Unit Petroleum says that at December 31, 2008, the company’s net total proved oil and natural gas reserves, as reviewed by its independent petroleum engineers, were 569.4 billion cubic feet equivalent (Bcfe) of natural gas, consisting of 9.7 million barrels (MMbls) of oil, 10.2 MMbls of natural gas liquids (NGLs) and 450.1 Bcf of natural gas. This represents an 11% increase over the company’s 2007 year-end net total proved reserves. These results include negative revisions of approximately 23 Bcfe resulting from lower commodity prices at year-end 2008 as compared to 2007. Eighty percent of the company’s proved oil and natural gas reserves are proved developed, with the remaining 20% comprising total proved undeveloped reserves. Natural gas comprises 79% of the company’s total proved reserves.

The company replaced approximately 186% of its 2008 oil and natural gas production, with approximately 166% through the drill bit. 2008 is the 25th consecutive year that the company has replaced more than 150% of its annual production with new oil and natural gas reserves. Over this 25-year period, the company’s average annual reserve replacement percentage is 224%, of which 145% was through the drill bit.

Future net cash flow from the company’s total proved reserve base as of December 31, 2008, before income taxes, is estimated to be $1.67 billion. The net present value of the company’s total proved reserve base (discounted at 10%) is approximately $892.6 million. These calculations are based on unescalated prices of $44.60 per barrel of oil, $26.04 per barrel of NGLs and $5.71 per Mcf of natural gas, adjusted for regional price differentials, for the estimated life of the respective properties.

Preliminary fourth quarter 2008 production for the company’s oil and natural gas operations was 318,000 barrels of oil, 427,000 barrels of NGLs and 12.3 Bcf of natural gas, or 16.8 Bcfe, a sequential increase of 6% over the third quarter of 2008 and an increase of 15% over the fourth quarter of 2007. Total preliminary production for 2008 was 63.4 Bcfe, an increase of 16% over the 54.7 Bcfe produced in 2007.

During 2008 the company commenced drilling operations on 276 new wells, 257 of which were completed by year end. In addition, 21 wells which were started but not completed in 2007 were completed in 2008 for a total of 278 wells completed during 2008. Of the 278 completed wells, 245 were completed as producing for a success rate of 88%.

For 2009, the company has approximately 69% of its average daily natural gas production (based on its fourth quarter 2008 production volumes) hedged through NYMEX plus basis at several delivery points and approximately 72% of its daily crude production (based on its fourth quarter 2008 production volumes) is hedged. Of the natural gas hedges, 89% are under swap contracts at a comparable NYMEX average price of $7.20 and 11% are under a collar contract with a comparable NYMEX floor of $8.22 and a ceiling of $10.80. The average basis differentials for these swaps are ($0.85). Of the oil hedges, 80% are under swap contracts at an average price of $51.87 and 20% under a collar contract with a floor of $100.00 and a ceiling of $156.25. For 2010, approximately 47% of the company’s average daily natural gas production (based on fourth quarter 2008 production) is hedged under swap contracts at a comparable average NYMEX price of $7.26. The average basis differentials for the swaps are ($0.61).

Larry Pinkston, President and Chief Executive Officer of Unit Corporation, said, “We are very pleased that the company’s exploration and production segment achieved its longstanding objective of replacing at least 150% of the year’s production with new reserves for the 25th consecutive year.

“Although the outlook for 2009 is very challenging as a consequence of the volatility in commodity prices and the global economic crisis, with our hedging positions and flexible capital program, I believe we are well-positioned to navigate these uncertain economic times.”

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