Unit Corp. to acquire PetroCorp Inc. for 6.86 times revenue

Weekly Corporate Growth Report, Jul 7, 2003

The Deal: Unit Corporation has agreed to purchase PetroCorp Inc. for about $190 million in cash and stock. Unit will pay with 2 million shares of stock (about $42 million based on recent closing prices) and the remainder in cash. The offer values PetroCorp at approximately $14.50 per share. The transaction is expected to close in the third quarter of 2003.

Discussion: PetroCorp is an oil and gas exploration company that operates primarily in the midcontinent region of the US, the Gulf of Mexico, and the states of Alabama, Louisiana, Mississippi, and Texas.

Unit Corp. conducts onshore drilling of oil and natural gas wells for a variety of customers in the Gulf Coast, midcontinent, and Rocky Mountain regions of the United States. The company maintains a drilling fleet of more than 70 rigs. Unit Corp. also explores for and produces oil and natural gas, primarily in the Anadarko and Arkoma basins of Oklahoma and Texas.

The acquisition is expected to help Unit compete against larger rivals. The combination will create a company with over $738.9 million in assets. Unit will add PetroCorp's roughly 55 billion cubic feet of natural gas reserves to its own 269.4 billion cubic feet equivalent of oil and gas.