Unit Corporation has declared its initial 2010 capital expenditures budget for all of its business segments of $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, which includes $319 million for drilling and completion activities and is a 66% increase over estimated 2009 capital expenditures, $49 million for its contract drilling segment, a 27% decrease over estimated 2009 capital expenditures, and $53 million for its midstream segment, a 446% increase over estimated 2009 capital expenditures.
The company's 2010 operating budget is based on oil and natural gas prices averaging $72.00 per barrel and $5.30 per million cubic feet (Mcf), respectively, and, in addition to other items, may be adjusted based on changes in commodity prices and industry conditions. The 2010 capital expenditures program is anticipated to be funded mainly through internally generated cash flow and to a lesser extent from borrowings under the company's bank credit facility.
Larry Pinkston, President and Chief Executive Officer of Unit Corporation, said,'Our increased drilling activity in the oil and natural gas segment will be concentrated in the areas that provide the highest economic returns, which currently are concentrated in our Granite Wash and Segno plays. With the reduction in well costs that occurred during 2009, we are entering 2010 drilling aggressively with a significant portion of the wells we drill in 2010 being horizontal.
'While our overall capital spending in the contract drilling segment for 2010 will be less than in 2009, the focus will be on refurbishing and upgrading drilling rigs in our fleet. We will be converting mechanical drilling rigs to electric drilling rigs, adding top drives and larger mud pumps, to ensure our drilling fleet will meet our customers' drilling requirements.
'Our increase in capital spending in the mid-stream segment is attributable to increased drilling activity we anticipate by operators in the areas of our existing gathering systems resulting in new well connections. Additionally, we will be adding a second processing facility in the Granite Wash play to accommodate the increased drilling activity of our oil and natural gas segment as well as that of other operators.'
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