10-Q 1 unt-20220331.htm 10-Q unt-20220331
FALSE2022Q112/3110,051,0840000798949two years113100007989492022-01-012022-03-3100007989492022-05-12xbrli:shares00007989492022-03-31iso4217:USD00007989492021-12-310000798949us-gaap:AssetPledgedAsCollateralMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-12-310000798949us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-12-31iso4217:USDxbrli:shares0000798949us-gaap:OilAndGasMember2022-01-012022-03-310000798949us-gaap:OilAndGasMember2021-01-012021-03-310000798949us-gaap:OilAndGasServiceMember2022-01-012022-03-310000798949us-gaap:OilAndGasServiceMember2021-01-012021-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMember2022-01-012022-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMember2021-01-012021-03-3100007989492021-01-012021-03-310000798949us-gaap:CommonStockMember2021-12-310000798949us-gaap:TreasuryStockMember2021-12-310000798949us-gaap:AdditionalPaidInCapitalMember2021-12-310000798949us-gaap:RetainedEarningsMember2021-12-310000798949us-gaap:NoncontrollingInterestMember2021-12-310000798949us-gaap:RetainedEarningsMember2022-01-012022-03-310000798949us-gaap:NoncontrollingInterestMember2022-01-012022-03-310000798949us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000798949us-gaap:CommonStockMember2022-03-310000798949us-gaap:TreasuryStockMember2022-03-310000798949us-gaap:AdditionalPaidInCapitalMember2022-03-310000798949us-gaap:RetainedEarningsMember2022-03-310000798949us-gaap:NoncontrollingInterestMember2022-03-310000798949us-gaap:CommonStockMember2020-12-310000798949us-gaap:TreasuryStockMember2020-12-310000798949us-gaap:AdditionalPaidInCapitalMember2020-12-310000798949us-gaap:RetainedEarningsMember2020-12-310000798949us-gaap:NoncontrollingInterestMember2020-12-3100007989492020-12-310000798949us-gaap:RetainedEarningsMember2021-01-012021-03-310000798949us-gaap:NoncontrollingInterestMember2021-01-012021-03-310000798949us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000798949us-gaap:CommonStockMember2021-03-310000798949us-gaap:TreasuryStockMember2021-03-310000798949us-gaap:AdditionalPaidInCapitalMember2021-03-310000798949us-gaap:RetainedEarningsMember2021-03-310000798949us-gaap:NoncontrollingInterestMember2021-03-3100007989492021-03-3100007989492020-09-012020-09-300000798949unt:SuperiorPipelineCompanyL.L.C.Member2022-03-31xbrli:pure0000798949unt:SPCMidstreamOperatingL.L.C.Member2022-03-31unt:segment0000798949unt:MidStreamMember2022-03-310000798949unt:MidStreamMember2021-12-310000798949unt:MidStreamMember2022-01-012022-03-310000798949srt:MinimumMember2022-04-012022-03-3100007989492022-07-01srt:MinimumMember2022-03-3100007989492022-07-01srt:MaximumMember2022-03-310000798949unt:MidStreamMember2023-01-012022-03-310000798949unt:OilAndNaturalGasMember2022-03-082022-03-080000798949unt:OilAndNaturalGasMember2022-01-012022-03-310000798949unt:OilAndNaturalGasMember2021-01-012021-03-310000798949unt:DrillingMember2022-01-012022-03-310000798949unt:DrillingMember2021-01-012021-03-3100007989492021-06-012021-06-300000798949unt:June2021RepurchaseProgramMember2022-03-310000798949unt:June2021RepurchaseProgramMember2021-10-310000798949unt:June2021RepurchaseProgramMember2022-01-012022-03-310000798949unt:PrivatelyNegotiatedTransactionMember2021-01-012021-12-310000798949unt:LongTermIncentivePlanMember2020-09-030000798949us-gaap:RestrictedStockUnitsRSUMember2021-12-310000798949us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310000798949us-gaap:RestrictedStockUnitsRSUMember2022-03-310000798949us-gaap:RestrictedStockUnitsRSUMember2022-01-072022-01-0700007989492022-01-072022-01-070000798949us-gaap:RestrictedStockMember2022-01-012022-03-310000798949unt:StockOptionsMember2022-01-012022-03-310000798949unt:SuccessorExitFacilityMemberus-gaap:LongTermDebtMember2022-03-310000798949unt:SuccessorExitFacilityMemberus-gaap:LongTermDebtMember2021-12-310000798949unt:SuperiorCreditAgreementMemberus-gaap:LongTermDebtMember2021-12-310000798949unt:SuccessorExitFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMember2020-09-030000798949unt:TermLoanMemberunt:SuccessorExitFacilityMemberus-gaap:SecuredDebtMember2020-09-030000798949unt:SuccessorExitFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMember2021-04-210000798949unt:SuccessorExitFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMember2021-10-190000798949unt:SuccessorExitFacilityMemberus-gaap:SecuredDebtMember2020-09-032020-09-030000798949us-gaap:EurodollarMemberunt:SuccessorExitFacilityMemberus-gaap:RevolvingCreditFacilityMember2020-09-032020-09-030000798949unt:AlternateBaseRateMemberunt:SuccessorExitFacilityMemberus-gaap:RevolvingCreditFacilityMember2020-09-032020-09-030000798949us-gaap:EurodollarMemberunt:TermLoanMemberunt:SuccessorExitFacilityMember2020-09-032020-09-030000798949unt:AlternateBaseRateMemberunt:TermLoanMemberunt:SuccessorExitFacilityMember2020-09-032020-09-030000798949unt:SuccessorExitFacilityMemberunt:September12020ToMarch312021Member2020-09-032020-09-030000798949unt:SuccessorExitFacilityMemberunt:April12021ToJune302022Member2020-09-032020-09-030000798949unt:July12022ToSeptember302022Memberunt:SuccessorExitFacilityMember2020-09-032020-09-030000798949unt:SuccessorExitFacilityMember2020-09-032020-09-030000798949unt:SuccessorExitFacilityMemberus-gaap:LetterOfCreditMember2022-03-310000798949unt:SuperiorCreditAgreementMember2022-01-012022-03-310000798949unt:SuperiorCreditAgreementMember2022-03-310000798949unt:SuperiorCreditAgreementMembersrt:MinimumMember2022-01-012022-03-310000798949unt:SuperiorCreditAgreementMembersrt:MaximumMember2022-01-012022-03-310000798949unt:AmendedSuperiorCreditAgreementMemberus-gaap:SubsequentEventMember2022-04-292022-04-290000798949unt:AmendedSuperiorCreditAgreementMemberus-gaap:SubsequentEventMember2022-04-290000798949us-gaap:SwapMemberunt:Apr22Dec22Membersrt:NaturalGasReservesMemberunt:IfNymexMember2022-01-012022-03-31utr:MMBTUiso4217:USDunt:Unit0000798949us-gaap:SwapMembersrt:NaturalGasReservesMemberunt:IfNymexMemberunt:Jan23Dec23Member2022-01-012022-03-310000798949unt:CollarMemberunt:Apr22Dec22Membersrt:NaturalGasReservesMemberunt:IfNymexMember2022-01-012022-03-310000798949srt:MinimumMemberunt:Apr22Dec22Memberunt:CollarMembersrt:NaturalGasReservesMemberunt:IfNymexMember2022-03-310000798949unt:Apr22Dec22Memberunt:CollarMembersrt:NaturalGasReservesMembersrt:MaximumMemberunt:IfNymexMember2022-03-310000798949unt:WtiNymexMemberus-gaap:SwapMembersrt:CrudeOilMemberunt:Apr22Jun22Member2022-01-012022-03-31utr:bbl0000798949unt:WtiNymexMemberus-gaap:SwapMembersrt:CrudeOilMemberunt:Apr22Dec22Member2022-01-012022-03-310000798949unt:WtiNymexMemberus-gaap:SwapMembersrt:CrudeOilMemberunt:Jan23Dec23Member2022-01-012022-03-310000798949unt:CurrentDerivativeLiabilitiesMember2022-03-310000798949unt:NonCurrentDerivativeLiabilitiesMember2022-03-310000798949unt:WarrantLiabilityMember2022-03-310000798949unt:CurrentDerivativeLiabilitiesMember2021-12-310000798949unt:NonCurrentDerivativeLiabilitiesMember2021-12-310000798949unt:WarrantLiabilityMember2021-12-310000798949us-gaap:CommodityContractMemberunt:GainlossonderivativesnotdesignatedashedgesandhedgeineffectivenessMember2022-01-012022-03-310000798949us-gaap:CommodityContractMemberunt:GainlossonderivativesnotdesignatedashedgesandhedgeineffectivenessMember2021-01-012021-03-310000798949us-gaap:WarrantMemberunt:GainlossonderivativesnotdesignatedashedgesandhedgeineffectivenessMember2022-01-012022-03-310000798949us-gaap:WarrantMemberunt:GainlossonderivativesnotdesignatedashedgesandhedgeineffectivenessMember2021-01-012021-03-310000798949us-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel1Member2022-03-310000798949us-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMember2022-03-310000798949us-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMember2022-03-310000798949us-gaap:CommodityContractMember2022-03-310000798949us-gaap:FairValueInputsLevel1Memberus-gaap:WarrantMember2022-03-310000798949us-gaap:FairValueInputsLevel2Memberus-gaap:WarrantMember2022-03-310000798949us-gaap:FairValueInputsLevel3Memberus-gaap:WarrantMember2022-03-310000798949us-gaap:WarrantMember2022-03-310000798949us-gaap:FairValueInputsLevel1Member2022-03-310000798949us-gaap:FairValueInputsLevel2Member2022-03-310000798949us-gaap:FairValueInputsLevel3Member2022-03-310000798949us-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel1Member2021-12-310000798949us-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMember2021-12-310000798949us-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMember2021-12-310000798949us-gaap:CommodityContractMember2021-12-310000798949us-gaap:FairValueInputsLevel1Memberus-gaap:WarrantMember2021-12-310000798949us-gaap:FairValueInputsLevel2Memberus-gaap:WarrantMember2021-12-310000798949us-gaap:FairValueInputsLevel3Memberus-gaap:WarrantMember2021-12-310000798949us-gaap:WarrantMember2021-12-310000798949us-gaap:FairValueInputsLevel1Member2021-12-310000798949us-gaap:FairValueInputsLevel2Member2021-12-310000798949us-gaap:FairValueInputsLevel3Member2021-12-310000798949us-gaap:FairValueInputsLevel3Member2021-12-310000798949us-gaap:FairValueInputsLevel3Member2020-12-310000798949us-gaap:FairValueInputsLevel3Member2022-01-012022-03-310000798949us-gaap:FairValueInputsLevel3Member2021-01-012021-03-310000798949us-gaap:FairValueInputsLevel3Member2022-03-310000798949us-gaap:FairValueInputsLevel3Member2021-03-31unt:rig00007989492021-05-012021-05-310000798949us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberunt:SuperiorPipelineCompanyL.L.C.Member2022-01-012022-03-310000798949unt:SPInvestorHoldingsLLCMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMemberunt:SuperiorPipelineCompanyL.L.C.Member2022-01-012022-03-310000798949us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberunt:SPCMidstreamOperatingL.L.C.Memberunt:SuperiorPipelineCompanyL.L.C.Member2022-01-012022-03-310000798949unt:SuperiorPipelineCompanyL.L.C.Member2021-01-012021-12-310000798949us-gaap:CapitalAdditionsMemberunt:OilAndNaturalGasMemberunt:SuperiorPipelineCompanyL.L.C.Member2021-01-012021-12-310000798949unt:SuperiorPipelineCompanyL.L.C.Member2022-01-012022-01-310000798949unt:SuperiorPipelineCompanyL.L.C.Member2022-01-012022-03-310000798949us-gaap:SubsequentEventMemberunt:SuperiorPipelineCompanyL.L.C.Member2022-04-012022-04-300000798949unt:SuperiorPipelineCompanyL.L.C.Member2018-04-030000798949us-gaap:OilAndGasMemberunt:SuperiorPipelineCompanyL.L.C.Member2022-01-012022-03-310000798949us-gaap:OilAndGasMemberunt:SuperiorPipelineCompanyL.L.C.Member2021-01-012021-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberunt:SuperiorPipelineCompanyL.L.C.Member2022-01-012022-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberunt:SuperiorPipelineCompanyL.L.C.Member2021-01-012021-03-3100007989492021-02-262021-02-2600007989492019-01-312019-01-310000798949unt:KaiserFrancisOilCompanyMember2022-03-310000798949unt:KaiserFrancisOilCompanyMember2021-12-310000798949unt:G.BaileyPeytonIVMemberunt:PeytonRoyaltiesLPMember2022-01-012022-03-310000798949unt:G.BaileyPeytonIVMember2022-01-012022-03-310000798949unt:G.BaileyPeytonIVMember2021-01-012021-03-310000798949us-gaap:OperatingSegmentsMemberunt:OilAndNaturalGasMemberus-gaap:OilAndGasMember2022-01-012022-03-310000798949unt:DrillingMemberus-gaap:OperatingSegmentsMemberus-gaap:OilAndGasMember2022-01-012022-03-310000798949unt:MidStreamMemberus-gaap:OperatingSegmentsMemberus-gaap:OilAndGasMember2022-01-012022-03-310000798949us-gaap:CorporateAndOtherMemberus-gaap:CorporateNonSegmentMemberus-gaap:OilAndGasMember2022-01-012022-03-310000798949us-gaap:IntersegmentEliminationMemberus-gaap:OilAndGasMember2022-01-012022-03-310000798949us-gaap:OilAndGasServiceMemberus-gaap:OperatingSegmentsMemberunt:OilAndNaturalGasMember2022-01-012022-03-310000798949us-gaap:OilAndGasServiceMemberunt:DrillingMemberus-gaap:OperatingSegmentsMember2022-01-012022-03-310000798949us-gaap:OilAndGasServiceMemberunt:MidStreamMemberus-gaap:OperatingSegmentsMember2022-01-012022-03-310000798949us-gaap:OilAndGasServiceMemberus-gaap:CorporateAndOtherMemberus-gaap:CorporateNonSegmentMember2022-01-012022-03-310000798949us-gaap:OilAndGasServiceMemberus-gaap:IntersegmentEliminationMember2022-01-012022-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberus-gaap:OperatingSegmentsMemberunt:OilAndNaturalGasMember2022-01-012022-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberunt:DrillingMemberus-gaap:OperatingSegmentsMember2022-01-012022-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberunt:MidStreamMemberus-gaap:OperatingSegmentsMember2022-01-012022-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberus-gaap:CorporateAndOtherMemberus-gaap:CorporateNonSegmentMember2022-01-012022-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberus-gaap:IntersegmentEliminationMember2022-01-012022-03-310000798949us-gaap:OperatingSegmentsMemberunt:OilAndNaturalGasMember2022-01-012022-03-310000798949unt:DrillingMemberus-gaap:OperatingSegmentsMember2022-01-012022-03-310000798949unt:MidStreamMemberus-gaap:OperatingSegmentsMember2022-01-012022-03-310000798949us-gaap:CorporateAndOtherMemberus-gaap:CorporateNonSegmentMember2022-01-012022-03-310000798949us-gaap:IntersegmentEliminationMember2022-01-012022-03-310000798949us-gaap:OperatingSegmentsMemberunt:OilAndNaturalGasMemberus-gaap:OilAndGasMember2021-01-012021-03-310000798949unt:DrillingMemberus-gaap:OperatingSegmentsMemberus-gaap:OilAndGasMember2021-01-012021-03-310000798949unt:MidStreamMemberus-gaap:OperatingSegmentsMemberus-gaap:OilAndGasMember2021-01-012021-03-310000798949us-gaap:CorporateAndOtherMemberus-gaap:CorporateNonSegmentMemberus-gaap:OilAndGasMember2021-01-012021-03-310000798949us-gaap:IntersegmentEliminationMemberus-gaap:OilAndGasMember2021-01-012021-03-310000798949us-gaap:OilAndGasServiceMemberus-gaap:OperatingSegmentsMemberunt:OilAndNaturalGasMember2021-01-012021-03-310000798949us-gaap:OilAndGasServiceMemberunt:DrillingMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310000798949us-gaap:OilAndGasServiceMemberunt:MidStreamMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310000798949us-gaap:OilAndGasServiceMemberus-gaap:CorporateAndOtherMemberus-gaap:CorporateNonSegmentMember2021-01-012021-03-310000798949us-gaap:OilAndGasServiceMemberus-gaap:IntersegmentEliminationMember2021-01-012021-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberus-gaap:OperatingSegmentsMemberunt:OilAndNaturalGasMember2021-01-012021-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberunt:DrillingMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberunt:MidStreamMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberus-gaap:CorporateAndOtherMemberus-gaap:CorporateNonSegmentMember2021-01-012021-03-310000798949us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMemberus-gaap:IntersegmentEliminationMember2021-01-012021-03-310000798949us-gaap:OperatingSegmentsMemberunt:OilAndNaturalGasMember2021-01-012021-03-310000798949unt:DrillingMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310000798949unt:MidStreamMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310000798949us-gaap:CorporateAndOtherMemberus-gaap:CorporateNonSegmentMember2021-01-012021-03-310000798949us-gaap:IntersegmentEliminationMember2021-01-012021-03-31
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 1-9260
unt-20220331_g1.jpg
UNIT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware73-1283193
(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)
None
(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
N/AN/AN/A
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 ☒ *

* Effective January 1, 2021, the registrant’s obligation to file reports under Section 15(d) of the Securities Exchange Act of 1934 was automatically suspended.
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.
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 has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes    No ☐               
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 May 12, 2022, 10,051,084 shares of the registrant's common stock were outstanding.


TABLE OF CONTENTS

1

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 address 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 United States Securities and Exchange Commission (SEC) will automatically update and supersede information in this report.

Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions. Future actions, conditions or events, and future results may differ materially from those expressed in our forward-looking statements. Many factors that will determine these results are beyond our ability to control or accurately predict. Specific factors that could cause actual results to differ from those in our forward-looking statements include:

the amount and nature of our future capital expenditures and how we expect to fund our capital expenditures;
prices for oil, 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 in the oil and natural gas industry;
our business strategy;
our plans to maintain or increase the production of oil, NGLs, and natural gas;
our ability, and the market's receptiveness, to execute a strategic divestiture process;
our ability to utilize the benefits of net operating losses and other deferred tax assets against potential future taxable income, including those that may be generated by a strategic divestiture process;
our ability to retain or recruit key personnel throughout a strategic divestiture process;
the number of gathering systems and processing plants we may plan to construct or acquire;
volumes and prices for the natural gas we gather and process;
expansion and growth of our business and operations;
demand for our drilling rigs and the rates we charge for the rigs;
our belief that the outcome of our legal proceedings 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, NGLs, or natural gas production to existing pipeline systems;
the 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;
any projected production guidelines we may issue;
our anticipated capital budgets;
our financial condition and liquidity;
2

the number of wells our oil and natural gas segment plans to drill;
our estimates of any ceiling test write-downs or other potential asset impairments we may have to record in future periods; and
our ability to carry out our post reorganization plans.
These statements are based on our assumptions and analyses considering our experience and our perception of historical trends, current conditions, expected future developments, and other factors we believe are appropriate in the circumstances. Whether actual results and developments will meet our expectations and predictions is subject to risks and uncertainties, any one or combination of which could cause our actual results to differ materially from our expectations and predictions. Some of these risks and uncertainties are:
the risk factors discussed in this document and the documents (if any) we incorporate by reference;
general economic, market, or business conditions;
the availability and nature of (or lack of) business opportunities we pursue;
demand for our land drilling services;
changes in laws and regulations;
changes in the current geopolitical situation, such as the current conflict occurring between Russia and Ukraine;
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 credit agreements;
pandemics, epidemics, outbreaks, or other public health events, such as COVID-19; and
other factors, most of which are beyond our control.
You should not construe this list to be exhaustive. We believe the forward-looking statements in this report are reasonable. However, there is no assurance that the actions, events, or results expressed in forward-looking statements will occur, or if any of them do, of their timing or what impact they will have on our results of operations or financial condition. Because of these uncertainties, you should not put undue reliance on any forward-looking statements. Except as required by law, we disclaim any obligation 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 incorrect assumptions or unanticipated events.

Additional discussion of factors that may affect our forward-looking statements appear elsewhere in this report, including in Item 1A “Risk Factors,” Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 3 "Quantitative and Qualitative Disclosures About Market Risk - Commodity Price Risk.”

3

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

UNIT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31,
2022
December 31,
2021
 (In thousands)
ASSETS
Current assets:
Cash and cash equivalents$88,259 $64,140 
Accounts receivable, net of allowance for credit losses of $2,482 and $2,511 as of March 31, 2022 and December 31, 2021, respectively
58,583 87,248 
Prepaid expenses and other3,024 5,542 
Total current assets149,866 156,930 
Property and equipment:
Oil and natural gas properties, on the full cost method:
Proved properties220,754 225,014 
Unproved properties not being amortized5,317 422 
Drilling equipment66,983 66,058 
Gas gathering and processing equipment 274,748 
Transportation equipment1,826 4,550 
Other8,631 8,631 
303,511 579,423 
Less accumulated depreciation, depletion, amortization, and impairment80,694 128,880 
Net property and equipment222,817 450,543 
Equity method investment (Note 15)1,658  
Right of use asset (Note 14)8,151 12,445 
Other assets7,093 9,559 
Total assets (1)
$389,585 $629,477 
1.Unit Corporation no longer consolidates the balance sheet of Superior Pipeline Company, L.L.C. (Superior) as of March 31, 2022 as discussed in Note 2 - Summary Of Significant Accounting Policies and Note 15 - Superior Investment. Unit Corporation's consolidated total assets as of December 31, 2021 include current and long-term assets of Superior of $61.1 million and $229.5 million, respectively, which can only be used to settle obligations of Superior. Unit Corporation's consolidated cash and cash equivalents of $64.1 million as of December 31, 2021 includes $17.2 million held by Superior.

















The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
4

UNIT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - CONTINUED
March 31,
2022
December 31,
2021
 (In thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$26,330 $58,625 
Accrued liabilities (Note 8)19,169 22,450 
Current operating lease liability (Note 14)1,949 3,791 
Current derivative liabilities (Note 12)78,868 40,876 
Warrant liability (Note 12)56,434 19,822 
Current portion of other long-term liabilities (Note 9)4,537 5,574 
Total current liabilities187,287 151,138 
Long-term debt (Note 9) 19,200 
Non-current derivative liabilities (Note 12)22,699 17,855 
Operating lease liability (Note 14)6,244 8,677 
Other long-term liabilities (Note 9)31,797 32,939 
Commitments and contingencies (Note 16)
Shareholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued
  
Common stock, $0.01 par value, 25,000,000 shares authorized; 12,000,524 shares issued and 10,050,561 outstanding at March 31, 2022, and 12,000,000 shares issued and 10,050,037 and outstanding at December 31, 2021
120 120 
Treasury stock (Note 5)(51,965)(51,965)
Capital in excess of par value199,209 198,171 
Retained earnings (deficit)(5,806)41,071 
Total shareholders’ equity attributable to Unit Corporation141,558 187,397 
Non-controlling interests in consolidated subsidiaries 212,271 
Total shareholders' equity141,558 399,668 
Total liabilities and shareholders’ equity (1)
$389,585 $629,477 
1.Unit Corporation no longer consolidates the balance sheet of Superior as of March 31, 2022 as discussed in Note 2 - Summary Of Significant Accounting Policies and Note 15 - Superior Investment. Unit Corporation's consolidated total liabilities as of December 31, 2021 include current and long-term liabilities of Superior of $42.3 million and $21.2 million, respectively. All of Unit Corporation's consolidated long-term debt of $19.2 million as of December 31, 2021 was held by Superior.

















The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
5

UNIT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 
Three Months Ended March 31,
 20222021
(In thousands)
Revenues:
Oil and natural gas$76,810 $55,024 
Contract drilling28,882 15,674 
Gas gathering and processing82,673 50,199 
Total revenues188,365 120,897 
Expenses:
Operating costs:
Oil and natural gas23,475 19,149 
Contract drilling26,237 11,871 
Gas gathering and processing62,388 40,543 
Total operating costs112,100 71,563 
Depreciation, depletion, and amortization11,270 17,511 
General and administrative6,526 6,289 
Gain on disposition of assets (Note 4)(2,175)(472)
Total operating expenses127,721 94,891 
Income from operations60,644 26,006 
Other income (expense):
Interest, net(274)(2,706)
Loss on derivatives (Note 12)(64,076)(22,831)
Loss on change in fair value of warrants (Note 12)(36,612) 
Loss on deconsolidation of Superior (Note 15)(13,141) 
Reorganization items, net (3)(1,136)
Other, net757 76 
Total other income (expense)(113,349)(26,597)
Loss before income taxes(52,705)(591)
Income tax expense (benefit):
Current  
Deferred  
Total income taxes  
Net loss(52,705)(591)
Net income (loss) attributable to non-controlling interest (Note 15)(5,828)1,346 
Net loss attributable to Unit Corporation$(46,877)$(1,937)
Net income (loss) attributable to Unit Corporation per common share (Note 7):
Basic$(4.66)$(0.16)
Diluted$(4.66)$(0.16)









The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
6

UNIT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

Shareholders' Equity Attributable to Unit Corporation
Common
Stock
Treasury StockCapital in Excess
of Par Value
Retained
Earnings (Deficit)
Non-controlling Interest in Consolidated SubsidiariesTotal
 (In thousands)
Balances as of December 31, 2021$120 $(51,965)$198,171 $41,071 $212,271 $399,668 
Net loss— — — (46,877)(5,828)(52,705)
Distributions to non-controlling interests— — — — (9,479)(9,479)
Deconsolidation of Superior— — — — (196,964)(196,964)
Activity in stock-based compensation plans— — 1,038 — — 1,038 
Balances as of March 31, 2022$120 $(51,965)$199,209 $(5,806)$ $141,558 

Shareholders' Equity Attributable to Unit Corporation
Common
Stock
Treasury StockCapital in Excess
of Par Value
Retained
Earnings (Deficit)
Non-controlling Interest in Consolidated SubsidiariesTotal
 (In thousands)
Balances as of December 31, 2020$120 $ $197,242 $(18,140)$246,371 $425,593 
Net income (loss)— — — (1,937)1,346 (591)
Activity in stock-based compensation plans— — 74 — 16 90 
Balances as of March 31, 2021$120 $ $197,316 $(20,077)$247,733 $425,092 

























The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
7

UNIT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Three Months Ended March 31,
 20222021
(In thousands)
OPERATING ACTIVITIES:
Net loss$(52,705)$(591)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization11,270 17,511 
Loss on derivatives (Note 12)64,076 22,831 
Cash payments on derivatives settled (Note 12)(21,239)(3,304)
Loss on change in fair value of warrants (Note 12)36,612  
Loss on deconsolidation of Superior (Note 15)13,141  
Gain on disposition of assets (Note 4)(2,175)(472)
Stock-based compensation plans (Note 6)1,038 90 
Change in credit loss reserve(29)482 
ARO liability accretion (Note 10)493 461 
Contract assets and liabilities, net (Note 3)199 812 
Capitalized contract fulfillment costs, net30  
Noncash reorganization items(77)760 
Other, net(431)(79)
Changes in operating assets and liabilities increasing (decreasing) cash:
Accounts receivable(12,532)(2,498)
Prepaid expenses and other1,466 1,586 
Accounts payable4,107 (4,043)
Accrued liabilities2,575 (4,287)
Income taxes 1,116 
Contract advances(9)(71)
Net cash provided by operating activities45,810 30,304 
INVESTING ACTIVITIES:
Capital expenditures(8,784)(2,034)
Deconsolidation of Superior cash and cash equivalents (Note 15)(10,119) 
Proceeds from disposition of property and equipment (Note 4)6,691 4,462 
Net cash provided by (used in) investing activities(12,212)2,428 
FINANCING ACTIVITIES:
Borrowings under line of credit (Note 9) 2,700 
Payments under line of credit (Note 9) (22,700)
Net payments on finance leases (Note 14) (1,067)
Distributions to non-controlling interests (Note 15)(9,479) 
Bank overdrafts 809 
Net cash used in financing activities(9,479)(20,258)
Net increase in cash and cash equivalents24,119 12,474 
Cash and cash equivalents, beginning of period64,140 12,714 
Cash and cash equivalents, end of period$88,259 $25,188 









The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
8

UNIT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - CONTINUED

 Three Months Ended March 31,
 20222021
 (In thousands)
Supplemental disclosure of cash flow information:
Cash paid (received) for:
Interest paid $285 $2,438 
Income taxes (1,116)
Reorganization items80 377 
Changes in accounts payable and accrued liabilities related to purchases of property and equipment(161)(1,920)
Non-cash (additions) reductions to oil and natural gas properties related to asset retirement obligations1,260 (26)
Non-cash trade of property and equipment10  







































The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
9

UNIT CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1ORGANIZATION AND BUSINESS

Unless the context clearly indicates otherwise, references in this report to “Unit”, “company”, “we”, “our”, “us”, or like terms refer to Unit Corporation or, as appropriate, one or more of its subsidiaries. References to our mid-stream segment refers to Superior Pipeline Company, L.L.C. (Superior) of which we own 50%.

We are primarily engaged in the development, acquisition, and production of oil and natural gas properties, the land contract drilling of natural gas and oil wells, and the buying, selling, gathering, processing, and treating of natural gas. Our operations are all in the United States and are organized in the following three reporting segments: (1) Oil and Natural Gas, (2) Contract Drilling, and (3) Mid-Stream.

Oil and Natural Gas. Carried out by our subsidiary, Unit Petroleum Company (UPC), we develop, acquire, and produce oil and natural gas properties for our own account. Our producing oil and natural gas properties, unproved properties, and related assets are primarily located in Oklahoma and Texas, and to a lesser extent, in Arkansas, Kansas, Louisiana, Montana, North Dakota, Utah, and Wyoming.

Contract Drilling. Carried out by our subsidiary, Unit Drilling Company (UDC), we drill onshore oil and natural gas wells for a wide range of other oil and natural gas companies as well as for our own account. Our drilling operations are primarily located in Oklahoma, Texas, New Mexico, Wyoming, and North Dakota.

Mid-Stream. Carried out by Superior of which we own 50%, buys, sells, gathers, transports, processes, and treats natural gas for UPC and for third parties. Mid-Stream operations are primarily located in Oklahoma, Texas, Kansas, Pennsylvania, and West Virginia.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States (GAAP) for complete consolidated financial statements, and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in the company’s Annual Report on Form 10-K as filed with the SEC on March 31, 2022.

In the opinion of management, the unaudited condensed consolidated financial statements are fairly stated and contain all normal recurring adjustments (including the elimination of all intercompany transactions). 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. The results for interim periods are not necessarily indicative of annual results. The company evaluates subsequent events through the date the financial statements are issued.

The consolidated financial statements include the accounts of Unit Corporation and its subsidiaries. We consolidated the financial position, operating results, and cash flows of Superior prior to March 1, 2022, on which date the Master Services and Operating Agreement (MSA) was amended and restated, with the result that we no longer consolidate Superior's financial position, operating results, and cash flows during periods subsequent to March 1, 2022. Accordingly, the unaudited condensed consolidated financial statements and notes reflect Superior activity on a consolidated basis for the two months prior to March 1, 2022. See Note 15 – Superior Investment for more information on the Superior investment and consolidation conclusions. All intercompany transactions and accounts between consolidated entities have been eliminated, including activity between Unit and Superior during the two months prior to March 1, 2022. Intercompany transactions and accounts between Unit and Superior subsequent to March 1, 2022 are not eliminated.

Certain amounts in this report for prior periods have been reclassified to conform to current year presentation. There was no impact from these reclassifications to consolidated net income/(loss) or shareholders' equity.
10


Recent Accounting Pronouncements

Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The FASB issued ASU 2020-04 and ASU 2021-01 which provide and clarify optional expedients and exceptions for applying generally accepted accounting principles to contract modifications, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The amendments within these ASUs will be in effect for a limited time beginning March 12, 2020, and an entity may elect to apply the amendments prospectively through December 31, 2022. In April 2022, the FASB proposed to defer the effective date to December 31, 2024, but a final ruling has not been issued. We have not yet elected to use the optional guidance and continue to evaluate the options provided by ASU 2020-04 and ASU 2021-01.

NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Our revenue streams are reported under three segments: oil and natural gas, contract drilling, and mid-stream which is consistent with how we report our segment revenue (as reflected in Note 19 – Industry Segment Information). Revenue from the oil and natural gas segment is from sales of our oil and natural gas production. Revenue from the contract drilling segment comes from contracting with upstream companies to drill an agreed-on number of wells or provide drilling rigs and services over an agreed-on period. Revenues from the mid-stream segment are generated from the fees earned for gas gathering and processing services provided to a customer or by selling of hydrocarbons to other mid-stream companies.

Oil and Natural Gas Revenue

Typical types of revenue contracts entered into by our oil and gas segment are Oil Sales Contracts, North American Energy Standards Board (NAESB) Contracts, Gas Gathering and Processing Agreements, and revenues earned as the non-operated party with the operator serving as an agent on our behalf under joint operating agreements. Consideration received is variable and settled monthly while contract terms can range from a single month or evergreen to terms of a decade or more. Revenues from oil and natural gas sales are recognized when the customer obtains control of the sold product which typically occurs at the point of delivery to the customer.

Certain costs, as either a deduction from revenue or as an expense, are determined based on when control of the commodity is transferred to our customer, which would affect our total revenue recognized, but will not affect gross profit. For example, gathering, processing and transportation costs are included as part of the contract price with the customer on transfer of control of the commodity are included in the transaction price, while costs incurred while we are in control of the commodity represent operating costs.

Contract Drilling Revenue

Contract drilling revenues and expenses are primarily recognized as services are performed and collection is reasonably assured. Payments for mobilization and demobilization activities do not relate to a distinct good or service within the contract and are deferred for ratable recognition when material. Costs incurred to relocate rigs and other drilling equipment to areas in which a contract has not been secured are expensed as incurred and any reimbursements received for out-of-pocket expenses are recorded as both revenues and direct costs.

Most of our drilling contracts have a term of one year or less and the remaining performance obligations under the contracts without a fixed term are not material.

Mid-Stream Revenue

The typical revenue contracts used by this segment are gas gathering and processing agreements as well as product sales. Superior recognizes sales revenue at the point in time when control transfers to the purchaser, typically at a specified delivery point, based on the contractually agreed upon fixed or index-based price received. Contracts for gas gathering and processing services may include terms for demand fees or shortfall fees. Demand fees or shortfall fees exist in arrangements where a customer agrees to pay a fixed fee for a contractually agreed upon pipeline capacity or shortfall fees for any minimum volumes not utilized, which create performance obligations for each individual period of reservation. Revenue for these fees is recognized once the services have been completed, the customer no longer has access to the contracted capacity, or the likelihood of the customer exercising all or a portion of their remaining rights becomes remote.

11

Contract Assets and Liabilities

The table below shows the changes in our contract asset and contract liability balances during periods presented:

Classification on the unaudited condensed consolidated balance sheetsMarch 31,
2022
December 31,
2021
Change
(In thousands)
Assets
Current contract assetsPrepaid expenses and other$ $174 $(174)
Non-current contract assetsOther assets   
Total contract assets$ $174 $(174)
Liabilities
Current contract liabilitiesCurrent portion of other long-term liabilities$670 $1,588 $(918)
Non-current contract liabilitiesOther long-term liabilities194 200 (6)
Total contract liabilities864 1,788 (924)
Contract assets (liabilities), net$(864)$(1,614)$750 
NOTE 4 – DIVESTITURES

Oil and Natural Gas

The company initiated an asset divestiture program at the beginning of 2021 to sell certain non-core oil and gas properties and reserves (the “Divestiture Program”). On October 4, 2021, the company announced that it is expanding the Divestiture Program to now include the potential sale of additional properties, including up to all of UPC’s oil and gas properties and reserves. On January 20, 2022, the company announced that it has retained a financial advisor and launched the process, which is still ongoing.

On March 8, 2022, the company closed on the sale of certain non-core wells and related leases located near the Oklahoma Panhandle for cash proceeds of $4.1 million net of customary closing and post-closing adjustments based on an effective date of December 1, 2021. These proceeds reduced the net book value of our full cost pool with no gain or loss recognized as the sale did not result in a significant alteration of the full cost pool.

We sold other non-core oil and natural gas assets for net proceeds of $0.5 million and $1.7 million during the three months ended March 31, 2022 and 2021, respectively. These proceeds reduced the net book value of our full cost pool with no gain or loss recognized as the sales did not result in a significant alteration of the full cost pool.

Contract Drilling

We sold non-core contract drilling assets for proceeds of $2.2 million and $2.0 million during the three months ended March 31, 2022 and 2021, respectively. These proceeds resulted in net gains of $2.1 million and 0.6 million during the three months ended March 31, 2022 and 2021, respectively.

12

NOTE 5 – CAPITAL STOCK

Stock Repurchase Program

In June 2021, we repurchased an aggregate of 600,000 shares of our common stock from the Lenders (as defined in Note 10 - Long-Term Debt And Other Long-Term Liabilities) which received these shares as an exit fee during our reorganization. The Lenders were paid $15.00 per share for their respective shares, for an aggregate cash purchase price of $9.0 million.

In June 2021, the company's board of directors (the Board) authorized repurchasing up to $25.0 million of the company’s outstanding common stock. In October 2021, the Board authorized an increase from $25.0 million of authorized repurchases to $50.0 million. The repurchases will be made through open market purchases, privately negotiated transactions, or other available means. The company has no obligation to repurchase any shares under the repurchase program and may suspend or discontinue it at any time without prior notice. As of March 31, 2022, we had repurchased a total of 1,271,963 shares at an average share price of $32.57 for an aggregate purchase price of $41.4 million under the repurchase program.

During the year ended December 31, 2021, we also repurchased 78,000 shares in a privately negotiated transaction at a share price of $19.07 which were not part of the repurchase program.

The cumulative number of shares repurchased as of March 31, 2022 totaled 1,949,963. The cash purchase price and any direct acquisition costs are reflected as treasury stock on the unaudited condensed consolidated balance sheets as of March 31, 2022.

Warrants

Each holder of Unit common stock outstanding ("Old Common Stock") before the September 3, 2020 emergence from bankruptcy ("Emergence Date") that did not opt out of the release under the Chapter 11 plan of reorganization filed with the bankruptcy court on June 9, 2020 is entitled to receive 0.03460447 warrants for every share of Old Common Stock owned. Each warrant is exercisable for one share of common stock, subject to adjustment as provided in the Warrant Agreement. The warrants expire on the earliest of (i) September 3, 2027, (ii) consummation of a Cash Sale (as defined in the Warrant Agreement), or (iii) the consummation of a liquidation, dissolution or winding up of the company. As of March 31, 2022, the company had issued 1,822,203 warrants.

Among other provisions, the Warrant Agreement outlines potential adjustments to the warrants if certain events occur, including (i) stock dividends payable in shares of common stock or stock splits, (ii) reverse stock splits or similar combination events, (iii) Liquidity Events (as defined in the Warrant Agreement), and (iv) other events not explicitly contemplated which may have an adverse impact to the intent and purpose of the warrants as set forth in the Plan, provided, however, the warrants will not be adjusted for (a) any issuances of securities in connection with a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, (b) the issuance of any securities by Unit on or after the Effective Date (as defined in the Plan) pursuant to the Plan or upon the issuance of shares of common stock upon the exercise of such securities, (c) the issuance of any shares of common stock pursuant to the exercise of the warrants, (d) the issuance of shares of common stock pursuant to any management stock option incentive or similar plan, (e) a dividend or distribution to holders of common stock of cash, property, or securities (other than common stock), and/or (f) any change in the par value of the common stock.

Pursuant to the terms of the Warrant Agreement, the company determined the initial exercise price of the warrants to be $63.74. On April 7, 2022, the company delivered notice of the initial exercise price to the Warrant Agent and the warrants became exercisable for shares of the company’s common stock. On or about April 25, 2022, the warrants began trading over-the-counter under the symbol "UNTCW".

13

NOTE 6 – STOCK-BASED COMPENSATION

On the Effective Date, the Board adopted the Unit Corporation Long Term Incentive Plan (LTIP) to incentivize employees, officers, directors and other service providers of the company and its affiliates. The LTIP will be administered by the Board or a committee thereof and provides for the grant, from time to time, at the discretion of the Board or a committee thereof, of stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), stock awards, dividend equivalents, other stock-based awards, cash awards, performance awards, substitute awards or any combination of the foregoing. Subject to adjustment in the event of certain transactions or changes of capitalization in accordance with the LTIP, 903,226 shares of New Common Stock have been reserved for issuance pursuant to awards under the LTIP. New Common Stock subject to an award that expires or is canceled, forfeited, exchanged, settled in cash, or otherwise terminated without delivery of shares and shares withheld to pay the exercise price of, or to satisfy the withholding obligations with respect to, an award will again be available for delivery pursuant to other awards under the LTIP.

The table below summarizes the stock-based compensation expense activity recognized during the following periods:

Three Months Ended March 31,
20222021
(In thousands)
Recognized stock compensation expense$1,038 $ 
Capitalized stock compensation cost for our oil and natural gas properties
  
Tax benefit on stock-based compensation$254 $ 

There were no RSUs granted or outstanding during the three months ended March 31, 2021. The table below summarizes the activity pertaining to nonvested RSUs during the three months ended March 31, 2022:

Three Months Ended March 31,
2022
Number
of Shares
Weighted
Average Grant Date
Fair Value
Nonvested RSUs, beginning of period315,529 $26.71 
Granted (1)
7,850 30.50 
Vested(524)30.50 
Forfeited  
Nonvested RSUs, end of period (2)
322,855 $26.80 
1.RSUs were granted on January 7, 2022 with an aggregate grant date fair value of $0.2 million and will vest equally each month for thirty months.
2.The aggregate compensation cost related to nonvested RSUs not yet recognized as of March 31, 2022 was $7.5 million with a weighted average remaining service period of 1.4 years.
14


There were no stock options granted or outstanding during the three months ended March 31, 2021. The table below summarizes the activity pertaining to outstanding stock options during the three months ended March 31, 2022:

Three Months Ended March 31,
2022
Number
of Shares
Weighted Average
Exercise Price
Outstanding stock options, beginning of period361,418 $45.00 
Granted (1)
13,416 45.00 
Exercised  
Forfeited or expired  
Outstanding stock options, end of period (2)
374,834 $45.00 
1.Stock options were granted on January 7, 2022 with an aggregate grant date fair value of $0.1 million and will 100% vest on the first anniversary of the grant date.
2.The stock options outstanding as of March 31, 2022 had a weighted average remaining contractual term of 4.5 years and an aggregate intrinsic value of $6.2 million. None of the stock options outstanding as of March 31, 2022 were exercisable. The aggregate compensation cost related to outstanding options not yet recognized as of March 31, 2022 was $3.5 million with a weighted average remaining service period of 1.5 years.

NOTE 7 – LOSS PER SHARE

The table below shows information related to the calculation of loss per share attributable to Unit Corporation using the treasury stock method for the periods indicated below:

Earnings (Loss)
(Numerator)
Weighted
Shares
(Denominator)
Per-Share
Amount
 (In thousands except per share amounts)
Three months ended March 31, 2022
Basic loss attributable to Unit Corporation per common share$(46,877)10,050 $(4.66)
Diluted loss attributable to Unit Corporation per common share$(46,877)10,050 $(4.66)
Three months ended March 31, 2021
Basic loss attributable to Unit Corporation per common share$(1,937)12,000 $(0.16)
Diluted loss attributable to Unit Corporation per common share$(1,937)12,000 $(0.16)

The effects related to 319,192 average outstanding restricted stock units and 368,126 average outstanding stock options were excluded from the loss per share calculation for the three months ended March 31, 2022 because their inclusion would be antidilutive.

NOTE 8 – ACCRUED LIABILITIES

The table below provides detail on our accrued liabilities as of the dates indicated:

March 31,
2022
December 31,
2021
 (In thousands)
Employee costs$7,708 $10,005 
Lease operating expenses3,910 3,451 
Capital expenditures4,715 3,962 
Taxes1,481 3,320 
Interest payable96 296 
Other1,259 1,416 
Total accrued liabilities$19,169 $22,450 
15

NOTE 9 – LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIES

Long-Term Debt

The table below provides detail on our outstanding long-term debt as of the dates indicated:

March 31,
2022
December 31,
2021
 (In thousands)
Long-term debt:
Exit credit agreement$ $ 
Superior credit agreement (1)
$19,200 
1.Unit Corporation no longer consolidates the financial position of Superior as of March 31, 2022 as discussed in Note 2 - Summary Of Significant Accounting Policies and Note 15 - Superior Investment.

Exit Credit Agreement. On the Effective Date, under the terms of the Plan, the company entered into an amended and restated credit agreement (the Exit credit agreement), providing for a $140.0 million senior secured revolving credit facility (RBL Facility) and a $40.0 million senior secured term loan facility, among (i) the company, UDC, and UPC (together, the Borrowers), (ii) the guarantors party thereto, including the company and all of its subsidiaries existing as of the Effective Date (other than Superior and its subsidiaries), (iii) the lenders party thereto from time to time (Lenders), and (iv) BOKF, NA dba Bank of Oklahoma as administrative agent and collateral agent (in such capacity, the Administrative Agent).

On April 6, 2021, the company finalized the first amendment to the Exit credit agreement. Under the first amendment, the company reaffirmed its borrowing base of $140.0 million of the RBL Facility, amended certain financial covenants, and received less restrictive terms, among others, as it relates to the disposition of assets and the use of proceeds from those dispositions.

On July 27, 2021, the company finalized the second amendment to the Exit credit agreement. Under the second amendment, the company obtained confirmation that the Term Loan had been paid in full prior to the amendment date and received one-time waivers related to the disposition of assets.

On October 19, 2021, the company finalized the third amendment to the Exit credit agreement. Under the third amendment, the company requested, and was granted, a reduction in the RBL Facility borrowing base from $140.0 million to $80.0 million in addition to less restrictive terms as it relates to capital expenditures, required hedges, and the use of proceeds from the disposition of certain assets, while also amending certain financial covenants.

On March 30, 2022, the RBL Facility borrowing base of $80.0 million was reaffirmed.

The maturity date of borrowings under this Exit credit agreement is March 1, 2024. Revolving Loans and Term Loans (each as defined in the Exit credit agreement) may be Eurodollar Loans or ABR Loans (each as defined in the Exit credit agreement). Revolving Loans that are Eurodollar Loans will bear interest at a rate per annum equal to the Adjusted LIBO Rate (as defined in the Exit credit agreement) for the applicable interest period plus 525 basis points. Revolving Loans that are ABR Loans will bear interest at a rate per annum equal to the Alternate Base Rate (as defined in the Exit credit agreement) plus 425 basis points. Term Loans that are Eurodollar Loans will bear interest at a rate per annum equal to the Adjusted LIBO Rate for the applicable interest period plus 625 basis points. Term Loans that are ABR Loans will bear interest at a rate per annum equal to the Alternate Base Rate plus 525 basis points.

The Exit credit agreement requires the company to comply with certain financial ratios, including a covenant that the company will not permit the Net Leverage Ratio (as defined in the Exit credit agreement) as of the last day of the fiscal quarters ended (i) December 31, 2020 and March 31, 2021, to be greater than 4.00 to 1.00, (ii) June 30, 2021 and September 30, 2021, to be greater than 3.75 to 1.00, and (iii) December 31, 2021 and any fiscal quarter thereafter, to be greater than 3.25 to 1.00. In addition, beginning with the fiscal quarter ended December 31, 2020, the company may not (a) permit the Current Ratio (as defined in the Exit credit agreement) as of the last day of any fiscal quarter to be less than 1.00 to 1.00 or (b) permit the Interest Coverage Ratio (as defined in the Exit credit agreement) as of the last day of any fiscal quarter to be less than 2.50 to 1.00. The Exit credit agreement also contains provisions, among others, that limit certain capital expenditures, and require certain hedging activities. The Exit credit agreement further requires the company to provide quarterly financial statements within 45 days after the end of each of the first three quarters of each fiscal year and annual financial statements within 90 days after the end of each fiscal year. As of March 31, 2022, Unit was in compliance with these covenants.
16


The Exit credit agreement is secured by first-priority liens on substantially all of the personal and real property assets of the Borrowers and the Guarantors, including the company’s ownership interests in Superior.

As of March 31, 2022, we had no long-term borrowings and $2.4 million of letters of credit outstanding under the Exit credit agreement.

Superior Credit Agreement. On May 10, 2018, Superior entered into a five-year, $200.0 million senior secured revolving credit facility with an option to increase the credit amount up to $250.0 million, subject to certain conditions (Superior credit agreement). The amounts borrowed under the Superior credit agreement bore annual interest at a rate, at Superior’s option, equal to (a) LIBOR plus the applicable margin of 2.00% to 3.25% or (b) the alternate base rate (greater of (i) the federal funds rate plus 0.5%, (ii) the prime rate, and (iii) the Thirty-Day LIBOR Rate (as defined in the Superior credit agreement)) plus the applicable margin of 1.00% to 2.25%.

The Superior credit agreement required that Superior maintain a Consolidated EBITDA to interest expense ratio for the most-recently ended rolling four quarters of at least 2.50 to 1.00, and a funded debt to Consolidated EBITDA ratio of not greater than 4.00 to 1.00. The agreement also contained several customary covenants that restrict (subject to certain exceptions) Superior’s ability to incur additional indebtedness, create additional liens on its assets, make investments, pay distributions, sign sale and leaseback transactions, engage in certain transactions with affiliates, engage in mergers or consolidations, sign hedging arrangements, and acquire or dispose of assets. Superior was in compliance with these covenants as of March 31, 2022.

On April 29, 2022, Superior entered into an Amended and Restated Credit Agreement for a four-year, $135.0 million senior secured revolving credit facility with an option to increase the credit amount up to $200.0 million, subject to certain conditions (Amended Superior credit agreement). The amounts borrowed under the Amended Superior credit agreement bear annual interest at a rate, at Superior’s option, equal to (a) SOFR plus the applicable margin of 2.75% to 3.75% or (b) the alternate base rate (greater of (i) the federal funds rate plus 0.5%, (ii) the prime rate, and (iii) SOFR plus 0.10%). The obligations under the Amended Superior credit agreement are secured by, among other things, mortgage liens on certain of Superior’s processing plants and gathering systems. Unit is not a party to and does not guarantee the Amended Superior credit agreement.

The Amended Superior credit agreement requires that Superior maintain a Consolidated EBITDA to interest expense ratio for the most-recently ended rolling four quarters of at least 2.50 to 1.00, and a funded debt to Consolidated EBITDA ratio of not greater than 3.50 to 1.00. Additionally, the Amended Superior credit agreement contains a number of customary covenants that, among other things, restrict (subject to certain exceptions) Superior’s ability to incur additional indebtedness, create additional liens on its assets, make investments, pay distributions, enter into sale and leaseback transactions, engage in certain transactions with affiliates, engage in mergers or consolidations, enter into hedging arrangements, and acquire or dispose of assets.

Other Long-Term Liabilities

The table below provides detail on our other long-term liabilities as of the dates indicated:

March 31,
2022
December 31,
2021
 (In thousands)
Asset retirement obligation (ARO) liability$24,939 $25,688 
Workers’ compensation7,673 7,925 
Contract liability864 1,788 
Separation benefit plans1,776 2,022 
Gas balancing liability1,082 1,090 
36,334 38,513 
Less: current portion4,537 5,574 
Total other long-term liabilities$31,797 $32,939 

17

NOTE 10 – ASSET RETIREMENT OBLIGATIONS

We are required to record the estimated fair value of the liabilities relating to the future retirement of our long-lived assets. Our oil and natural gas wells are plugged and abandoned when the oil and natural gas reserves in those wells are depleted or the wells are no longer able to produce. The plugging and abandonment liability for a well is recorded in the period in which the obligation is incurred (at the time the well is drilled or acquired). None of our assets are restricted for purposes of settling these AROs. All our AROs relate to the plugging costs associated with our oil and gas wells.

The following table shows certain information about our estimated AROs for the periods indicated:

Three Months Ended March 31,
20222021
(In thousands)
ARO liability, beginning of period$25,688 $23,356 
Accretion of discount493 461 
Liability incurred  
Liability settled(55)(16)
Liability sold(2,670)(2)
Revision of estimates (1)
1,483 44 
ARO liability, end of period24,939 23,843 
Less: current portion2,654 2,161 
Total long-term ARO$22,285 $21,682 
1.Plugging liability estimates were revised in 2022 and 2021 for updates in the cost of services used to plug wells over the preceding year as well as estimated inflation and discount rates. We had various upward and downward adjustments.

NOTE 11 – WORKERS' COMPENSATION

We are liable for workers' compensation benefits for traumatic injuries through our self-insured program to provide income replacement and medical treatment for work-related traumatic injury claims as required by applicable state laws. Workers' compensation laws also compensate survivors of workers who suffer employment related deaths. Our liability for traumatic injury claims is the estimated present value of current workers' compensation benefits, based on our actuarial estimates. Our actuarial calculations are based on a blend of actuarial projection methods and numerous assumptions including claim development patterns, mortality, medical costs and interest rates.

The following table summarizes activity for our workers' compensation liability during the periods indicated:

Three months ended March 31,
 20222021
 (In thousands)
Workers' compensation liability, beginning of period$7,925 $10,164 
Claims and valuation adjustments(160)1,646 
Payments(92)(75)
Workers' compensation liability, end of period7,673 11,735 
Less: current portion1,169 1,882 
Long-term workers' compensation liability$6,504 $9,853 

Our workers' compensation liability above is presented on a gross basis and does not include our expected receivables on our insurance policy. Our receivables for traumatic injury claims under these policies as of March 31, 2022 and December 31, 2021 are $3.9 million and $4.0 million, respectively, and are included in Other assets on our unaudited condensed consolidated balance sheets.

18

NOTE 12 – DERIVATIVES

Commodity Derivatives

We have entered into various types of derivative transactions covering some of our projected natural gas, NGLs, and oil production. These transactions are intended to reduce our exposure to market price volatility by setting the price(s) we will receive for that production. Our decisions on the price(s), type, and quantity of our production subject to a derivative contract are based, in part, on our view of current and future market conditions as well as certain requirements stipulated in the Exit credit agreement. As of March 31, 2022, our commodity derivative transactions consisted of the following types of hedges:

Swaps. We receive or pay a fixed price for the commodity and pay or receive a floating market price to the counterparty. The fixed-price payment and the floating-price payment are netted, resulting in a net amount due to or from the counterparty.
Collars. A collar contains a fixed floor price (put) and a ceiling price (call). If the market price exceeds the call strike price or falls below the put strike price, we receive the fixed price and pay the market price. If the market price is between the call and the put strike price, no payments are due from either party. 

We do not engage in derivative transactions for speculative purposes. We are not required to post any cash collateral with our counterparties and no collateral has been posted as of March 31, 2022.

The following non-designated commodity hedges were outstanding as of March 31, 2022:

TermCommodityContracted Volume
Weighted Average 
Fixed Price for Swaps
Contracted Market
Apr'22 - Dec'22Natural gas - swap
5,000 MMBtu/day
$2.61IF - NYMEX (HH)
Jan'23 - Dec'23Natural gas - swap
22,000 MMBtu/day
$2.46IF - NYMEX (HH)
Apr'22 - Dec'22Natural gas - collar
35,000 MMBtu/day
$2.50 - $2.68
IF - NYMEX (HH)
Apr'22 - Jun'22Crude oil - swap
824 Bbl/day
$70.30WTI - NYMEX
Apr'22 - Dec'22Crude oil - swap
2,300 Bbl/day
$42.25WTI - NYMEX
Jan'23 - Dec'23Crude oil - swap
1,300 Bbl/day
$43.60WTI - NYMEX

Warrants

We recognize the fair value of the warrants as a derivative liability on our consolidated balance sheets with changes in the liability reported as loss on change in fair value of warrants in our consolidated statements of operations. The liability will continue to be adjusted to fair value at each reporting period until the warrants meet the definition of an equity instrument, at which time they will be reported as shareholders' equity and no longer subject to future fair value adjustments.

On April 7, 2022, the company delivered notice of the initial $63.74 exercise price resulting in the warrants meeting the definition of an equity instrument. We will estimate the fair value of the warrants as of April 7, 2022 and they will be reported as shareholders' equity in future periods.

The following tables present the recognized derivative assets and liabilities on our unaudited condensed consolidated balance sheets:

Balances as of March 31, 2022
Balance Sheet ClassificationPresented
Gross
Effects of
Netting
Presented
Net
  (In thousands)
Liabilities:
Current Commodity DerivativesCurrent derivative liabilities$78,868 $ $78,868 
Long-term Commodity DerivativesNon-current derivative liabilities22,699  22,699 
Warrant LiabilityWarrant liability56,434  56,434 
Total derivative liabilities$158,001 $ $158,001 

19

Balances as of December 31, 2021
Balance Sheet ClassificationPresented
Gross
Effects of
Netting
Presented
Net
  (In thousands)
Liabilities:
Current Commodity DerivativesCurrent derivative liabilities$40,876 $ $40,876 
Long-term Commodity DerivativesNon-current derivative liabilities17,855  17,855 
Warrant LiabilityWarrant liability19,822  19,822 
Total derivative liabilities$78,553 $ $78,553 

The following table shows the activity related to derivative instruments in the unaudited condensed consolidated statements of operations for the periods indicated:

Three Months Ended March 31,
20222021
 (In thousands)
Loss on derivatives$(64,076)$(22,831)
Cash settlements paid on commodity derivatives(21,239)(3,304)
Loss on derivatives less cash settlements paid on commodity derivatives$(42,837)$(19,527)
Loss on change in fair value of warrants$(36,612)$ 

NOTE 13 – FAIR VALUE MEASUREMENTS

This disclosure of the estimated fair value of financial instruments is made under accounting guidance for financial instruments. We have determined the estimated fair values by using market information and certain valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Using different market assumptions or valuation methodologies may have a material effect on our estimated fair value amounts.

The inputs available determine the valuation technique that we use to measure the fair value of the assets and liabilities presented in our unaudited condensed consolidated financial statements. Fair value measurements are categorized into one of three different levels depending on the observability of the inputs used in the measurement. The levels are summarized as follows:

Level 1—observable inputs such as quoted prices in active markets for identical assets and liabilities.
Level 2—other observable pricing inputs, such as quoted prices in inactive markets, or other inputs that are either directly or indirectly observable as of the reporting date, including inputs that are derived from or corroborated by observable market data.
Level 3—generally unobservable inputs which are developed based on the best information available and may include our own internal data or estimates about how market participants would value such assets and liabilities.

20

Recurring Fair Value Measurements

The following tables set forth our recurring fair value measurements by level:

Balances as of March 31, 2022
 Level 1Level 2Level 3Total
 (In thousands)
Financial liabilities:
Commodity derivative liabilities$ $101,567 $ $101,567 
Warrant liability  56,434 56,434 
$ $101,567 $56,434 $158,001 

Balances as of December 31, 2021
 Level 1Level 2Level 3Total
 (In thousands)
Financial liabilities:
Commodity derivative liabilities$ $58,731 $ $58,731 
Warrant liability  19,822 19,822 
$ $58,731 $19,822 $78,553 

The carrying values on the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, other current assets, and current liabilities approximate their fair value because of their short-term nature. The following methods and assumptions were used to estimate the fair values of the assets and liabilities in the table above. There were no transfers between Level 2 and Level 3 financial liabilities.

Commodity Derivatives. We measure the fair values of our crude oil and natural gas swaps and collars using estimated discounted cash flow calculations based on the NYMEX futures index. We consider these Level 2 measurements within the fair value hierarchy as the inputs in the model are substantially observable over the term of the commodity derivative contract and there is a wide availability of quoted market prices for similar commodity derivative contracts.

We determined that the non-performance risk regarding our commodity derivative counterparties was immaterial based on our valuation at March 31, 2022.
Warrant Liability. We use the Black-Scholes option pricing model to measure the fair value of the warrants. Key inputs for the Black-Scholes model include the stock price, exercise price, expected term, risk-free rate, volatility, and dividend yield. We consider this a Level 3 measurement within the fair value hierarchy as estimated volatility is generally unobservable and requires management's estimation.

The following tables summarize the activity of our recurring Level 3 fair value measurements during the periods presented:

Three Months Ended March 31,
20222021
 (In thousands)
Beginning of period$19,822 $885 
Loss on change in warrant liability36,612  
End of period$56,434 $885 

Nonrecurring Fair Value Measurements

ARO. The initial measurement of ARO at fair value is calculated using discounted cash flow techniques and based on internal estimates of future retirement costs associated with property and equipment. Significant Level 3 inputs used in the calculation of AROs include plugging costs and remaining reserve lives. A summary of the company’s ARO activity is presented in Note 10 – Asset Retirement Obligations.
21


Stock-Based Compensation. We use the Black-Scholes option pricing model to estimate the fair value of stock option grants while the value of our restricted stock grants is based on the grant date closing stock price. Key assumptions for the Black-Scholes models include the stock price, exercise price, expected term, risk-free rate, volatility, and dividend yield. We consider this a Level 3 measurement within the fair value hierarchy as estimated volatility is generally unobservable and requires management's estimation.

See Note 15 - Superior Investment for discussion on the estimated fair value of our retained equity method investment in Superior as of March 1, 2022.

NOTE 14 – LEASES

Operating Leases. We are a lessee through noncancellable lease agreements for property and equipment consisting primarily of office space, land, vehicles, and equipment used in both our operations and administrative functions.

The following table sets forth the maturities, weighted average remaining lease term, and weighted average discount rate of our operating lease liabilities as of March 31, 2022:

Amount
(In thousands)
Ending March 31,
2022$2,423 
20231,994 
20242,014 
20252,055 
2026954 
2027 and beyond 
Total future payments9,440 
Less: Interest1,247 
Present value of future minimum operating lease payments8,193 
Less: Current portion1,949 
Total long-term operating lease payments$6,244 
Weighted average remaining lease term (years)4.3
Weighted average discount rate (1)
6.64 %
1.Our weighted average discount rates represent the rate implicit in the lease or our incremental borrowing rate for a term equal to the remaining term of the lease.

Finance Leases. During 2014, Superior entered into finance lease agreements for 20 compressors with initial terms of seven years and an option to purchase the assets at 10% of their then fair market value at the end of the term. These finance leases were discounted using annual rates of 4.0% and the underlying assets are included in gas gathering and processing equipment. Superior purchased the leased assets for $3.0 million in May 2021.
22

The following table shows information about our lease assets and liabilities on our unaudited condensed consolidated balance sheets:

Classification on the unaudited condensed consolidated balance sheetsMarch 31,
2022
December 31,
2021
(In thousands)
Assets
Operating lease right of use assetsRight of use assets$8,151 $12,445 
Total right of use assets$8,151 $12,445 
Liabilities
Current liabilities:
Operating lease liabilitiesCurrent operating lease liabilities$1,949 $3,791 
Non-current liabilities:
Operating lease liabilitiesOperating lease liabilities6,244 8,677 
Total lease liabilities$8,193 $12,468 

The following table shows certain information related to the lease costs for our finance and operating leases for the periods indicated:

Three Months Ended March 31,
20222021
(In thousands)
Components of total lease cost:
Amortization of finance leased assets$