UNTC - Unit Corporation

[rosemontseneca]

Illiquid post-reorg energy company with Tier 3 assets, but I think it is the cheapest play in energy right now. 

 

There are 12mm shares at $14/each =  $170mm market cap plus c.$90mm net debt = $260mm TEV.   

 

23,000 boe/d production that should generate $100mm of EBITDA at $55/bbl oil.  Out of the money hedges probably remove $20mm from that number.  Let's assume PDP PV-10 at $300mm at current pricing, net of hedge liability.

 

14 AC drilling rigs with replacement cost of $280mm.  Worth less today.  Let's use 5x run-rate EBITDA or $75mm, but plenty of torque if the rig market spikes. 

 

50% interest in midstream JV that is probably worthless due to liquidation preference held by JV partner, but Unit controls it, so maybe there is some control/holdup value.  Let's add $20mm of option value.

 

That all adds up to $25/share.  Should de-lever meaningfully this year, so downside is probably limited at these levels.  I have no opinion on the management team, but G&A seems reasonably low.  Biggest risk is probably reinvestment of cash flow into bad acquisitions. 

 

 

[investor1]

I've poked around on this a little. Agree there is value, though the oil & gas assets are higher decline, so the updated production numbers will be critical once released. Any view on the timing of a relisting on an exchange? I'm not sure what's typical in this scenario.

[rosemontseneca]

23kboe/d is my estimate for 2021 per the disclosure statement (31kboe/d in Q3'20)

 

Not sure on timing of relisting