeaways or on-call guidance clarifications to report for this period [ListDocuments showed none; 2021 transcripts not found].

Estimates Context

• Wall Street consensus (S&P Global) for Q2 2021 EPS and revenue was not available via our data pull at this time (SPGI daily request limit reached). In prior checks, UNTC had limited sell-side coverage as an OTC-traded issuer; accordingly, we anchored comparisons to reported results and internal trends. Values retrieved from S&P Global were unavailable due to API limit; consensus should be treated as unavailable for this recap at this time.

Key Takeaways for Investors

• Strong sequential revenue growth to $134.1M was driven by Mid-Stream strength; however, a sizable $(42.4)M derivative loss overshadowed operating profitability and resulted in a $(13.0)M net loss (diluted EPS $(1.09)) .
• Capital return and balance sheet: $25M buyback authorization, $9.0M repurchase executed on 6/16, and $35M long-term debt as of 6/30 underscore a shareholder-friendly stance with improving leverage .
• Segment trajectory: Mid-Stream improving sequentially, Drilling recovering with slightly higher utilization/dayrates, while Oil & Gas remains mixed—prices up YoY but volumes down YoY due to natural declines .
• Hedge headwinds are a central P&L variable to monitor; continued large non-cash mark-to-market losses could mask underlying operating gains; watch 2H hedge books and strip moves .
• Fresh-start accounting limits direct comparability to pre-emergence periods; focus on sequential metrics and post-emergence run-rate .
• Near-term catalysts: incremental buyback activity, incremental rig activations, Mid-Stream commercial wins, and updates on acquisitions/divestitures referenced in strategy .
• With no formal guidance or call transcript, monitor upcoming filings/8-Ks for operating updates and capital allocation signals .

References:

• Q2 2021 10-Q financials, segment data, and MD&A .
• Q1 2021 10-Q financials and segment data .
• Q2 2020 comparative figures (within Q2 2021 10-Q) .
• 8-K (7/13/2021): $25M buyback; $35M long-term debt as of 6/30/2021 .
• 8-K (6/21/2021): Repurchase of 600,000 shares for $9.0M on 6/16/2021 .
• 8-K (7/27/2021): Issuance of ~680,000 new common shares under Plan (post-Q2) .
• 8-K (8/4/2021): Warrant issuance process/status (post-Q2) .