Unit Corp deems 3 of 4 intervals economic in Granite Wash

Tulsa, Okla.-based Unit Corp. (NYSE:UNT) is logging new developments in the Texas Panhandle portion of the Granite Wash. With reserve estimates of its 2009 Frank Shaller 7H horizontal well standing at 6.0 to 8.0 Bcfe and four wells drilled in the first quarter of 2010 (three vertical and one horizontal), the company is testing the area for further drilling.

The company has identified seven different sand intervals in the Granite Wash that might be economically to develop and has tested four of these intervals to date. Results from three of the four indicate that they are economic to develop at current prices.

The other, a well with a first sales rate of approximately 1,800 Mcfe per day with reserves estimated between 1.5 to 2.0 Bcfe on March 1, was deemed uneconomic.

Related spending
Earlier in the year, the company set its initial 2010 capital expenditures budget at $467 million, an increase of 57% over estimated 2009 capital expenditures. Of this amount, $365 million is budgeted for its oil and natural gas segment.

When the budget was set in January, Larry Pinkston, president and CEO noted that the increased drilling activity would be concentrated “in the areas that provide the highest economic returns, which currently are concentrated in our Granite Wash and Segno plays.”

The Frank Shaller 7H is a horizontal Granite Wash well drilled in late 2009 that continues to produce at a rate of approximately 5,800 Mcfe per day after four months online. This well has estimated reserves of 6.0 to 8.0 Bcfe.

To help accommodate the increase Granite Wash drilling activity for the company and other operators, the company plans a second processing facility in the area.

Unit Corp. is 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.

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