Company Quick10K Filing
Price3.32 EPS-4
Shares53 P/E-1
MCap176 P/FCF1
Net Debt788 EBIT-221
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-06-25
10-K 2019-12-31 Filed 2020-03-16
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-06
10-Q 2019-03-31 Filed 2019-05-02
10-K 2018-12-31 Filed 2019-02-26
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-03
10-K 2017-12-31 Filed 2018-02-27
10-Q 2017-09-30 Filed 2017-11-02
10-Q 2017-06-30 Filed 2017-08-03
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-02-28
10-Q 2016-09-30 Filed 2016-11-03
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-05
10-K 2015-12-31 Filed 2016-02-25
10-Q 2015-09-30 Filed 2015-11-03
10-Q 2015-06-30 Filed 2015-08-04
10-Q 2015-03-31 Filed 2015-05-07
10-K 2014-12-31 Filed 2015-02-24
10-Q 2014-09-30 Filed 2014-11-04
10-Q 2014-06-30 Filed 2014-08-05
10-Q 2014-03-31 Filed 2014-05-08
10-K 2013-12-31 Filed 2014-02-25
10-Q 2013-09-30 Filed 2013-11-05
10-Q 2013-06-30 Filed 2013-08-06
10-Q 2013-03-31 Filed 2013-05-07
10-K 2012-12-31 Filed 2013-02-26
10-Q 2012-09-30 Filed 2012-11-01
10-Q 2012-06-30 Filed 2012-08-02
10-Q 2012-03-31 Filed 2012-05-01
10-K 2011-12-31 Filed 2012-02-23
10-Q 2011-09-30 Filed 2011-11-03
10-Q 2011-06-30 Filed 2011-08-04
10-Q 2011-03-31 Filed 2011-05-03
10-K 2010-12-31 Filed 2011-02-24
10-Q 2010-09-30 Filed 2010-11-04
10-Q 2010-06-30 Filed 2010-08-05
10-Q 2010-03-31 Filed 2010-05-04
10-K 2009-12-31 Filed 2010-02-23
8-K 2020-06-19
8-K 2020-05-26
8-K 2020-05-22
8-K 2020-05-15
8-K 2020-05-07
8-K 2020-05-04
8-K 2020-04-17
8-K 2020-04-15
8-K 2020-04-13
8-K 2020-03-25
8-K 2020-03-16
8-K 2020-03-11
8-K 2020-02-18
8-K 2020-02-03
8-K 2020-01-13
8-K 2019-12-19
8-K 2019-12-16
8-K 2019-12-02
8-K 2019-11-26
8-K 2019-11-12
8-K 2019-11-08
8-K 2019-11-05
8-K 2019-08-06
8-K 2019-05-02
8-K 2019-05-01
8-K 2019-02-21
8-K 2018-11-06
8-K 2018-10-18
8-K 2018-08-09
8-K 2018-08-01
8-K 2018-05-10
8-K 2018-05-03
8-K 2018-05-02
8-K 2018-04-02
8-K 2018-03-28
8-K 2018-03-14
8-K 2018-03-07
8-K 2018-02-22

UNT 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1 - Basis of Preparation and Presentation
Note 2 - Chapter 11 Proceedings, Liquidity, and Ability To Continue As A Going Concern
Note 3 - Impairments
Note 4 - Revenue From Contracts with Customers
Note 5 - Divestitures
Note 6 - Loss per Share
Note 7 - Accrued Liabilities
Note 8 - Long - Term Debt and Other Long - Term Liabilities
Note 9 - Asset Retirement Obligations
Note 10 - New Accounting Pronouncements
Note 11 - Stock - Based Compensation
Note 12 - Derivatives
Note 13 - Fair Value Measurements
Note 14 - Leases
Note 15 - Commitments and Contingencies
Note 16 - Variable Interest Entity Arrangements
Note 17 - Industry Segment Information
Note 18 - Supplemental Condensed Consolidating Financial Information
Note 19 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 unt-20200331x10qxexx311.htm
EX-31.2 unt-20200331x10qxexx312.htm
EX-32 unt-20200331xex32.htm

Unit Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin

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Washington, D.C. 20549
Form 10-Q
For the quarterly period ended March 31, 2020
For the transition period from              to             
[Commission File Number 1-9260]
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)
8200 South Unit Drive,Tulsa,Oklahoma74132
(Address of principal executive offices)(Zip Code)
(918) 493-7700
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockUNTCQ*
* On May 26, 2020, the issuer’s common stock was suspended from trading on the NYSE. Effective May 27, 2020, trades in the issuer’s common stock began being quoted on the OTC Pink Marketplace under the symbol “UNTCQ.” On June 10, 2020, the NYSE filed a Form 25 to delist the issuer’s common stock and to remove it from registration under Section 12(b) of the Exchange Act.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒            No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).       Yes ☒            No ☐                                                   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐    Accelerated filer     Non-accelerated filer
Smaller reporting company    Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐        

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes             No ☒         
As of June 11, 2020, 54,622,664 shares of the issuer's common stock were outstanding.

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As previously disclosed in the Current Report on Form 8-K filed by Unit Corporation, a Delaware corporation (the company), with the U.S. Securities and Exchange Commission (SEC) on May 7, 2020, the filing of this report was delayed due to the circumstances related to the COVID-19 pandemic. The outbreak and spread of COVID-19 required the company’s employees to work remotely, which has resulted in a delay in the preparation and completion of the information in the 10-Q. The company’s headquarters, officers, corporate, legal, and accounting personnel are in Tulsa, Oklahoma, which had issued orders limiting the company’s ability to conduct its normal business operations, including orders to “shelter-in-place.” The disruptions in staffing, communications, and access to personnel resulted in delays, limited support, and insufficient time for preparation and review of this report. For the foregoing reasons, the company had not yet finalized its financial results for the quarterly period ended March 31, 2020. The company relied on the SEC’s Order Under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies, dated March 25, 2020 (Release No. 34-88465) to delay the filing of this report on Form 10-Q.


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Item 1.
Unaudited Condensed Consolidated Balance Sheets
March 31, 2020 and December 31, 2019
Unaudited Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2020 and 2019
Unaudited Condensed Consolidated Statements of Comprehensive Loss
Three Months Ended March 31, 2020 and 2019
Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity
Three Months Ended March 31, 2020 and 2019
Unaudited Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2020 and 2019
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


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Forward-Looking Statements

This report contains “forward-looking statements” – meaning, statements related to future events within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this document that addresses activities, events or developments we expect or anticipate will or may occur, are forward-looking statements. The words “believes,” “intends,” “expects,” “anticipates,” “projects,” “estimates,” “predicts,” and similar expressions are used to identify forward-looking statements. This report modifies and supersedes documents filed by us before this report. In addition, certain information we file with the SEC will automatically update and supersede information in this report.
These forward-looking statements include, among others, things such as:

the amount and nature of our future capital expenditures and how we expect to fund our capital expenditures;
prices for oil, natural gas liquids (NGLs), and natural gas;
demand for oil, NGLs, and natural gas;
our exploration and drilling prospects;
the estimates of our proved oil, NGLs, and natural gas reserves;
oil, NGLs, and natural gas reserve potential;
development and infill drilling potential;
expansion and other development trends of the oil and natural gas industry;
our business strategy;
our plans to maintain or increase production of oil, NGLs, and natural gas;
the number of gathering systems and processing plants we plan to construct or acquire;
volumes and prices for natural gas gathered and processed;
expansion and growth of our business and operations;
demand for our drilling rigs and drilling rig rates;
our belief that the final outcome of legal proceedings involving us will not materially affect our financial results;
our ability to timely secure third-party services used in completing our wells;
our ability to transport or convey our oil or natural gas production to established pipeline systems;
impact of federal and state legislative and regulatory actions affecting our costs and increasing operating restrictions or delays and other adverse impacts on our business;
the possibility of security threats, including terrorist attacks and cybersecurity breaches, against, or otherwise affecting our facilities and systems;
our projected production guidelines for the year;
our anticipated capital budgets;
our financial condition and liquidity (including our ability to refinance our senior subordinated notes);
the number of wells our oil and natural gas segment plans to drill or rework during the year;
our estimates of the amounts of any ceiling test write-downs or other potential asset impairments we may have to record in future periods; and
our plans to restructure our debt and the costs related to those plans.
These statements are based on assumptions and analyses made by us based on our experience and our perception of historical trends, current conditions, and expected future developments, and other factors we believe are appropriate in the circumstances. Whether actual results and developments will conform to our expectations and predictions is subject to several risks and uncertainties, any one or combination of which could cause our actual results to differ materially from our expectations and predictions, including:
the risk factors discussed in this document and in the documents (if any) we incorporate by reference;
general economic, market, or business conditions;
the availability of and nature of (or lack of) business opportunities we pursue;
demand for our land drilling services;
changes in laws or regulations;
changes in the current geopolitical situation;
risks relating to financing, including restrictions in our debt agreements and availability and cost of credit;
risks associated with future weather conditions;
decreases or increases in commodity prices;
the amount and terms of our debt;
future compliance with covenants under our debt agreements;

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our ability to confirm and consummate a plan of reorganization under Chapter 11 of Title 11 of the United States Code (Bankruptcy Code);
our ability to obtain the approval of the United States Bankruptcy Court for the Southern District of Texas, Houston Division (Bankruptcy Court) regarding motions or other requests made to the Bankruptcy Court in the Chapter 11 Cases (as defined below), including maintaining strategic control as debtor-in-possession;
Bankruptcy Court rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general;
the time that we will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the proceedings;
risks associated with third party motions in the Chapter 11 Cases, which may interfere with our ability to confirm and consummate a plan of reorganization;
the potential adverse effects of the Chapter 11 Cases on our liquidity and results of operations;
increased advisory costs to execute a reorganization;
the effects of the Bankruptcy Petitions (as defined below) on the interests of various constituencies, including holders of our common stock;
inability to maintain relationship with suppliers, customers, employees and other third parties because of our Chapter 11 filing;
ability to satisfy our short- or long-term liquidity needs, including ability to generate sufficient cash flow from operations or to obtain adequate financing to fund our capital expenditures and meet working capital needs and ability to continue as a going concern;
our ability to continue as a going concern;
putative class action lawsuits that may cause substantial expenditures and divert management's attention;
the public health crisis related to a novel strain of coronavirus (COVID-19) and resulting impact on demand and supply for oil and natural gas;
delays in the Chapter 11 Cases or interruptions or cessation of our business operations as a result of the COVID-19 pandemic;
other risks related to the outbreak of COVID-19 and its impact on our business, suppliers, customers, employees and supply chains; and
other factors, most of which are beyond our control.
You should not place undue reliance on these forward-looking statements. Except as required by law, we disclaim any intention to update forward-looking information and to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after this document to reflect unanticipated events.
To help provide you with a more thorough understanding of the possible effects of these influences on any forward-looking statements made by us, this discussion outlines some (but not all) of the factors that could cause our consolidated results to differ materially from those that may be presented in any forward-looking statement made by us or on our behalf.

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Item 1. Financial Statements

March 31,
December 31,
 (In thousands except share amounts)
Current assets:
Cash and cash equivalents$40,994  $571  
Accounts receivable, net of allowance for doubtful accounts of $2,332 as of March 31, 2020 and December 31, 2019, respectively  54,379  82,656  
Materials and supplies414  449  
Current derivative asset (Note 12)661  633  
Current income tax receivable2,673  1,756  
Assets held for sale (Note 5)  5,908  
Prepaid expenses and other13,754  13,078  
Total current assets112,875  105,051  
Property and equipment:
Oil and natural gas properties, on the full cost method:
Proved properties6,565,136  6,341,582  
Unproved properties not being amortized31,538  252,874  
Drilling equipment1,298,626  1,295,713  
Gas gathering and processing equipment829,600  824,699  
Saltwater disposal systems43,831  69,692  
Land and building59,080  59,080  
Transportation equipment27,515  29,723  
Other58,039  57,992  
8,913,365  8,931,355  
Less accumulated depreciation, depletion, amortization, and impairment7,768,310  6,978,669  
Net property and equipment1,145,055  1,952,686  
Right of use asset (Note 14)6,937  5,673  
Other assets22,976  26,642  
Total assets (1)
$1,287,843  $2,090,052  

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

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March 31,
December 31,
 (In thousands except share amounts)
Current liabilities:
Accounts payable$58,595  $84,481  
Accrued liabilities (Note 7)41,830  46,562  
Current operating lease liability (Note 14)4,128  3,430  
Current portion of long-term debt (Note 8)(1)
771,283  108,200  
Current portion of other long-term liabilities (Note 8)18,317  17,376  
Total current liabilities894,153  260,049  
Long-term debt less debt issuance costs (Note 8)(1)
37,000  663,216  
Non-current derivative liabilities (Note 12)123  27  
Operating lease liability (Note 14)2,639  2,071  
Other long-term liabilities (Note 8)88,237  95,341  
Deferred income taxes11,205  13,713  
Commitments and contingencies (Note 15)
Shareholders’ equity:
Preferred stock, $1.00 par value, 5,000,000 shares authorized, none issued    
Common stock, $0.20 par value, 175,000,000 shares authorized, 54,746,727 and 55,443,393 shares issued as of March 31, 2020 and December 31, 2019, respectively10,694  10,591  
Capital in excess of par value646,543  644,152  
Retained earnings (deficit)(571,359) 199,135  
Total shareholders’ equity attributable to Unit Corporation85,878  853,878  
Non-controlling interests in consolidated subsidiaries168,608  201,757  
Total shareholders' equity254,486  1,055,635  
Total liabilities(2) and shareholders’ equity
$1,287,843  $2,090,052  
(1)As of March 31, 2020, the current portion of long-term debt is net of debt issuance costs. As of December 31, 2019, the long-term debt is net of debt issuance costs. See Note 8 – Long-Term Debt and Other Long-Term Liabilities.
(2)Unit Corporation's consolidated total assets as of March 31, 2020 include total current and long-term assets of its variable interest entity (VIE) (Superior Pipeline Company, L.L.C.) of $46.7 million and $360.7 million, respectively, which can only settle obligations of the VIE. Unit Corporation's consolidated total liabilities as of March 31, 2020 include total current and long-term liabilities of the VIE of $25.8 million and $42.9 million, respectively, for which the creditors of the VIE have no recourse to Unit Corporation. Unit Corporation's consolidated total assets as of December 31, 2019 include total current and long-term assets of the VIE of $28.8 million and $434.3 million, respectively, which can only settle obligations of the VIE. Unit Corporation's consolidated total liabilities as of December 31, 2019 include total current and long-term liabilities of the VIE of $32.2 million and $26.0 million, respectively, for which the creditors of the VIE have no recourse to Unit Corporation. See Note 16 – Variable Interest Entity Arrangements.

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

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Three Months Ended
 March 31,
 (In thousands except per share amounts)
Oil and natural gas$48,522  $86,095  
Contract drilling36,632  51,155  
Gas gathering and processing37,222  52,441  
Total revenues122,376  189,691  
Operating costs:
Oil and natural gas30,663  32,714  
Contract drilling25,449  31,401  
Gas gathering and processing27,611  39,355  
Total operating costs83,723  103,470  
Depreciation, depletion, and amortization61,617  62,126  
Impairments (Note 3)741,924    
Loss on abandonment of assets (Note 3)17,554    
General and administrative11,553  9,741  
Loss on disposition of assets390  1,615  
Total operating expenses916,761  176,952  
Income (loss) from operations(794,385) 12,739  
Other income (expense):
Interest, net(13,257) (8,538) 
Gain (loss) on derivatives483  (6,932) 
Other, net60  5  
Total other income (expense)(12,714) (15,465) 
Loss before income taxes(807,099) (2,726) 
Income tax benefit:
Deferred(2,508) (444) 
Total income taxes(3,425) (444) 
Net loss(803,674) (2,282) 
Net income (loss) attributable to non-controlling interest(33,180) 1,222  
Net loss attributable to Unit Corporation(770,494) (3,504) 
Net loss attributable to Unit Corporation per common share (Note 6):
Basic$(14.50) $(0.07) 
Diluted$(14.50) $(0.07) 

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.


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Three Months Ended
 March 31,
 (In thousands)
Net loss(803,674) (2,282) 
Other comprehensive income, net of taxes:  
Unrealized gain on securities, net of tax of $0 and $7  24  
Comprehensive loss  (803,674) (2,258) 
Less: Comprehensive income (loss) attributable to non-controlling interest(33,180) 1,222  
Comprehensive loss attributable to Unit Corporation$(770,494) $(3,480) 

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

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Three Months Ended March 31, 2020
Shareholders' Equity Attributable to Unit Corporation
Capital in Excess
of Par Value
Accumulated Other Comprehensive IncomeRetained
Earnings (Deficit)
Non-controlling Interest in Consolidated SubsidiariesTotal
(In thousands except per share amounts)
Balances, December 31, 2019$10,591  $644,152  $  $199,135  $201,757  $1,055,635  
Net loss      (770,494) (33,180) (803,674) 
Activity in employee compensation plans103  2,391      31  2,525  
Balances, March 31, 2020$10,694  $646,543  $  $(571,359) $168,608  $254,486  

Three Months Ended March 31, 2019
Shareholders' Equity Attributable to Unit Corporation
Capital in Excess
of Par Value
Accumulated Other Comprehensive Income (Loss)Retained
Non-controlling Interest in Consolidated SubsidiariesTotal
(In thousands except per share amounts)
Balances, December 31, 2018$10,414  $628,108  $(481) $752,840  $202,563  $1,593,444  
Cumulative effect adjustment for adoption of ASUs      174    174  
Net income (loss)      (3,504) 1,222  (2,282) 
Other comprehensive income (net of tax of $7)    24      24  
Total comprehensive loss(2,258) 
Distributions to non-controlling interest        (918) (918) 
Activity in employee compensation plans164  5,253        5,417  
Balances, March 31, 2019$10,578  $633,361  $(457) $749,510  $202,867  $1,595,859  

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

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Three Months Ended
 March 31,
 (In thousands)
Net loss  $(803,674) $(2,282) 
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization61,617  62,126  
Impairments (Note 3) 741,924    
Loss on abandonment of assets (Note 3) 17,554    
Amortization of debt issuance costs and debt discount (Note 8) 567  556  
(Gain) loss on derivatives (Note 12) (483) 6,932  
Cash receipts on derivatives settled (Note 12) 551  2,656  
Loss on disposition of assets  390  1,615  
Deferred tax benefit(2,508) (444) 
Employee stock compensation plans2,568  5,134  
ARO liability accretion (Note 9) 596  562  
Contract assets and liabilities, net (Note 4) 808  (700) 
Other, net(740) 11  
Changes in operating assets and liabilities increasing (decreasing) cash:
Accounts receivable28,277  22,940  
Material and supplies35  (22) 
Prepaid expenses and other420  747  
Accounts payable(12,341) (20,848) 
Accrued liabilities(4,840) 2,749  
Income taxes(917)   
Contract advances108  (544) 
Net cash provided by operating activities  29,912  81,188  
Capital expenditures(17,528) (122,507) 
Producing properties and other acquisitions(210) (1,580) 
Proceeds from disposition of property and equipment1,751  3,190  
Net cash used in investing activities  (15,987) (120,897) 
Borrowings under line of credit71,400  109,800  
Payments under line of credit(35,100) (69,800) 
Net payments on finance leases(1,026) (985) 
Employee taxes paid by withholding shares(43) (4,110) 
Distributions to non-controlling interests  (918) 
Bank overdrafts(8,733) 3,161  
Net cash provided by financing activities  26,498  37,148  
Net increase (decrease) in cash and cash equivalents 40,423  (2,561) 
Cash and cash equivalents, beginning of year571  6,452  
Cash and cash equivalents, end of year$40,994  $3,891  

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

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Three Months Ended
 March 31,
 (In thousands)
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest paid (net of capitalized)$2,141  $(3,307) 
Income taxes    
Changes in accounts payable and accrued liabilities related to purchases of property, plant, and equipment4,812  (641) 
Non-cash (additions) reductions to oil and natural gas properties related to asset retirement obligations3,404  (3,070) 
Non-cash trade of property, plant, and equipment548    

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

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The unaudited condensed consolidated financial statements in this report include the accounts of Unit Corporation and all its subsidiaries and affiliates and have been prepared under the rules and regulations of the SEC. The terms “company,” “Unit,” “we,” “our,” “us,” or like terms refer to Unit Corporation, a Delaware corporation, and one or more of its subsidiaries and affiliates, except as otherwise indicated or as the context otherwise requires. We consolidate the activities of Superior Pipeline Company, L.L.C. (Superior), a 50/50 joint venture between Unit Corporation and SP Investor Holdings, LLC, (SP Investor) which qualifies as a Variable Interest Entity (VIE) under generally accepted accounting principles in the United States (GAAP). We have concluded that we are the primary beneficiary of the VIE, as defined in the accounting standards, since we have the power, through 50% ownership, to direct those activities that most significantly affect the economic performance of Superior as further described in Note 16 – Variable Interest Entity Arrangements.

The condensed consolidated financial statements are unaudited and do not include all the notes in our annual financial statements. This report should be read with the audited consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC March 16, 2020.

In the opinion of our management, the unaudited condensed consolidated financial statements contain all normal recurring adjustments (including the elimination of all intercompany transactions) necessary to fairly state:

Balance Sheets as of March 31, 2020 and December 31, 2019;
Statements of Operations for the three months ended March 31, 2020 and 2019;
Statements of Comprehensive Income (Loss) for the three months ended March 31, 2020 and 2019;
Statements of Changes in Shareholders' Equity for the three months ended March 31, 2020 and 2019; and
Statements of Cash Flows for the three months ended March 31, 2020 and 2019.

Our financial statements are prepared in conformity with GAAP, which requires us to make certain estimates and assumptions that may affect the amounts reported in our unaudited condensed consolidated financial statements and notes. Actual results may differ from those estimates. Results for the three months ended March 31, 2020 and 2019 are not necessarily indicative of the results we may realize for the full year of 2020, or that we realized for the full year of 2019.

Certain amounts in this report for prior periods have been reclassified to conform to current year presentation. There was no impact to consolidated net loss or shareholders' equity.


Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code

On May 22, 2020 (Petition Date), Unit and its wholly owned subsidiaries Unit Drilling Company (UDC) Unit Petroleum Company (UPC), 8200 Unit Drive, L.L.C. (8200 Unit), Unit Drilling Colombia, L.L.C. (Unit Drilling Colombia) and Unit Drilling USA Colombia, L.L.C. (Unit Drilling USA, together with Unit, UPC, UDC, 8200 Unit and Unit Drilling Colombia, the Debtors) filed voluntary petitions (Bankruptcy Petitions) for reorganization under Chapter 11 of Title 11 of the United States Code (Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (Bankruptcy Court). The Chapter 11 proceedings are being jointly administered under the caption In re Unit Corporation, et al., Case No. 20-32740 (DRJ) (Chapter 11 Cases). The Debtors are operating their business as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and under the provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

On May 22, 2020, the Debtors entered into a Restructuring Support Agreement (RSA) with (i)holders of 100% of the aggregate principal amount of loans outstanding under the Senior Credit Agreement, dated as of September 13, 2011 (as amended, the Unit credit agreement, together with the loan facility, the Unit credit facility), by and among the company, UPC and UDC, as borrowers, the institutions named as lenders (RBL Lenders) and BOKF, NA dba Bank of Oklahoma, as administrative agent (RBL Agent) and (ii)holders of over 70% of the aggregate outstanding principal amount of the company’s 6.625% senior subordinated notes due 2021 (Notes). In accordance with the RSA, the Debtors filed a Chapter 11 plan of reorganization (including all exhibits and schedules attached thereto, and as may be amended, supplemented, or modified from

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time to time, Plan) and the related disclosure statement with the Bankruptcy Court on June 9, 2020. Below is a summary of the treatment that the stakeholders of the Debtors would receive under the Plan:

Each lender under the Unit credit facility and the DIP credit facility described below will receive its pro rata share of revolving loans, term loans and letter-of-credit participations under the Exit Facility described below, in exchange for that lender’s allowed claims under the Unit credit facility or DIP credit facility;
Each holder of the Notes will receive its pro rata share of new common shares of reorganized Unit based on equity allocations at each of Unit, UDC and UPC in exchange for the holder’s allowed Notes claim;
Each holder of an allowed general unsecured claim against Unit or UPC will receive its pro rata share of new common shares of reorganized Unit based on equity allocations at each of Unit and UPC, respectively;
Each retained or former employee with a claim for vested severance benefits may opt-in to a settlement to receive a cash payment for that claim in lieu of an allocation of new common shares of reorganized Unit otherwise provided to holders of general unsecured claims;
Each holder of an allowed unsecured claim against UDC, 8200 Unit, Unit Drilling Colombia and Unit Drilling USA will receive payment in full of that claim in the ordinary course of business; and
Each holder of the company’s common stock that does not opt out of the releases under the Plan will receive its pro rata share of seven-year warrants to purchase an aggregate of 12.5% of the new common shares of reorganized Unit at an aggregate exercise price equal to the $650.0 million principal amount of the Notes plus interest thereon to the May 15, 2021 maturity date of the Notes.

As contemplated by the RSA and subject to the Bankruptcy Court’s approval, upon the Debtors’ emergence from the Chapter 11 Cases and to the extent any claims under the DIP credit facility have not otherwise been repaid, each holder of an allowed claim under the DIP credit facility will receive its pro rata share of (i) revolving loans, term loans and letter-of-credit participations under the Exit Facility and (ii) an equity fee under the Exit Facility equal to 5% of the new common shares of reorganized Unit (subject to dilution by shares reserved for issuance under a management incentive plan and exercise of the warrants described above).

As contemplated by the RSA, the company and the other Debtors entered into a Superpriority Senior Secured Debtor-in-Possession Credit Agreement dated May 27, 2020 (DIP credit agreement), by and among the Debtors, the RBL Lenders (in such capacity, the DIP Lenders) and BOKF, NA dba Bank of Oklahoma, as administrative agent, under which the DIP Lenders agreed to provide the company with a $