Unit's Balancing Act

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Because Unit (NYSE: UNT) plays in various parts of the oil patch, I prefer not to dwell on its overall results for the final quarter and full year. We're really better off looking at each of the three segments in turn.

First up: the drilling business, whose contribution to the overall top line has diminished somewhat in an environment of drab dayrates. Unlike non-pitiablePatterson-UTI (Nasdaq: PTEN), Unit's contract drilling rates continued to soften, as did the segment's daily operating margin. However, those margins still shine relative to most competitors -- Helmerich & Payne (NYSE: HP) just narrowly edged out Unit with a 52% margin this quarter.

The E&P business, which is more steady and predictable than the drilling business, can be safely viewed with a longer time horizon. For the year, the segment achieved natural-gas-equivalent production of 54.7 billion cubic feet. About 80% of production was natural gas, which actually declined for the year. Oil and natural gas liquids, however, combined to lift overall production by a few percentage points. Unit's 171% reserve replacement ratio was high enough to make a big slug like Chevron (NYSE: CVX) feel pretty salty, but it was also far less explosive than the results turned in by Chesapeake Energy (NYSE: CHK), at 369%, XTO Energy (NYSE: XTO) at 513%, or Carrizo Oil & Gas (Nasdaq: CRZO), at 887%.

The midstream business remains a standout, with three new facilities contributing to a near-doubling of liquid sales volume. I really don't have much to add -- with fourth-quarter operating profits up 70% over last year, the numbers speak for themselves.

If you find the drillers too dramatic, the volatility of the upstream players too upsetting, and pipeline operations akin to watching paint dry, Unit provides fairly balanced exposure to the sector. While there are names that I prefer more in each particular segment, you may have neither the time nor the inclination to get that intimate with the oil patch. Honestly, Fool? That's just fine.

Related Foolishness:

• No dreary drilling here -- feel the Payne.
• XTO is a machine that marches.
• Chesapeake continues to be a natural gas bull.