-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NoGaN7zPhzAYDt+ctZIehZONG7Gmz8oAM4n+KcAMvj53X0xzXWMCsDHSvNd10YHl rFyAdFSydIcWSx8DadVtMA== 0000798949-96-000031.txt : 19961111 0000798949-96-000031.hdr.sgml : 19961111 ACCESSION NUMBER: 0000798949-96-000031 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961108 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIT CORP CENTRAL INDEX KEY: 0000798949 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 731283193 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09260 FILM NUMBER: 96656481 BUSINESS ADDRESS: STREET 1: 1000 KENSINGTON CENTRE STREET 2: 7130 SOUTH LEWIS CITY: TULSA STATE: OK ZIP: 74136 BUSINESS PHONE: 9184937700 10-Q 1 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended September 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number 1-9260 UNIT CORPORATION (Exact name of registrant as specified in its charter) Delaware 73-1283193 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1000 Kensington Tower I, 7130 South Lewis, Tulsa, Oklahoma 74136 (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) 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 X No _______ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.20 par value 24,123,109 Class Outstanding at November 1, 1996 UNIT CORPORATION INDEX Page PART I. Financial Information: Number Item 1 - Financial Statements (Unaudited) Consolidated Condensed Balance Sheets September 30, 1996 and December 31, 1995 2 Consolidated Condensed Statements of Operations Three and Nine Months Ended September 30, 1996 and 1995 3 Consolidated Condensed Statements of Cash Flows Nine Months Ended September 30, 1996 and 1995 4 Notes to Consolidated Condensed Financial Statements 5 Report of Review by Independent Accountants 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. Other Information: Item 1 - Legal Proceedings 13 Item 2 - Changes in Securities 13 Item 3 - Defaults Upon Senior Securities 13 Item 4 - Submission of Matters to a Vote of 13 Security Holders Item 5 - Other Information 13 Item 6 - Exhibits and Reports on Form 8-K 13 Signatures 14 1 Item 1. Financial Statements UNIT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS September 30, December 31, 1996 1995 ---------- ---------- ASSETS (Unaudited) - ------ (In thousands) Current Assets: Cash and cash equivalents $ 478 $ 534 Accounts receivable 12,003 10,398 Other 3,495 3,094 ---------- ---------- Total current assets 15,976 14,026 ---------- ---------- Property and Equipment: Total cost 285,855 260,771 Less accumulated depreciation, depletion, amortization and impairment 172,301 164,752 ---------- ---------- Net property and equipment 113,554 96,019 ---------- ---------- Other Assets 137 877 ---------- ---------- Total Assets $ 129,667 $ 110,922 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current Liabilities: Current portion of long-term debt $ - $ 20 Accounts payable 8,755 6,701 Accrued liabilities 4,336 4,386 ---------- ---------- Total current liabilities 13,091 11,107 ---------- ---------- Natural Gas Purchaser Prepayments (Note 3) 2,007 2,109 ---------- ---------- Long-Term Debt 37,700 41,100 ---------- ---------- Deferred Income Taxes 2,292 - ---------- ---------- Shareholders' Equity: Preferred stock, $1.00 par value, 5,000,000 shares authorized, none issued - - Common stock $.20 par value, 40,000,000 shares authorized, 24,013,497 and 20,976,090 shares issued, respectively 4,803 4,195 Capital in excess of par value 62,714 50,181 Retained Earnings 7,125 2,418 Treasury stock, at cost, 23,755 and 68,441 shares, respectively (65) (188) ---------- ---------- Total shareholders' equity 74,577 56,606 ---------- ---------- Total Liabilities and Shareholders' Equity $ 129,667 $ 110,922 ========== ========== The accompanying notes are an integral part of the consolidated condensed financial statements. 2 UNIT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 --------- --------- --------- --------- Revenues: (In thousands except per share amounts) Contract drilling $ 7,420 $ 6,003 $ 20,216 $ 14,074 Oil and natural gas 9,682 7,160 29,867 22,236 Other 184 954 181 1,700 --------- --------- --------- --------- Total revenues 17,286 14,117 50,264 38,010 --------- --------- --------- --------- Expenses: Contract drilling: Operating costs 5,999 5,260 17,328 13,034 Depreciation 735 624 2,105 1,656 Oil and natural gas: Operating costs 3,111 3,052 9,937 8,601 Depreciation, depletion and amortization 2,574 2,506 7,803 7,604 General and administrative 943 942 3,072 2,840 Interest 828 813 2,442 2,388 --------- --------- --------- --------- Total expenses 14,190 13,197 42,687 36,123 --------- --------- --------- --------- Income From Continuing Operations Before Income Taxes 3,096 920 7,577 1,887 --------- --------- --------- --------- Income Tax Expense: Current 21 4 48 12 Deferred 1,176 - 2,822 - --------- --------- --------- --------- Total income tax expense 1,197 4 2,870 12 --------- --------- --------- --------- Income From Continuing Operations 1,899 916 4,707 1,875 Income (Loss) From Operations of Discontinued Segment - (35) - (17) --------- --------- --------- --------- Net Income $ 1,899 $ 881 $ 4,707 $ 1,858 ========= ========= ========= ========= Income Per Common Share: Continuing Operations $ .08 $ .04 $ .21 $ .09 ========= ========= ========= ========= Net Income $ .08 $ .04 $ .21 $ .09 ========= ========= ========= ========= Weighted Average Shares Outstanding: Primary 23,708 20,896 22,322 20,884 ========= ========= ========= ========= Fully Diluted 23,708 20,896 22,326 20,884 ========= ========= ========= ========= The accompanying notes are an integral part of the consolidated condensed financial statements. 3 UNIT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30, 1996 1995 ---------- ---------- Cash Flows From Operating Activities: (In thousands) Income From Continuing Operations $ 4,707 $ 1,875 Adjustments to reconcile income from continuing operations to net cash provided (used) by operating activities: Depreciation, depletion and amortization 10,150 9,488 Other-net 33 (511) Deferred income tax expense 2,822 - Changes in operating assets and liabilities increasing (decreasing) cash: Accounts receivable (1,605) (1,523) Accounts payable (2,939) (2,069) Natural gas purchaser prepayments (Note 3) (102) (1,312) Other-net (203) 587 ---------- ---------- Net cash provided by continuing operating activities 12,863 6,535 Net cash flow provided by discontinued operations including changes in working capital - 634 ---------- ---------- Net cash provided by operating activities 12,863 7,169 ---------- --------- Cash Flows From (Used In) Investing Activities: Capital expenditures (23,352) (14,931) Proceeds from disposition of assets 871 4,335 Other-net 210 (136) ---------- ---------- Net cash used in investing activities (22,271) (10,732) ---------- ---------- Cash Flows From (Used In) Financing Activities: Net (payments) borrowings under line of credit (3,400) 3,100 Net payments of notes payable and long-term debt (20) (980) Proceeds from stock options and warrants 12,772 - Other-net - (230) ---------- ---------- Net cash provided by financing activities 9,352 1,890 ---------- ---------- Net Decrease in Cash and Cash Equivalents (56) (1,673) Cash and Cash Equivalents, Beginning of Year 534 2,749 ---------- ---------- Cash and Cash Equivalents, End of Period $ 478 $ 1,076 ========== ========== Supplemental Disclosure of Cash Flow Information: Cash paid during the nine months ended September 30, for: Interest $ 2,472 $ 2,101 Income taxes $ 50 $ - The accompanying notes are an integral part of the consolidated condensed financial statements. 4 UNIT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PREPARATION AND PRESENTATION - ---------------------------------------------- In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary (all adjustments are of a normal recurring nature) to present fairly the financial position of Unit Corporation as of September 30, 1996 and the results of its operations for the three and nine month periods ended September 30, 1996 and 1995 and cash flows for the nine months ended September 30, 1996 and 1995. Results for the three and nine months ended September 30, 1996 are not necessarily indicative of the results to be realized during the full year. The year end consolidated condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. The condensed financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 1995. NOTE 2 - LONG-TERM DEBT - ----------------------- Effective as of September 4, 1996, the Company's credit agreement was amended extending the revolving credit facility through August 1, 1999 and the term loan thereafter to a maturity on August 1, 2003. The total loan commitment remained at $75 million with borrowings under the amended agreement limited to the amount of a borrowing base which is determined semi-annually. As of September 30, 1996, the borrowing base was $50 million. The amendment also lowered the interest rate on the portion of debt subject to the London Interbank Offered Rates ("Libor Rate") to the Libor Rate plus 1.25 to 1.75 percent depending on the level of debt as a percentage of the total borrowing base. Subsequent to August 1, 1999, borrowings under the amended agreement subject to the Libor Rate will bear interest at the Libor Rate plus 1.5 to 2.0 percent depending on the level of debt as a percentage of the total borrowing base. NOTE 3 - NATURAL GAS PURCHASER PREPAYMENTS - ------------------------------------------- In March 1988, the Company entered into a settlement agreement with a natural gas purchaser. During early 1991, the Company and the natural gas purchaser superseded the original agreement with a new settlement agreement effective retroactively to January 1, 1991. Under these settlement agreements, the Company has a prepayment balance of $2.0 million at September 30, 1996 representing proceeds received from the purchaser as prepayment for natural gas. This amount is net of natural gas recouped and net of certain amounts disbursed to other owners (such owners, collectively with the Company are referred to as the "Committed Interest") for their proportionate share of the prepayments. The September 30, 1996 prepayment balance is subject to recoupment in volumes of natural gas for a period ending the earlier of recoupment or December 31, 1997 (the "Recoupment Period"). Additionally, the purchaser is obligated to make monthly payments on behalf of the Committed Interest in an amount calculated as a percentage of the Committed Interest's share of the deliverability of the wells subject to the settlement agreement, up to a maximum of $180,000 or a minimum of $90,000 per month for the year 1996 and up to a maximum of $156,000 or a minimum of $80,000 per month for the year 1997. Both the maximum and minimum monthly payments decline annually through the Recoupment Period. The 5 prepayment amounts are being recorded as liabilities and reflected in revenues as recoupment occurs. The portion of the prepayments that are estimated to be recouped in the next twelve months are classified as current liabilities. At December 31, 1997, the Committed Interest's prepayment balance, if any, that has not been fully recouped in natural gas is subject to a cash repayment limited to a maximum of $3 million to be made in equal annual installments over a five year period. The Company anticipates the maximum balance of $3 million will be unrecouped at December 31, 1997. At the end of the Recoupment Period, the terms of the settlement agreement and the natural gas purchase contracts which are subject to the settlement agreement will terminate. NOTE 4 - INCOME TAXES - --------------------- Income tax expense for the three and nine month periods ended September 30, 1995 differs from income tax expense computed by applying the statutory rate due principally to the utilization of the Company's net operating loss carryforward. All of the financial statement benefit related to the Company's net operating loss carryforward was recognized at December 31, 1995. As such, income tax expense for the three and nine month periods ended September 30, 1996 approximates the statutory rate (federal and state). 6 REPORT OF REVIEW BY INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders Unit Corporation We have reviewed the accompanying consolidated condensed balance sheet of Unit Corporation and subsidiaries as of September 30, 1996, and the related consoli- dated condensed statements of operations for the three and nine month periods ended September 30, 1996 and 1995 and cash flows for the nine month periods ended September 30, 1996 and 1995. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Unit Corporation and subsidiaries at December 31, 1995, and the related consolidated statements of operations, changes in shareholders' equity and cash flows for the year then ended (not presented herein); and our report dated February 20, 1996 expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet at December 31, 1995, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. COOPERS & LYBRAND L. L. P. Tulsa, Oklahoma October 29, 1996 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ------------------------------------------------------------------------- FINANCIAL CONDITION - ------------------- On September 4, 1996 the Company amended its loan agreement. The amended loan agreement (the "Loan Agreement") provides for a total commitment of $75 million, consisting of a revolving credit facility through August 1, 1999 and a term loan thereafter, maturing on August 1, 2003. Borrowings under the revolving credit facility are limited to a borrowing base which is subject to a semi-annual redetermination. The latest borrowing base determination indicated $50 million of the commitment is available to the Company. At September 30, 1996, borrowings under the Loan Agreement totaled $37.7 million and the average interest rate in the third quarter of 1996 was 8.0 percent compared to the average interest rate of 8.1 percent in the third quarter of 1995. A 1/2 of 1 percent facility fee is charged for any unused portion of the borrowing base. The Company's shareholders' equity at September 30, 1996 was $74.6 million resulting in a ratio of long-term debt-to-equity of .51 to 1. The Company's primary source of liquidity and capital resources in the near- and long-term will consist of cash flow from operating activities and available borrowings under the Company's Loan Agreement. Net cash provided by continuing operating activities for the first nine months of 1996 was $12.9 million as compared to $6.5 million for the first nine months of 1995. The increase in 1996, as compared to 1995, was primarily due to higher spot market natural gas and oil prices received and increased rig utilization. During the first nine months of 1996, the Company had capital expenditures of $28.3 million. Approximately 72 percent of the expenditures were for oil and natural gas exploration and development drilling and the remainder were primarily for the Company's contract drilling operations. The Company plans to continue its focus on development drilling during the remainder of 1996. A majority of the contract drilling expenditures were for drill pipe as certain grades of the Company's drill pipe are reaching the end of their useful life. During September 1996, the Company acquired one 1,500 horsepower rig, one 2,500 horsepower rig and 36,000 feet of drill pipe for $1.7 million. Expenditures for the remainder of 1996 and into the early portion of 1997 are anticipated to be within the constraints of available cash to be provided by operating activities and the Company's Loan Agreement. A large portion of the Company's capital expenditures are discretionary; therefore, current operations should not be adversely affected by any inability to obtain funds outside of the Company's Loan Agreement. At December 31, 1995, the Company had 2.873 million common stock warrants outstanding. The warrants entitled the holders to purchase one share of common stock at a price of $4.375 per share. Subsequent to March 31, 1996 and prior to the warrants expiration on August 30, 1996, 2.86 million warrants were exercised providing $12.5 million in additional capital to the Company. The Company continued to receive monthly payments on behalf of itself and other parties (collectively the "Committed Interest") from a natural gas purchaser pursuant to a settlement agreement, as amended (the "Settlement Agreement"). As a result of the Settlement Agreement, the September 30, 1996 prepayment balance of $2.0 million paid by the purchaser for natural gas not 8 taken (the "Prepayment Balance") is subject to recoupment in volumes of natural gas through a period ending on the earlier of recoupment or December 31, 1997 (the "Recoupment Period"). Additionally, the purchaser is obligated to make monthly payments on behalf of the Committed Interest based on their share of the natural gas deliverability of the wells subject to the Settlement Agreement, up to a maximum of $180,000 or a minimum of $90,000 per month for the year 1996 and up to a maximum of $156,000 or a minimum of $80,000 per month for the year 1997. Both the maximum and minimum monthly payments decline annually through the Recoupment Period. If natural gas is taken during a month, the value of such natural gas is credited toward the monthly amount the purchaser is required to pay. In the event the purchaser takes volumes of natural gas valued in excess of its monthly payment obligations, the value taken in excess is applied to reduce any then outstanding Prepayment Balance. The Company currently believes that sufficient natural gas deliverability is available to enable the Committed Interest to receive substantially all of the maximum monthly payments during 1996. At the end of the Recoupment Period, the Settlement Agreement and the natural gas purchase contracts which are subject to the Settlement Agreement will terminate. If the Prepayment Balance is not fully recouped in natural gas by December 31, 1997 then the unrecouped portion is subject to cash repayment, limited to a maximum of $3 million, payable in equal annual installments over a five year period. The Company anticipates the maximum balance of $3 million will be unrecouped at December 31, 1997. Under the Settlement Agreement, the purchaser is entitled to make a monthly determination of the volumes to be purchased from the wells subject to the Settlement Agreement. Pursuant to the terms of the Settlement Agreement, the purchaser notified the Company that effective October 1, 1995 the purchaser planned to make seasonal takes of natural gas by requesting the maximum deliverability subject to the Settlement Agreement in certain months and no deliverability in other months. From October 1, 1995 and through the first quarter of 1996, the purchaser requested and received the maximum deliverability subject to the Settlement Agreement. During the second and third quarters of 1996 the purchaser elected to not take natural gas under the Settlement Agreement and in the fourth quarter the purchaser has elected to take minimum volumes as allowed while taking natural gas under the terms of the contract. Because these month-to-month determinations, up to certain maximum levels, are made by the purchaser, the Company is unable to predict with certainty future natural gas sales from these wells. In addition, future revenues to be received by the Company would be impacted by the failure of the purchaser to meet its obligations, financially or otherwise, under the terms of the Settlement Agreement or by the inability of the wells to maintain certain projected deliverability requirements. In the event the wells are unable to maintain such deliverability, the monthly payments to be received by the Company under the Settlement Agreement would be decreased. The price per Mcf under the Settlement Agreement is substantially higher than current spot market prices. The impact of the higher price received under the Settlement Agreement increased pre-tax income approximately $360,000 and $1,250,000 in the first nine months of 1996 and 1995, respectively. The average oil price of $21.19 received by the Company in the third quarter of 1996 was $5.11 per barrel higher than the average oil price received in the third quarter of 1995 while the average spot market natural gas price of $2.00 was $.71 per Mcf higher than the average spot market natural gas prices received in the same quarter of 1995. Oil prices within the industry remain largely dependent upon world market developments for crude oil. Prices for natural gas are influenced by weather conditions and supply imbalances, particularly in the domestic market, and by world wide oil price levels. Since natural gas comprises approximately 78 percent of the Company's reserves, large 9 drops in spot market natural gas prices have a significant adverse effect on the value of the Company's reserves. Such decreases also adversely effect the Company's cash flow. Likewise, declines in natural gas or oil prices could adversely effect the semi-annual borrowing base determination under the Company's current Loan Agreement since this determination is calculated on the value of the Company's oil and natural gas reserves. The Company's ability to utilize its full complement of drilling rigs, is restricted due to the lack of qualified labor and certain supporting equipment not only within the Company but in the industry as a whole. In addition, the Company's ability to utilize its drilling rigs at any given time is also dependent on a number of other factors, including but not limited to, the price of both oil and natural gas and the Company's ability to supply the type of equipment required. The Company's management expects that these factors will continue to influence the Company's rig utilization throughout 1996 and into 1997. In the third quarter of 1994, the Company's Board of Directors authorized the Company to purchase up to 1,000,000 shares of the Company's outstanding common stock on the open market. Since that time, 115,100 shares have been repurchased at prices ranging from $2 1/2 to $3 3/8 per share. During the first quarters of 1996 and 1995, 44,686 and 46,659 of the purchased shares, respectively, were used as the Company's matching contribution to its 401(K) Employee Thrift Plan. At September 30, 1996, 23,755 treasury shares were held by the Company. Safe Harbor Statement. With the exception of historical information many of the matters discussed in this report are forward looking statements that involve risks and uncertainties and actual results could differ materially from those discussed. Generally, these statements relate to projections involving the anticipated revenues to be received from the Company's oil and natural gas production, the utilization rate of its drilling rigs, growth of its oil and natural gas reserves and well performance and the Company's anticipated bank debt. As with any forward- looking statement, these statements are subject to a number of factors that may tend to influence the accuracy of the statements and the projections upon which the statements are based. All phases of the Company's operations are subject to a number of influences outside the control of the Company, any one of which, or a combination of which, could materially affect the results of the Company's operations. A more thorough discussion of some of these factors and their possible impact on the Company is provided in the Company's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the Securities and Exchange Commission. RESULTS OF OPERATIONS - --------------------- Third Quarter 1996 versus Third Quarter 1995 - ---------------------------------------------- The Company reported income from continuing operations of $1,899,000 in the third quarter of 1996 as compared to income from continuing operations of $916,000 for the third quarter of 1995. Higher natural gas and oil prices along with increased natural gas production, rig utilization and operating margins between the comparative quarters all contributed to the rise in income. 10 Oil and natural gas revenues increased 35 percent in the third quarter of 1996 as compared to the third quarter of 1995. As a result of the Company's producing property acquisitions and development drilling program, natural gas production increased by 7 percent between the comparative quarters while oil production decreased by 7 percent due to lower production from certain wells. Average oil prices received by the Company increased 32 percent and the average natural gas prices rose by 36 percent. The increase in natural gas prices received was directly a result of higher spot market natural gas prices since less than 1 percent of the Company's third quarter production came from wells covered by the Settlement Agreement, which provides for prices higher than current spot market prices, as discussed above. The impact of the higher price received under the Settlement Agreement increased pre-tax income by approximately $50,000 and $510,000 in the third quarters of 1996 and 1995, respectively. Oil and natural gas operating margins (revenues less operating costs) increased from 57 percent in the third quarter of 1995 to 68 percent in the third quarter of 1996 due to the increase in both oil and natural gas prices. Total operating costs increased 2 percent between the comparative quarters. Depreciation, depletion and amortization ("DD&A") increased 3 percent due to increased natural gas production. The increase was partially offset by a reduction in the Company's average DD&A rate to $3.90 for the third quarter of 1996 compared with $3.95 in the third quarter of 1995. Contract drilling revenues increased 24 percent for the comparative quarters due to the rise in rig utilization and increased drilling dayrates. Rig utilization averaged 14.5 rigs in the third quarter of 1996 and averaged 12.4 rigs in the third quarter of 1995. Contract drilling operating margins (revenues less operating costs) were 19 percent in the third quarter of 1996 as compared to 12 percent in the third quarter of 1995. General and administrative expenses were unchanged between the third quarter of 1996 and the third quarter of 1995 while interest expense increased 2 percent. Average long-term bank debt outstanding increased 7 percent between the comparative quarters as the average interest rate incurred by the Company dropped from 8.1 to 8.0 percent. Income tax expense for the third quarter of 1995 differs from income tax expense computed by applying the statutory rate due principally to the utilization of the Company's net operating loss carryforward. All of the financial statement benefit related to the Company's net operating loss carryforward was recognized at December 31, 1995. As such, income tax expense for the third quarter of 1996 approximates the statutory rate (federal and state). Nine Months 1996 versus Nine Months 1995 - ------------------------------------------------- Income from continuing operations for the first nine months of 1996 was $4,707,000 as compared to $1,875,000 for the first nine months of 1995. Higher oil and natural gas prices along with increased production, rig utilization and operating margins all contributed to the increase in income between the periods. Oil and natural gas revenues increased 34 percent in the first nine months of 1996 as compared to the first nine months of 1995. As a result of the Company's producing property acquisitions and development drilling 11 program, oil and natural gas production increased by 10 and 6 percent, respectively, between the comparative periods. Average oil prices received by the Company increased 18 percent during the first nine months while the average natural gas prices rose by 31 percent. The increase in natural gas prices was caused by a $.58 increase in average spot market prices partially offset by a decline in production from wells covered by the Settlement Agreement, which provides for prices higher than current spot market prices, as discussed above. The impact of the higher price received under the Settlement Agreement increased pre-tax income by approximately $360,000 and $1,250,000 in the first nine months of 1996 and 1995, respectively. Oil and natural gas operating margins (revenues less operating costs) improved from 61 percent in the first nine months of 1995 to 67 percent in the first nine months of 1996. While increased prices helped improve operating margins, total operating costs increased 16 percent due to the additional costs associated with producing properties acquired in 1995 and wells drilled in early 1996. Depreciation, depletion and amortization ("DD&A") increased 3 percent due to increased production between the comparative periods. The increase in DD&A from increased production was partially offset by a reduction in the Company's average DD&A rate from $3.96 in the first nine months of 1995 to $3.81 in the first nine months of 1996. Contract drilling revenues increased 44 percent for the comparative nine month periods as rig utilization increased from an average of 10.1 rigs operating to 14.1 operating and as dayrates received by the Company improved. As a result, contract drilling operating margins (revenue less operating costs) were 14 percent in the first nine months of 1996 as compared to 7 percent in the first nine months of 1995. General and administrative expense increased 8 percent during the comparative nine month periods as employee compensation and corporate office related expenses increased as the Company continues to grow. Interest expense increased 2 percent due to a 13 percent increase in the average long-term bank debt outstanding in the first nine months of 1996 compared to the first nine months of 1995. While average long-term bank debt increased, the average interest rate incurred by the Company dropped from 8.6 to 7.8 percent. Income tax expense for the first nine months of 1995 differs from income tax expense computed by applying the statutory rate due principally to the utilization of the Company's net operating loss carryforward. All of the financial statement benefit related to the Company's net operating loss carryforward was recognized at December 31, 1995. As such, income tax expense for the first nine months of 1996 approximates the statutory rate (federal and state). 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings - -------------------------- Not applicable Item 2. Changes in Securities - ------------------------------ Not applicable Item 3. Defaults Upon Senior Securities - ---------------------------------------- Not applicable Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ Not applicable Item 5. Other Information - -------------------------- Not applicable Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits: 10.1.21 First Amendment to the Loan Agreement effective as of September 4, 1996, by an between Unit Corporation and Bank of Oklahoma, N.A., The First National Bank of Boston, Bank IV Oklahoma, N.A. and American National Bank and Trust Company of Shawnee. 15 Letter re: Unaudited Interim Financial Information 27 Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended September 30, 1996. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNIT CORPORATION Date: November 8, 1996 By: /s/ John G. Nikkel --------------------------- ------------------------ JOHN G. NIKKEL President, Chief Operating Officer and Director Date: November 8, 1996 By: /s/ Larry D. Pinkston --------------------------- ------------------------ LARRY D. PINKSTON Vice President, Chief Financial Officer and Treasurer 14 EX-10 2 FIRST AMENDMENT TO LOAN AGREEMENT Dated as of September 4, 1996 between UNIT CORPORATION UNIT DRILLING AND EXPLORATION COMPANY MOUNTAIN FRONT PIPELINE COMPANY, INC. UNIT DRILLING COMPANY UNIT PETROLEUM COMPANY PETROLEUM SUPPLY COMPANY "Borrowers" and BANK OF OKLAHOMA, NATIONAL ASSOCIATION THE FIRST NATIONAL BANK OF BOSTON BANK IV OKLAHOMA, N.A. AMERICAN NATIONAL BANK AND TRUST COMPANY OF SHAWNEE "Banks" and BANK OF OKLAHOMA, NATIONAL ASSOCIATION "Agent" FIRST AMENDMENT TO LOAN AGREEMENT THIS FIRST AMENDMENT TO LOAN AGREEMENT, dated as of September 4, 1996 ("First Amendment"), is entered into among UNIT CORPORA- TION, a Delaware corporation ("Unit"), UNIT DRILLING AND EXPLORA- TION COMPANY, a Delaware corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corporation, UNIT PETROLEUM COMPANY, an Oklahoma corpora- tion and PETROLEUM SUPPLY COMPANY, an Oklahoma corporation, each with its principal place of business at 1000 Galleria Tower 1, 7130 South Lewis, Tulsa, Oklahoma 74136 (collectively the "Borrowers") and BANK OF OKLAHOMA, NATIONAL ASSOCIATION, a national banking association, with principal offices at Bank of Oklahoma Tower, 7 East 2nd Street, Tulsa, Oklahoma 74172 ("BOK"); THE FIRST NATIONAL BANK OF BOSTON, a national banking association, with principal offices at 100 Federal Street, Boston, Massachusetts 02110 ("Bank of Boston"); BANK IV OKLAHOMA, N.A., with principal offices at 515 South Boulder, Tulsa, Oklahoma, 74119 ("BANK IV"); and AMERICAN NATIONAL BANK AND TRUST COMPANY OF SHAWNEE, a national banking association, with principal offices at 201 N. Broadway, Shawnee, Oklahoma 74801 ("ANB") (BOK, Bank of Boston, BANK IV and ANB each being sometimes referred to herein, individually, as a "Bank", and collectively as the "Banks"); and BOK as Agent for the Banks (in such capacity, herein referred to as the "Agent"). WITNESSETH: WHEREAS, the Borrowers and the Banks are parties to that certain Loan Agreement dated as of August 3, 1995 (the "Prior Loan Agreement"), pursuant to which the Banks extended to the Borrowers a $75,000,000 revolving line of credit (the "Line Commitment") that converts to a forty-eight (48) month term payment (the "Term Commitment"); and WHEREAS, the Borrowers have requested the Banks to (i) extend the Line Commitment to August 1, 1999, and (ii) decrease the Libor Rate Option; and WHEREAS, subject to the terms and conditions hereinafter set forth, the Banks are willing to extend the Line Commitment and decrease the Libor Rate Option as described below. NOW, THEREFORE, in consideration of the mutual agreements and covenants herein made, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers and the Banks agree as follows: 1. Amended Definitions. The following defined term in the Prior Loan Agreement is hereby amended, as follows: 1.6 "Commitment Termination Date" shall mean August 1, 1999 unless the Commitment is terminated at an earlier date pursuant to the terms of this Agreement. 2. Revolving Line of Credit. The reference to "August 31, 1997" in Section 2.1 of the Prior Loan Agreement is hereby amended to refer to "August 1, 1999." 3. Notes. The form of the Notes referenced in Section 2.2 of the Prior Loan Agreement and attached thereto as Exhibits A-1, A-2, A-3 and A-4 are hereof replaced with the form of the Notes attached hereto as Exhibits A-1, A-2, A-3 and A-4. 4. Principal. The references to "September 1, 1997" and "August 1, 2001", respectively, in Section 2.4(a) of the Prior Loan Agreement are hereby amended to refer to "September 1, 1999" and "August 1, 2003", respectively. 5. Interest. Section 2.5(a) of the Prior Loan Agreement is hereby amended to read as follows: (a) Available Options. Except as hereinafter provided, during the period commencing on September 1, 1996 and continuing through the Commitment Termination Date, interest shall accrue on any past due interest and on that portion of the aggregate principal amount of the Notes from time to time outstanding (collectively the "Debt") according to the following matrix: Percentage that the Debt Bears to the Borrowing Base Rate of Interest ------------------------- -------------------- Less than 50% Applicable Prime Rate or Libor Rate plus 1.25% 50% - up to but Applicable Prime Rate or not including 75% Libor Rate plus 1.50% 75% or more Applicable Prime Rate or Libor Rate plus 1.75% Except as hereinafter provided, during the period commencing on August 2, 1999, and continuing through Maturity, interest shall accrue on the Debt according to the following matrix: 2 Percentage that the Debt Bears to the Borrowing Base Rate of Interest ------------------------- -------------------- Less than 50% Applicable Prime Rate plus .25% or Libor Rate plus 1.50% 50% - up to but Applicable Prime Rate plus .25% not including 75% or Libor Rate plus 1.75% 75% or more Applicable Prime Rate plus .25% or Libor Rate plus 2.00% In determining the percentage that the Debt bears to the Borrowing Base, the "Debt" and the "Borrowing Base" shall be the average of such respective amounts during the most recent calendar month preceding such determination. The Applicable Prime Rate option described above in the matrices is herein- after referred to as the "Prime Rate Option" and the Libor Rate interest option described above in the matrices is here- inafter referred to as the "Libor Rate Option". The Prime Rate Option shall be computed on the basis of a year of 365 or 366 days, as the case may be and the Libor Rate Option shall be based on a year of 360 days and actual days elapsed. The reference to "September 1, 1995" in Section 2.5(c) in the Prior Loan Agreement is hereby amended to refer to "October 1, 1996." 6. Determination of Borrowing Base. The reference to "October 31, 1995" in Section 3.1(a) of the Prior Loan Agreement is hereby amended to refer to "October 31, 1996." The reference to "November 1, 1995" in Section 3.1(b) of the Prior Loan Agreement is hereby amended to refer to "November 1, 1996." 7. Financial Statements and Reports. Section 6.8(e) of the Prior Loan Agreement is hereby amended to include the following sentence: "Prior to September 30 of each year commencing September 30, 1996, Borrowers shall deliver to each of the Banks all pertinent data regarding Borrowers' new producing wells since the preceding March 31, prepared by Borrowers' in-house engineers, in form and substance satisfactory to Agent and based on the best information available to Borrowers at that time." 8. Setoff. Section 9.3 of the Prior Loan Agreement is hereby amended to include a reference to Account No. 2-083-0798-3 and references to the following Account Nos. are hereby deleted: 1-022-5426-5, 1-035-9028-1, 2-042-1333-2, 2-043-5134-9, 2-060-0786-1, 2-078-9622-0, 2-079-1080-6, 2-079-1087-2. 3 9. Conditions Precedent. The effectiveness of this First Amendment and the obligation of the Banks to extend the Line Commitment and decrease the Libor Rate Option are subject to the satisfaction of the following conditions precedent: (a) No Default. There shall exist no Event of Default or Default on the date hereof. (b) No Material Adverse Change. From and after August 3, 1995, no material adverse changes in the properties, business prospects or financial conditions of the Borrowers shall have occurred. (c) Representations and Warranties. The representations and warranties set forth in the Prior Loan Agreement shall be true and correct on and as of the date hereof, with the same effect as though made on and as of this date. (d) Certificates. Each of the Borrowers shall have delivered to the Agent a Certificate, dated as of even date herewith, and signed by its President or Vice President and its Secretary or Assistant Secretary certifying (i) to the matters covered by the conditions specified in subsections (a), (b) and (c) of this Section 9, (ii) that it has performed and complied with all agreements and conditions required to be per- formed or complied with by it prior to or as of the date hereof, (iii) to the name and signature of each officer authorized to execute and deliver this First Amendment and any other documents, certificates or writings and to borrow under the Prior Loan Agreement, as amended by this First Amendment (the "Agreement"), and (iv) to such other matters in connection with this First Amendment and the Agreement which the Banks shall determine to be advisable. The Banks may conclu- sively rely on such Certificates until it receives notice in writing to the contrary. (e) Proceedings. On or before the date hereof, all corporate proceedings of each of the Borrowers shall have been taken in connection with the transactions contemplated by this First Amendment and shall be satisfactory in form and substance to the Agent and its counsel; and the Banks shall have received certified copies, in form and substance satisfactory to the Agent and its counsel, of the resolutions of the Board of Directors of the Borrowers, as adopted, authorizing the execution and delivery of this First Amendment and the borrowings under this First Amendment. 4 (f) Notes and First Amendment. The Borrowers shall have delivered to the Agent this First Amendment, appropriately executed by the appropriate parties and dated as of the date hereof. The Borrowers shall have delivered the Notes to the order of the Banks, appropriately executed. 10. Ratifications, Representations and Warranties. The terms and provisions set forth in this First Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Prior Loan Agreement and except as expressly modified and supersed- ed by this First Amendment, the terms and provisions of the Prior Loan Agreement are ratified and confirmed and shall continue in full force and effect. The Borrowers and the Banks agree that the Prior Loan Agreement as amended hereby shall continue to be legal, valid, binding and enforceable in accordance with its terms. 11. Reference to Agreement. Each of the Loan Documents, in- cluding the Prior Loan Agreement and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Prior Loan Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Prior Loan Agreement shall mean a reference to the Prior Loan Agreement as amended hereby. 12. Costs. Borrowers agree to pay to the Agent for the benefit of the Banks on demand all reasonable costs and expenses incurred by the Banks in connection with the preparation, execu- tion, delivery, filing, recording and administration of this First Amendment and any amendments and modifications thereto, including without limitation the costs and fees of the Agent's and the Banks' legal counsel, and all costs and expenses incurred by the Banks in connection with the enforcement or preservation of any rights under this First Amendment, or any other Loan Documents, including without limitation the reasonable costs and fees of legal counsel of the Banks. 5 IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the day and year first above written. "Borrowers" UNIT CORPORATION, a Delaware corporation UNIT DRILLING AND EXPLORATION COMPANY, a Delaware corporation MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation UNIT PETROLEUM COMPANY, an Oklahoma corporation UNIT DRILLING COMPANY, an Oklahoma corporation PETROLEUM SUPPLY COMPANY, an Oklahoma corporation By____________________________________ John G. Nikkel, President of UNIT CORPORATION, UNIT DRILLING AND EXPLORATION COMPANY, MOUNTAIN FRONT PIPELINE COMPANY, INC., UNIT PETROLEUM COMPANY, UNIT DRILLING COMPANY, PETROLEUM SUPPLY COMPANY "Banks" BANK OF OKLAHOMA, NATIONAL ASSOCIATION By__________________________________ Pam Schloeder, Vice President P. O. Box 2300 Tulsa, Oklahoma 74192 6 "Agent" BANK OF OKLAHOMA, NATIONAL ASSOCIATION By__________________________________ Pam Schloeder, Vice President P. O. Box 2300 Tulsa, Oklahoma 74192 7 THE FIRST NATIONAL BANK OF BOSTON By___________________________________ ________________, _______________ P.O. Box 2016 100 Federal Street Energy & Utility Division 01-08-02 Boston, Massachusetts 02110 8 BANK IV OKLAHOMA, N.A. By_______________________________ Glenn A. Elrod Senior Vice President P. O. Box 2360 Tulsa, Oklahoma 74101-2360 9 AMERICAN NATIONAL BANK AND TRUST COMPANY OF SHAWNEE By Tony M. McMurry Executive Vice President P. O. Box 1089 Shawnee, Oklahoma 74801-1089 10 EXHIBIT "A-1" PROMISSORY NOTE $25,000,000 September 4, 1996 Tulsa, Oklahoma FOR VALUE RECEIVED, the undersigned, UNIT CORPORATION, a Delaware corporation, UNIT DRILLING AND EXPLORATION COMPANY, a Delaware corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corpora- tion, UNIT PETROLEUM COMPANY (formerly Sunshine Development Corpor- ation), an Oklahoma corporation and PETROLEUM SUPPLY COMPANY, an Oklahoma corporation (individually and collectively the "Borrow- ers"), jointly and severally promise to pay to the order of BANK OF OKLAHOMA, NATIONAL ASSOCIATION ("BOK"), with interest, the princi- pal sum of TWENTY FIVE MILLION and no/100ths DOLLARS ($25,000,000) or, if less, the aggregate principal amount of all advances made by BOK to Borrowers pursuant to the Loan Agreement dated as of August 3, 1995 among Borrowers, BOK, BANK IV Oklahoma, N.A., The First National Bank of Boston and American National Bank and Trust Company of Shawnee (collectively the "Banks"), with BOK as Agent, as amended by that First Amendment to Loan Agreement among Borrowers, the Banks and BOK as Agent (the Loan Agreement, as amended, referred to as the "Loan Agreement"), which are outstand- ing as of August 1, 1999 (the "Commitment Termination Date"). Such outstanding principal shall be payable in forty-eight (48) consecutive monthly installments commencing September 1, 1999, and continuing on the first (1st) day of each month thereafter through August 1, 2003 ("Maturity"). Each of the first forty-seven (47) of such principal installments shall be in the amount derived by dividing the principal amount hereof outstanding on the Commitment Termination Date by forty-eight (48). The forty-eighth (48th) and final installment shall be in the amount of the remaining principal balance of this Note at Maturity plus all accrued but unpaid interest hereon. Except as hereinafter provided in connection with a default, interest shall accrue on the outstanding principal balance hereof and on any past due interest through Maturity at the rate or rates per annum determined pursuant to the Loan Agreement, payable as provided therein, and shall be calculated as provided in the Loan Agreement. The rate of interest payable upon the indebtedness evidenced by this Note shall not at any time exceed the maximum rate of interest permitted under the laws of the State of Oklahoma or federal laws to the extent they apply for loans of the type and character evidenced by this Note. All payments under this Note shall be made in legal tender of the United States of America or in other immediately available funds at the offices of the Agent at Bank of Oklahoma Tower, 7 East 2nd Street, Tulsa, Oklahoma 74172, and no credit shall be given for any payment received by check, draft or other instrument or item until such time as the Agent or the holder hereof shall have received credit therefor from the Agent's or the holder's collect- ing agent or, in the event no collecting agent is used, from the bank or other financial institution upon which said check, draft or other instrument or item is drawn. If any payment is due upon a Saturday or Sunday or upon any other day on which state or national banks in the State of Oklahoma are closed for business by virtue of a legal holiday for such banks, such payment shall be due and payable on the next succeeding Business Day, and interest shall accrue to such day. Prior to the Commitment Termination Date, the Borrowers may borrow, repay and reborrow hereunder at any time and from time to time as provided in the Loan Agreement. From and after the Commitment Termination Date, the Borrowers may prepay this Note in whole or in part, subject to the prepayment limitations contained in the Loan Agreement; provided, however, that any partial prepayment shall be applied first to accrued interest, then to unpaid principal installments in the inverse order of maturity. From time to time the Borrowers and the Banks may agree to extend the maturity date of this Note or to renew this Note, in whole or in part, or a new note of different form may be substitut- ed for this Note and/or the rate of interest may be changed, or changes may be made in consideration of loan extensions, and the holder, from time to time, may waive or surrender, either in whole or in part, any rights, guarantees, security interests, or liens given for the benefit of the holder in connection with the payment and the securing the payment of this Note; but no such occurrences shall in any manner affect, limit, modify or otherwise impair any rights, guarantees or security of the holder not specifically waived, released or surrendered in writing, nor shall the Borrowers or any guarantor, endorser or any other person who is or might be liable hereon, either primarily or contingently, be released from such liability by reason of the occurrence of any such event. The holder hereof, from time to time, shall have the unlimited right to release any person who might be liable hereon; and such release shall not affect or discharge the liability of any other person who is or might be liable hereon. If any payment required by this Note to be made is not made within ten (10) Business Days after the same shall become due and payable, or if any default occurs under the Loan Agreement, the Security Agreement or under the provisions of any mortgage, deed of trust, security agreement, assignment, pledge or other document or agreement which provides security for the indebtedness evidenced by this Note, the holder hereof may, at its option, without notice or demand, declare this Note in default and all indebtedness due and owing hereunder immediately due and payable. In the event of a default the entire unpaid balance shall be immediately due and payable, together with any past due interest at the rate of five 2 percentage points (5%) per annum above the Applicable Prime Rate ("Default Rate"). The Borrowers and all endorsers, guarantors and sureties hereby severally waive protest, presentment, demand, and notice of protest and nonpayment in case this Note or any payment due hereunder is not paid when due; and they agree to any renewal of this Note or to any extension, acceleration or postponement of the time of payment, or any other indulgence, to any substituting, exchange or release of collateral and to the release of any party or person primarily or contingently liable hereon without prejudice to the holder and without notice to the Borrowers or any endorser, guarantor or surety. In the event of any controversy, claim or dispute between the parties affecting or relating to the subject matter or performance of this Note, the prevailing party shall be entitled to recover from the non-prevailing party all of its reasonable costs, expenses, including reasonable attorneys' and accountants' fees. In the event the Agent or BOK is the prevailing party, the Borrowers, and any guarantor, endorser, surety or any other person who is or may become liable hereon, will, on demand, pay all such costs and expenses. Upon the occurrence of any default hereunder, BOK shall have the right, immediately and without further action by it, to set off against this Note all money owed by BOK in any capacity (except for balances in the following accounts with BOK: Account Nos. 1-01174868, 1-026- 5743-7, 1-035-7018-4, 1-038-4862-7, 1-038-4077-3, 2-079-1154-3, 2-079-2793-3, 2- 079-2310-4, 2-079-2353-3, 2-079-2860-4, 2-079-2861-5, 2-079-2862-6, 2-079-2864- 8, 2-079-3738-2, 2-083-0274-7 and 2-083-0798-3), to each or any of the Borrowers, guarantor, endorser or any other person who is or might be liable for payment hereof, whether or not due, and also to set off against all other liabilities of each of the Borrowers to BOK all money owed by BOK in any capacity to each or any of the Borrowers; and BOK shall be deemed to have exercised such right of setoff and to have made a charge against such money immediately upon the occurrence of such default even though such charge is made or entered into the books of BOK subsequently thereto. This Note is issued pursuant to and subject to the terms of the Loan Agreement and is secured by the Collateral described in the Loan Agreement, which provides, among other things, for pre-payment of this Note upon the occurrence of certain events and for limitations on advances which may be made hereunder. This Note is a renewal, extension, substitution and replacement of that certain promissory note dated August 3, 1995, payable by Borrowers to the order of BOK in the original principal amount of $25,000,000. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement. This Note shall be governed by and construed in accordance with the laws of the State of Oklahoma. Borrowers agree that all suits or proceedings arising from or related to this Note or the Loan Agreement may be litigated in courts, state or federal, sitting in the State of Oklahoma. In furtherance of this provi- sion, Borrowers hereby waive any objection to such venue. 3 Notwithstanding the single execution of this Note by the President of each of the Borrowers, each of the Borrowers is jointly and severally bound by the terms of this Note. "Borrowers" UNIT CORPORATION, a Delaware corporation UNIT DRILLING AND EXPLORATION COMPANY, a Delaware corporation MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation UNIT PETROLEUM COMPANY, an Oklahoma corporation UNIT DRILLING COMPANY, an Oklahoma corporation PETROLEUM SUPPLY COMPANY, an Oklahoma corporation By___________________________________ John G. Nikkel, President of UNIT CORPORATION, UNIT DRILLING AND EXPLORATION COMPANY, MOUNTAIN FRONT PIPELINE COMPANY, INC., UNIT PETRO- LEUM COMPANY, UNIT DRILLING COMPA- NY, PETROLEUM SUPPLY COMPANY Due: August 1, 2003 (subject to conversion to Term Loan payout on August 1, 1999 per Loan Agreement) 719303.055 4 EXHIBIT "A-2" PROMISSORY NOTE $23,500,000 September 4, 1996 Tulsa, Oklahoma FOR VALUE RECEIVED, the undersigned, UNIT CORPORATION, a Delaware corporation, UNIT DRILLING AND EXPLORATION COMPANY, a Delaware corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corpora- tion, UNIT PETROLEUM COMPANY (formerly Sunshine Development Corpor- ation), an Oklahoma corporation and PETROLEUM SUPPLY COMPANY, an Oklahoma corporation (individually and collectively the "Borrow- ers"), jointly and severally promise to pay to the order of THE FIRST NATIONAL BANK OF BOSTON ("Bank of Boston"), with interest, the principal sum of TWENTY THREE MILLION FIVE HUNDRED THOUSAND and no/100ths DOLLARS ($23,500,000) or, if less, the aggregate principal amount of all advances made by Bank of Boston to Borrowers pursuant to the Loan Agreement dated as of August 3, 1995 among Borrowers, Bank of Boston, Bank of Oklahoma, National Association ("BOK"), BANK IV Oklahoma, N.A. and American National Bank and Trust Company of Shawnee (collectively the "Banks"), with BOK as Agent, as amended by that First Amendment to Loan Agreement among Borrowers, the Banks and BOK as Agent (the Loan Agreement, as amended, referred to as the "Loan Agreement"), which are outstand- ing as of August 31, 1999 (the "Commitment Termination Date"). Such outstanding principal shall be payable in forty-eight (48) consecutive monthly installments commencing September 1, 1999, and continuing on the first (1st) day of each month thereafter through August 1, 2003 ("Maturity"). Each of the first forty-seven (47) of such principal installments shall be in the amount derived by dividing the principal amount hereof outstanding on the Commitment Termination Date by forty-eight (48). The forty-eighth (48th) and final installment shall be in the amount of the remaining principal balance of this Note at Maturity plus all accrued but unpaid interest hereon. Except as hereinafter provided in connection with a default, interest shall accrue on the outstanding principal balance hereof and on any past due interest through Maturity at the rate or rates per annum determined pursuant to the Loan Agreement, payable as provided therein, and shall be calculated as provided in the Loan Agreement. The rate of interest payable upon the indebtedness evidenced by this Note shall not at any time exceed the maximum rate of interest permitted under the laws of the State of Oklahoma or federal laws to the extent they apply for loans of the type and character evidenced by this Note. All payments under this Note shall be made in legal tender of the United States of America or in other immediately available funds at the offices of the Agent at Bank of Oklahoma Tower, 7 East 2nd Street, Tulsa, Oklahoma 74172, and no credit shall be given for any payment received by check, draft or other instrument or item until such time as the Agent or the holder hereof shall have received credit therefor from the Agent's or the holder's collect- ing agent or, in the event no collecting agent is used, from the bank or other financial institution upon which said check, draft or other instrument or item is drawn. If any payment is due upon a Saturday or Sunday or upon any other day on which state or national banks in the State of Oklahoma are closed for business by virtue of a legal holiday for such banks, such payment shall be due and payable on the next succeeding Business Day, and interest shall accrue to such day. Prior to the Commitment Termination Date, the Borrowers may borrow, repay and reborrow hereunder at any time and from time to time as provided in the Loan Agreement. From and after the Commitment Termination Date, the Borrowers may prepay this Note in whole or in part, subject to the prepayment limitations contained in the Loan Agreement; provided, however, that any partial prepayment shall be applied first to accrued interest, then to unpaid principal installments in the inverse order of maturity. From time to time the Borrowers and the Banks may agree to extend the maturity date of this Note or to renew this Note, in whole or in part, or a new note of different form may be substitut- ed for this Note and/or the rate of interest may be changed, or changes may be made in consideration of loan extensions, and the holder, from time to time, may waive or surrender, either in whole or in part, any rights, guarantees, security interests, or liens given for the benefit of the holder in connection with the payment and the securing the payment of this Note; but no such occurrences shall in any manner affect, limit, modify or otherwise impair any rights, guarantees or security of the holder not specifically waived, released or surrendered in writing, nor shall the Borrowers or any guarantor, endorser or any other person who is or might be liable hereon, either primarily or contingently, be released from such liability by reason of the occurrence of any such event. The holder hereof, from time to time, shall have the unlimited right to release any person who might be liable hereon; and such release shall not affect or discharge the liability of any other person who is or might be liable hereon. If any payment required by this Note to be made is not made within ten (10) Business Days after the same shall become due and payable, or if any default occurs under the Loan Agreement, the Security Agreement or under the provisions of any mortgage, deed of trust, security agreement, assignment, pledge or other document or agreement which provides security for the indebtedness evidenced by this Note, the holder hereof may, at its option, without notice or demand, declare this Note in default and all indebtedness due and owing hereunder immediately due and payable. In the event of a default the entire unpaid balance shall be immediately due and 2 payable, together with any past due interest at the rate of five percentage points (5%) per annum above the Applicable Prime Rate ("Default Rate"). The Borrowers and all endorsers, guarantors and sureties hereby severally waive protest, presentment, demand, and notice of protest and nonpayment in case this Note or any payment due hereunder is not paid when due; and they agree to any renewal of this Note or to any extension, acceleration or postponement of the time of payment, or any other indulgence, to any substituting, exchange or release of collateral and to the release of any party or person primarily or contingently liable hereon without prejudice to the holder and without notice to the Borrowers or any endorser, guarantor or surety. In the event of any controversy, claim or dispute between the parties affecting or relating to the subject matter or performance of this Note, the prevailing party shall be entitled to recover from the non-prevailing party all of its reasonable costs, expenses, including reasonable attorneys' and accountants' fees. In the event the Agent or Bank of Boston is the prevailing party, the Borrowers, and any guarantor, endorser, surety or any other person who is or may become liable hereon, will, on demand, pay all such costs and expenses. Upon the occurrence of any default hereunder, Bank of Boston shall have the right, immediately and without further action by it, to set off against this Note all money owed by Bank of Boston in any capacity, to each or any of the Borrowers, guarantor, endorser or any other person who is or might be liable for payment hereof, whether or not due, and also to set off against all other liabili- ties of each of the Borrowers to Bank of Boston all money owed by Bank of Boston in any capacity to each or any of the Borrowers; and Bank of Boston shall be deemed to have exercised such right of setoff and to have made a charge against such money immediately upon the occurrence of such default even though such charge is made or entered into the books of Bank of Boston subsequently thereto. This Note is issued pursuant to and subject to the terms of the Loan Agreement and is secured by the Collateral described in the Loan Agreement, which provides, among other things, for prepayment of this Note upon the occurrence of certain events and for limitations on advances which may be made hereunder. This Note is a renewal, extension, substitution and replacement of that certain promissory note dated August 3, 1995, payable by Borrowers to the order of Bank of Boston in the original principal amount of $23,500,000. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement. This Note shall be governed by and construed in accordance with the laws of the State of Oklahoma. Borrowers agree that all suits or proceedings arising from or related to this Note or the Loan Agreement may be litigated in courts, state or federal, sitting in the State of Oklahoma. In furtherance of this provi- sion, Borrowers hereby waive any objection to such venue. 3 Notwithstanding the single execution of this Note by the President of each of the Borrowers, each of the Borrowers is jointly and severally bound by the terms of this Note. "Borrowers" UNIT CORPORATION, a Delaware corporation UNIT DRILLING AND EXPLORATION COMPANY, a Delaware corporation MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation UNIT PETROLEUM COMPANY, an Oklahoma corporation UNIT DRILLING COMPANY, an Oklahoma corporation PETROLEUM SUPPLY COMPANY, an Oklahoma corporation By___________________________________ John G. Nikkel, President of UNIT CORPORATION, UNIT DRILLING AND EXPLORATION COMPANY, MOUNTAIN FRONT PIPELINE COMPANY, INC., UNIT PETRO- LEUM COMPANY, UNIT DRILLING COMPA- NY, PETROLEUM SUPPLY COMPANY Due: August 1, 2003 (subject to conversion to Term Loan payout on August 1, 1999 per Loan Agreement) 719303.056 4 EXHIBIT "A-3" PROMISSORY NOTE $25,000,000 September 4, 1996 Tulsa, Oklahoma FOR VALUE RECEIVED, the undersigned, UNIT CORPORATION, a Delaware corporation, UNIT DRILLING AND EXPLORATION COMPANY, a Delaware corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corpora- tion, UNIT PETROLEUM COMPANY (formerly Sunshine Development Corpor- ation), an Oklahoma corporation and PETROLEUM SUPPLY COMPANY, an Oklahoma corporation (individually and collectively the "Borrow- ers"), jointly and severally promise to pay to the order of BANK IV Oklahoma, N.A. ("Bank IV"), with interest, the principal sum of TWENTY FIVE MILLION and no/100ths DOLLARS ($25,000,000) or, if less, the aggregate principal amount of all advances made by BANK IV to Borrowers pursuant to the Loan Agreement dated as of August 3, 1995 among Borrowers, BANK IV, Bank of Oklahoma, National Association ("BOK"), The First National Bank of Boston and American National Bank and Trust Company of Shawnee (collectively the "Banks"), with BOK as Agent, as amended by that First Amendment to Loan Agreement among Borrowers, the Banks and BOK as Agent (the Loan Agreement, as amended, referred to as the "Loan Agreement"), which are outstanding as of August 31, 1999 (the "Commitment Termination Date"). Such outstanding principal shall be payable in forty-eight (48) consecutive monthly installments commencing September 1, 1999, and continuing on the first (1st) day of each month thereafter through August 1, 2003 ("Maturity"). Each of the first forty-seven (47) of such principal installments shall be in the amount derived by dividing the principal amount hereof outstanding on the Commitment Termination Date by forty-eight (48). The forty-eighth (48th) and final installment shall be in the amount of the remaining principal balance of this Note at Maturity plus all accrued but unpaid interest hereon. Except as hereinafter provided in connection with a default, interest shall accrue on the outstanding principal balance hereof and on any past due interest through Maturity at the rate or rates per annum determined pursuant to the Loan Agreement, payable as provided therein, and shall be calculated as provided in the Loan Agreement. The rate of interest payable upon the indebtedness evidenced by this Note shall not at any time exceed the maximum rate of interest permitted under the laws of the State of Oklahoma or federal laws to the extent they apply for loans of the type and character evidenced by this Note. All payments under this Note shall be made in legal tender of the United States of America or in other immediately available funds at the offices of the Agent at Bank of Oklahoma Tower, 7 East 2nd Street, Tulsa, Oklahoma 74172, and no credit shall be given for any payment received by check, draft or other instrument or item until such time as the Agent or the holder hereof shall have received credit therefor from the Agent's or the holder's collect- ing agent or, in the event no collecting agent is used, from the bank or other financial institution upon which said check, draft or other instrument or item is drawn. If any payment is due upon a Saturday or Sunday or upon any other day on which state or national banks in the State of Oklahoma are closed for business by virtue of a legal holiday for such banks, such payment shall be due and payable on the next succeeding Business Day, and interest shall accrue to such day. Prior to the Commitment Termination Date, the Borrowers may borrow, repay and reborrow hereunder at any time and from time to time as provided in the Loan Agreement. From and after the Commitment Termination Date, the Borrowers may prepay this Note in whole or in part, subject to the prepayment limitations contained in the Loan Agreement; provided, however, that any partial prepayment shall be applied first to accrued interest, then to unpaid principal installments in the inverse order of maturity. From time to time the Borrowers and the Banks may agree to extend the maturity date of this Note or to renew this Note, in whole or in part, or a new note of different form may be substitut- ed for this Note and/or the rate of interest may be changed, or changes may be made in consideration of loan extensions, and the holder, from time to time, may waive or surrender, either in whole or in part, any rights, guarantees, security interests, or liens given for the benefit of the holder in connection with the payment and the securing the payment of this Note; but no such occurrences shall in any manner affect, limit, modify or otherwise impair any rights, guarantees or security of the holder not specifically waived, released or surrendered in writing, nor shall the Borrowers or any guarantor, endorser or any other person who is or might be liable hereon, either primarily or contingently, be released from such liability by reason of the occurrence of any such event. The holder hereof, from time to time, shall have the unlimited right to release any person who might be liable hereon; and such release shall not affect or discharge the liability of any other person who is or might be liable hereon. If any payment required by this Note to be made is not made within ten (10) Business Days after the same shall become due and payable, or if any default occurs under the Loan Agreement, the Security Agreement or under the provisions of any mortgage, deed of trust, security agreement, assignment, pledge or other document or agreement which provides security for the indebtedness evidenced by this Note, the holder hereof may, at its option, without notice or demand, declare this Note in default and all indebtedness due and owing hereunder immediately due and payable. In the event of a default the entire unpaid balance shall be immediately due and payable, together with any past due interest at the rate of five 2 percentage points (5%) per annum above the Applicable Prime Rate ("Default Rate"). The Borrowers and all endorsers, guarantors and sureties hereby severally waive protest, presentment, demand, and notice of protest and nonpayment in case this Note or any payment due hereunder is not paid when due; and they agree to any renewal of this Note or to any extension, acceleration or postponement of the time of payment, or any other indulgence, to any substituting, exchange or release of collateral and to the release of any party or person primarily or contingently liable hereon without prejudice to the holder and without notice to the Borrowers or any endorser, guarantor or surety. In the event of any controversy, claim or dispute between the parties affecting or relating to the subject matter or performance of this Note, the prevailing party shall be entitled to recover from the non-prevailing party all of its reasonable costs, expenses, including reasonable attorneys' and accountants' fees. In the event the Agent or BANK IV is the prevailing party, the Borrowers, and any guarantor, endorser, surety or any other person who is or may become liable hereon, will, on demand, pay all such costs and expenses. Upon the occurrence of any default hereunder, BANK IV shall have the right, immediately and without further action by it, to set off against this Note all money owed by BANK IV in any capacity, to each or any of the Borrowers, guarantor, endorser or any other person who is or might be liable for payment hereof, whether or not due, and also to set off against all other liabili- ties of each of the Borrowers to BANK IV all money owed by BANK IV in any capacity to each or any of the Borrowers; and BANK IV shall be deemed to have exercised such right of setoff and to have made a charge against such money immediately upon the occurrence of such default even though such charge is made or entered into the books of BANK IV subsequently thereto. This Note is issued pursuant to and subject to the terms of the Loan Agreement and is secured by the Collateral described in the Loan Agreement, which provides, among other things, for prepayment of this Note upon the occurrence of certain events and for limitations on advances which may be made hereunder. This Note is a renewal, extension, substitution and replacement of that certain promissory note dated August 3, 1995, payable by Borrowers to the order of BANK IV Oklahoma, N.A. in the original principal amount of $25,000,000. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement. This Note shall be governed by and construed in accordance with the laws of the State of Oklahoma. Borrowers agree that all suits or proceedings arising from or related to this Note or the Loan Agreement may be litigated in courts, state or federal, sitting in the State of Oklahoma. In furtherance of this provi- sion, Borrowers hereby waive any objection to such venue. 3 Notwithstanding the single execution of this Note by the President of each of the Borrowers, each of the Borrowers is jointly and severally bound by the terms of this Note. "Borrowers" UNIT CORPORATION, a Delaware corporation UNIT DRILLING AND EXPLORATION COMPANY, a Delaware corporation MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation UNIT PETROLEUM COMPANY, an Oklahoma corporation UNIT DRILLING COMPANY, an Oklahoma corporation PETROLEUM SUPPLY COMPANY, an Oklahoma corporation By___________________________________ John G. Nikkel, President of UNIT CORPORATION, UNIT DRILLING AND EXPLORATION COMPANY, MOUNTAIN FRONT PIPELINE COMPANY, INC., UNIT PETRO- LEUM COMPANY, UNIT DRILLING COMPA- NY, PETROLEUM SUPPLY COMPANY Due: August 1, 2003 (subject to conversion to Term Loan payout on August 1, 1999 per Loan Agreement) 719303.057 4 EXHIBIT "A-4" PROMISSORY NOTE $1,500,000 September 4, 1996 Tulsa, Oklahoma FOR VALUE RECEIVED, the undersigned, UNIT CORPORATION, a Delaware corporation, UNIT DRILLING AND EXPLORATION COMPANY, a Delaware corporation, MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corpora- tion, UNIT PETROLEUM COMPANY (formerly Sunshine Development Corpor- ation), an Oklahoma corporation and PETROLEUM SUPPLY COMPANY, an Oklahoma corporation (individually and collectively the "Borrow- ers"), jointly and severally promise to pay to the order of AMERICAN NATIONAL BANK AND TRUST COMPANY OF SHAWNEE ("ANB"), with interest, the principal sum of ONE MILLION FIVE HUNDRED THOUSAND and no/100ths DOLLARS ($1,500,000) or, if less, the aggregate principal amount of all advances made by ANB to Borrowers pursuant to the Loan Agreement dated as of August 3, 1995 among Borrowers, ANB, Bank of Oklahoma, National Association ("BOK"), The First National Bank of Boston and BANK IV Oklahoma, N.A. (collectively the "Banks"), with BOK as Agent, as amended by that First Amendment to Loan Agreement among Borrowers, the Banks and BOK as Agent (the Loan Agreement, as amended, referred to as the "Loan Agreement"), which are outstanding as of August 31, 1999 (the "Commitment Termination Date"). Such outstanding principal shall be payable in forty-eight (48) consecutive monthly installments commencing September 1, 1999, and continuing on the first (1st) day of each month thereafter through August 1, 2003 ("Maturity"). Each of the first forty-seven (47) of such principal installments shall be in the amount derived by dividing the principal amount hereof outstanding on the Commitment Termination Date by forty-eight (48). The forty-eighth (48th) and final installment shall be in the amount of the remaining principal balance of this Note at Maturity plus all accrued but unpaid interest hereon. Except as hereinafter provided in connection with a default, interest shall accrue on the outstanding principal balance hereof and on any past due interest through Maturity at the rate or rates per annum determined pursuant to the Loan Agreement, payable as provided therein, and shall be calculated as provided in the Loan Agreement. The rate of interest payable upon the indebtedness evidenced by this Note shall not at any time exceed the maximum rate of interest permitted under the laws of the State of Oklahoma or federal laws to the extent they apply for loans of the type and character evidenced by this Note. All payments under this Note shall be made in legal tender of the United States of America or in other immediately available funds at the offices of the Agent at Bank of Oklahoma Tower, 7 East 2nd Street, Tulsa, Oklahoma 74172, and no credit shall be given for any payment received by check, draft or other instrument or item until such time as the Agent or the holder hereof shall have received credit therefor from the Agent's or the holder's collect- ing agent or, in the event no collecting agent is used, from the bank or other financial institution upon which said check, draft or other instrument or item is drawn. If any payment is due upon a Saturday or Sunday or upon any other day on which state or national banks in the State of Oklahoma are closed for business by virtue of a legal holiday for such banks, such payment shall be due and payable on the next succeeding Business Day, and interest shall accrue to such day. Prior to the Commitment Termination Date, the Borrowers may borrow, repay and reborrow hereunder at any time and from time to time as provided in the Loan Agreement. From and after the Commitment Termination Date, the Borrowers may prepay this Note in whole or in part, subject to the prepayment limitations contained in the Loan Agreement; provided, however, that any partial prepayment shall be applied first to accrued interest, then to unpaid principal installments in the inverse order of maturity. From time to time the Borrowers and the Banks may agree to extend the maturity date of this Note or to renew this Note, in whole or in part, or a new note of different form may be substitut- ed for this Note and/or the rate of interest may be changed, or changes may be made in consideration of loan extensions, and the holder, from time to time, may waive or surrender, either in whole or in part, any rights, guarantees, security interests, or liens given for the benefit of the holder in connection with the payment and the securing the payment of this Note; but no such occurrences shall in any manner affect, limit, modify or otherwise impair any rights, guarantees or security of the holder not specifically waived, released or surrendered in writing, nor shall the Borrowers or any guarantor, endorser or any other person who is or might be liable hereon, either primarily or contingently, be released from such liability by reason of the occurrence of any such event. The holder hereof, from time to time, shall have the unlimited right to release any person who might be liable hereon; and such release shall not affect or discharge the liability of any other person who is or might be liable hereon. If any payment required by this Note to be made is not made within ten (10) Business Days after the same shall become due and payable, or if any default occurs under the Loan Agreement, the Security Agreement or under the provisions of any mortgage, deed of trust, security agreement, assignment, pledge or other document or agreement which provides security for the indebtedness evidenced by this Note, the holder hereof may, at its option, without notice or demand, declare this Note in default and all indebtedness due and owing hereunder immediately due and payable. In the event of a default the entire unpaid balance shall be immediately due and payable, together with any past due interest at the rate of five 2 percentage points (5%) per annum above the Applicable Prime Rate ("Default Rate"). The Borrowers and all endorsers, guarantors and sureties hereby severally waive protest, presentment, demand, and notice of protest and nonpayment in case this Note or any payment due hereunder is not paid when due; and they agree to any renewal of this Note or to any extension, acceleration or postponement of the time of payment, or any other indulgence, to any substituting, exchange or release of collateral and to the release of any party or person primarily or contingently liable hereon without prejudice to the holder and without notice to the Borrowers or any endorser, guarantor or surety. In the event of any controversy, claim or dispute between the parties affecting or relating to the subject matter or performance of this Note, the prevailing party shall be entitled to recover from the non-prevailing party all of its reasonable costs, expenses, including reasonable attorneys' and accountants' fees. In the event the Agent or ANB is the prevailing party, the Borrowers, and any guarantor, endorser, surety or any other person who is or may become liable hereon, will, on demand, pay all such costs and expenses. Upon the occurrence of any default hereunder, ANB shall have the right, immediately and without further action by it, to set off against this Note all money owed by ANB in any capacity, to each or any of the Borrowers, guarantor, endorser or any other person who is or might be liable for payment hereof, whether or not due, and also to set off against all other liabilities of each of the Borrowers to ANB all money owed by ANB in any capacity to each or any of the Borrowers; and ANB shall be deemed to have exercised such right of setoff and to have made a charge against such money immediately upon the occurrence of such default even though such charge is made or entered into the books of ANB subsequently thereto. This Note is issued pursuant to and subject to the terms of the Loan Agreement and is secured by the Collateral described in the Loan Agreement, which provides, among other things, for prepayment of this Note upon the occurrence of certain events and for limitations on advances which may be made hereunder. This Note is a renewal, extension, substitution and replacement of that certain promissory note dated August 3, 1995, payable by Borrowers to the order of ANB in the original principal amount of $1,500,000. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement. This Note shall be governed by and construed in accordance with the laws of the State of Oklahoma. Borrowers agree that all suits or proceedings arising from or related to this Note or the Loan Agreement may be litigated in courts, state or federal, sitting in the State of Oklahoma. In furtherance of this provi- sion, Borrowers hereby waive any objection to such venue. 3 Notwithstanding the single execution of this Note by the President of each of the Borrowers, each of the Borrowers is jointly and severally bound by the terms of this Note. "Borrowers" UNIT CORPORATION, a Delaware corporation UNIT DRILLING AND EXPLORATION COMPANY, a Delaware corporation MOUNTAIN FRONT PIPELINE COMPANY, INC., an Oklahoma corporation UNIT PETROLEUM COMPANY, an Oklahoma corporation UNIT DRILLING COMPANY, an Oklahoma corporation PETROLEUM SUPPLY COMPANY, an Oklahoma corporation By___________________________________ John G. Nikkel, President of UNIT CORPORATION, UNIT DRILLING AND EXPLORATION COMPANY, MOUNTAIN FRONT PIPELINE COMPANY, INC., UNIT PETRO- LEUM COMPANY, UNIT DRILLING COMPA- NY, PETROLEUM SUPPLY COMPANY Due: August 1, 2003 (subject to conversion to Term Loan payout on August 1, 1999 per Loan Agreement) 719303.058 4 EX-15 3 Exhibit 15 ---------- November 6, 1996 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 RE: Unit Corporation Registration on Form S-8 and S-3 We are aware that our report dated October 29, 1996 on our review of interim financial information of Unit Corporation for the three and nine month periods ended September 30, 1996 and 1995 and included in the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1996 is incorporated by reference in the Company's registration statements on Form S-8 (File No.'s 33- 19652, 33-44103, 33-49724, 33-64323 and 33-53542). Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statement prepared or certified by us within the meaning of Sections 7 and 11 of that Act. COOPERS & LYBRAND L. L. P. EX-27 4
5 The schedule contains summary financial information extracted from the Consolidated Condensed Financial Statements of Unit Corporation and Subsidiaries under cover of Form 10-Q for the nine months ended September 30, 1996 and is qualified in its entirety by reference to such financial statements. 0000798949 UNIT CORPORATION 1,000 9-MOS DEC-31-1996 SEP-30-1996 478 0 12,003 0 0 15,976 285,855 172,301 129,667 13,091 0 0 0 4,803 69,774 129,667 0 50,264 0 37,173 3,072 0 2,442 7,577 2,870 4,707 0 0 0 4,707 .21 .21 Accounts Receivable is presented net in the Consolidated Condensed Balance Sheet. Inventory is presented as a portion of Other Current Assets in the Consolidated Condensed Balance Sheet. On April 1, 1995 the Company completed a business combination between the Company's natural gas marketing operations and a third party also involved in natural gas marketing activities forming a new company called GED Gas Services, L.L.C. ("GED"). The Company owns a 34 percent interest in GED. Effective November 1, 1995, GED sold its natural gas marketing operations to a third party. This sale removed the Company from the third party natural gas marketing business. The discontinuation of the Company's natural gas marketing segment has been accounted for as a discontinued operation and accordingly, the 1995 consolidated condensed financial information has been restated to reflect this treatment.
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