Sunday, June 28, 2015

Seeking Alpha: Unit Corp. Will Likely Struggle To Get Its Full Due

Diversification can reduce the operating risk of a company, but it comes at a cost. Analysts rarely have the skillset to properly evaluate all of the components, investors will punish a perceived "lack of focus", and the companies themselves are rarely equally good at all of the businesses.

I think that's a relevant risk factor for Unit Corp (NYSE:UNT), as this company has rarely traded at multiples similar to what blended peer comps would suggest as fair. While I think Unit has some interesting oil and gas assets in southwest Oklahoma and southeast Texas, I continue to think the company's suboptimal drilling operation is more of an anchor than an asset and I don't believe the company is likely to have the resources to really maximize its midstream assets. The shares do seem undervalued and would do well if energy prices accelerate again, but investors attracted by the apparent value here need to be prepared for a longer wait.

Read the full article here:
Unit Corp. Will Likely Struggle To Get Its Full Due

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