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Unit Corp., the Tulsa-based energy company, has struggled during the last few quarters as low energy prices depressed earnings.

But Unit, which is engaged through its subsidiaries in oil and gas exploration, production, contract drilling and natural gas gathering and processing, is positioned for growth and profitability as energy prices recover

"We think over a period of years, natural gas prices will be trending higher so this would be a good time to be buying," said Jim Huntzinger, executive vice president and chief investment officer at BOK Financial Corp.

The company had second-quarter revenue of $164.07 million, down from $370.15 million in 2008's second quarter. Unit's second- quarter net income was $32.03 million or 68 cents per share versus $94.1 million or $2 per share in last year's second quarter.

Unit, which has a New York Stock Exchange symbol of UNT, is diversified: 45 percent of revenue is derived from exploration and production, 40 percent from its drilling company and 15 percent from its 800-mile pipeline company.

"With just over $163 million in debt, UNT has a debt/equity ratio of just 10 percent," said Huntzinger in written comments sent in July. " UNT has just 39 rigs working at the present time for a utilization rate of just under 30 percent. As the natural gas market stabilizes, UNT should see considerable benefits on both E&P profits, as well as drilling."

At the close of 2008, Unit's net total proved oil and natural gas reserves were 569.4 billion cubic feet equivalent of natural gas, an 11 percent increase compared with the year-end 2007 total. It was the 25th consecutive year that the company has replaced more than 150 percent of its production with new oil and natural gas reserves.

"They have financial flexibility and a strong balance sheet that allows them to be opportunistic, and they have been very careful with their use of hedges," said James Redman, who follows Unit for Gibraltar Capital Management. "Together, they will allow Unit to ride out any turmoil in the oil and gas markets in 2009 and 2010."

D.R. Stewart 581-8451

Originally published by D.R. STEWART World Staff Writer.

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