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Supplemental Condensed Consolidated Financial Information
9 Months Ended
Sep. 30, 2018
Supplemental Condensed Consolidated Financial Information [Abstract]  
Condensed Consolidated Financial Statements
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

We have no significant assets or operations other than our investments in our subsidiaries. Our wholly owned subsidiaries are the guarantors of our Notes. On April 3, 2018, we sold 50% of the ownership interest in our mid-stream segment, Superior and that company and its subsidiaries are no longer guarantors of the Notes. Instead of providing separate financial statements for each subsidiary issuer and guarantor, we have included the accompanying unaudited condensed consolidating financial statements based on Rule 3-10 of the SEC's Regulation S-X.

For purposes of the following footnote:

we are referred to as "Parent",
the direct subsidiaries are 100% owned by the Parent and the guarantee is full and unconditional and joint and several and referred to as "Combined Guarantor Subsidiaries", and
Superior and its subsidiaries and the Operator are referred to as "Non-Guarantor Subsidiaries."

The following unaudited supplemental condensed consolidating financial information reflects the Parent's separate accounts, the combined accounts of the Combined Guarantor Subsidiaries', the combined accounts of the Non-Guarantor Subsidiaries', the combined consolidating adjustments and eliminations, and the Parent's consolidated amounts for the periods indicated.
Condensed Consolidating Balance Sheets (Unaudited)
 
September 30, 2018
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
82,267

 
$
251

 
$
9,039

 
$

 
$
91,557

Accounts receivable, net of allowance for doubtful accounts of $2,450 (Guarantor of $1,245 and Non-Guarantor of $1,205)
1,374

 
92,078

 
28,671

 

 
122,123

Materials and supplies

 
505

 

 

 
505

Current derivative asset

 

 

 

 

Prepaid expenses and other
3,125

 
3,538

 
2,756

 

 
9,419

Total current assets
86,766

 
96,372

 
40,466

 

 
223,604

Property and equipment:
 
 
 
 
 
 
 
 
 
Oil and natural gas properties on the full cost method:
 
 
 
 
 
 
 
 
 
Proved properties

 
5,901,661

 

 

 
5,901,661

Unproved properties not being amortized

 
332,886

 

 

 
332,886

Drilling equipment

 
1,632,540

 

 

 
1,632,540

Gas gathering and processing equipment

 

 
751,715

 

 
751,715

Saltwater disposal systems

 
67,074

 

 

 
67,074

Corporate land and building

 
59,081

 

 

 
59,081

Transportation equipment
9,273

 
16,766

 
3,064

 

 
29,103

Other
28,506

 
28,244

 

 

 
56,750

 
37,779

 
8,038,252

 
754,779

 

 
8,830,810

Less accumulated depreciation, depletion, amortization, and impairment
25,922

 
5,945,762

 
353,476

 

 
6,325,160

Net property and equipment
11,857

 
2,092,490

 
401,303

 

 
2,505,650

Intercompany receivable
907,907

 

 

 
(907,907
)
 

Goodwill

 
62,808

 

 

 
62,808

Investments
1,248,309

 
1,500

 

 
(1,248,309
)
 
1,500

Other assets
5,605

 
6,186

 
15,412

 

 
27,203

Total assets
$
2,260,444

 
$
2,259,356

 
$
457,181

 
$
(2,156,216
)
 
$
2,820,765


 
September 30, 2018
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
28,116

 
$
90,543

 
$
24,893

 
$

 
$
143,552

Accrued liabilities
36,444

 
26,583

 
4,716

 

 
67,743

Income taxes payable
1,051

 

 

 

 
1,051

Current derivative liability
13,067

 

 

 

 
13,067

Current portion of other long-term liabilities
966

 
6,348

 
6,836

 

 
14,150

Total current liabilities
79,644

 
123,474

 
36,445

 

 
239,563

Intercompany debt

 
906,296

 
1,086

 
(907,382
)
 

Bonds payable less debt issuance costs
643,921

 

 

 

 
643,921

Non-current derivative liabilities
1,542

 

 

 

 
1,542

Other long-term liabilities
12,790

 
72,494

 
16,126

 

 
101,410

Deferred income taxes
54,707

 
110,257

 

 

 
164,964

Shareholders’ equity:
 
 
 
 
 
 
 
 
 
Preferred stock, $1.00 par value, 5,000,000 shares authorized, none issued

 

 

 

 

Common stock, $.20 par value, 175,000,000 shares authorized, 54,063,705 shares issued
10,414

 

 

 

 
10,414

Capital in excess of par value
626,746

 
45,921

 
197,042

 
(242,963
)
 
626,746

Contributions from Unit

 

 
525

 
(525
)
 

Accumulated other comprehensive loss

 
(103
)
 

 

 
(103
)
Retained earnings
830,680

 
1,001,017

 
4,329

 
(1,005,346
)
 
830,680

Total shareholders’ equity attributable to Unit Corporation
1,467,840

 
1,046,835

 
201,896

 
(1,248,834
)
 
1,467,737

Non-controlling interests in consolidated subsidiaries

 

 
201,628

 

 
201,628

Total shareholders' equity
1,467,840

 
1,046,835

 
403,524

 
(1,248,834
)
 
1,669,365

Total liabilities and shareholders’ equity
$
2,260,444

 
$
2,259,356

 
$
457,181

 
$
(2,156,216
)
 
$
2,820,765


 
December 31, 2017
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
510

 
$
191

 
$

 
$

 
$
701

Accounts receivable, net of allowance for doubtful accounts of $2,450 (Guarantor of $1,245 and Non-Guarantor of $1,205)
154

 
83,442

 
27,916

 

 
111,512

Materials and supplies

 
505

 

 

 
505

Current derivative asset
721

 

 

 

 
721

Prepaid expenses and other
2,986

 
2,370

 
877

 

 
6,233

Total current assets
4,371

 
86,508

 
28,793

 

 
119,672

Property and equipment:
 
 
 
 
 
 
 
 
 
Oil and natural gas properties on the full cost method:
 
 
 
 
 
 
 
 
 
Proved properties

 
5,712,813

 

 

 
5,712,813

Unproved properties not being amortized

 
296,764

 

 

 
296,764

Drilling equipment

 
1,593,611

 

 

 
1,593,611

Gas gathering and processing equipment

 

 
726,236

 

 
726,236

Saltwater disposal systems

 
62,618

 

 

 
62,618

Corporate land and building

 
59,080

 

 

 
59,080

Transportation equipment
9,270

 
17,423

 
2,938

 

 
29,631

Other
28,039

 
25,400

 

 

 
53,439

 
37,309

 
7,767,709

 
729,174

 

 
8,534,192

Less accumulated depreciation, depletion, amortization, and impairment
21,268

 
5,807,757

 
322,425

 

 
6,151,450

Net property and equipment
16,041

 
1,959,952

 
406,749

 

 
2,382,742

Intercompany receivable
1,155,725

 

 

 
(1,155,725
)
 

Goodwill

 
62,808

 

 

 
62,808

Investments
1,044,709

 
1,500

 

 
(1,044,709
)
 
1,500

Other assets
5,373

 
6,328

 
3,029

 

 
14,730

Total assets
$
2,226,219

 
$
2,117,096

 
$
438,571

 
$
(2,200,434
)
 
$
2,581,452


 
December 31, 2017
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
13,124

 
$
81,334

 
$
18,190

 
$

 
$
112,648

Accrued liabilities
26,165

 
19,134

 
3,224

 

 
48,523

Current derivative liability
7,763

 

 

 

 
7,763

Current portion of other long-term liabilities
657

 
8,501

 
3,844

 

 
13,002

Total current liabilities
47,709

 
108,969

 
25,258

 

 
181,936

Intercompany debt

 
870,582

 
285,143

 
(1,155,725
)
 

Long-term debt
178,000

 

 

 

 
178,000

Bonds payable less debt issuance costs
642,276

 

 

 

 
642,276

Other long-term liabilities
11,257

 
77,566

 
11,380

 

 
100,203

Deferred income taxes
1,480

 
85,443

 
46,554

 

 
133,477

Shareholders’ equity:
 
 
 
 
 
 
 
 
 
Preferred stock, $1.00 par value, 5,000,000 shares authorized, none issued

 

 

 

 

Common stock, $.20 par value, 175,000,000 shares authorized, 52,880,134 shares issued
10,280

 

 

 

 
10,280

Capital in excess of par value
535,815

 
45,921

 
15,549

 
(61,470
)
 
535,815

Accumulated other comprehensive income

 
63

 

 

 
63

Retained earnings
799,402

 
928,552

 
54,687

 
(983,239
)
 
799,402

Total shareholders’ equity attributable to Unit Corporation
1,345,497

 
974,536

 
70,236

 
(1,044,709
)
 
1,345,560

Non-controlling interests in consolidated subsidiaries

 

 

 

 

Total shareholders' equity
1,345,497

 
974,536

 
70,236

 
(1,044,709
)
 
1,345,560

Total liabilities and shareholders’ equity
$
2,226,219

 
$
2,117,096

 
$
438,571

 
$
(2,200,434
)
 
$
2,581,452


Condensed Consolidating Statements of Income (Unaudited)
 
Three Months Ended September 30, 2018
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
Revenues
$

 
$
169,635

 
$
82,882

 
$
(32,459
)
 
$
220,058

Expenses:
 
 
 
 
 
 
 
 
 
Operating costs

 
71,646

 
66,932

 
(31,273
)
 
107,305

Depreciation, depletion, and amortization
1,923

 
50,349

 
11,265

 

 
63,537

General and administrative

 
9,252

 
26

 

 
9,278

Gain on disposition of assets

 
(237
)
 
(16
)
 

 
(253
)
Total operating costs
1,923

 
131,010

 
78,207

 
(31,273
)
 
179,867

Income from operations
(1,923
)
 
38,625

 
4,675

 
(1,186
)
 
40,191

Interest, net
(7,564
)
 

 
(381
)
 

 
(7,945
)
Loss on derivatives
(4,385
)
 

 

 

 
(4,385
)
Other, net
6

 
(1
)
 
1

 

 
6

Income (loss) before income taxes
(13,866
)
 
38,624

 
4,295

 
(1,186
)
 
27,867

Income tax expense (benefit)
(3,688
)
 
9,839

 
593

 

 
6,744

Equity in net earnings from investment in subsidiaries, net of taxes
29,077

 

 

 
(29,077
)
 

Net income
18,899

 
28,785

 
3,702

 
(30,263
)
 
21,123

Less: net income attributable to non-controlling interest

 

 
2,224

 

 
2,224

Net income attributable to Unit Corporation
$
18,899

 
$
28,785

 
$
1,478

 
$
(30,263
)
 
$
18,899

 
Three Months Ended September 30, 2017
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
Revenues
$

 
$
141,058

 
$
69,057

 
$
(21,627
)
 
$
188,488

Expenses:
 
 
 
 
 
 
 
 
 
Operating costs

 
73,197

 
54,603

 
(21,026
)
 
106,774

Depreciation, depletion, and amortization
1,913

 
41,740

 
10,880

 

 
54,533

General and administrative

 
7,083

 
2,152

 

 
9,235

Gain on disposition of assets

 
(67
)
 
(14
)
 

 
(81
)
Total operating costs
1,913

 
121,953

 
67,621

 
(21,026
)
 
170,461

Income (loss) from operations
(1,913
)
 
19,105

 
1,436

 
(601
)
 
18,027

Interest, net
(9,776
)
 

 
(168
)
 

 
(9,944
)
Loss on derivatives
(2,614
)
 

 

 

 
(2,614
)
Other, net
5

 

 

 

 
5

Income (loss) before income taxes
(14,298
)
 
19,105

 
1,268

 
(601
)
 
5,474

Income tax expense (benefit)
(5,626
)
 
7,003

 
392

 

 
1,769

Equity in net earnings from investment in subsidiaries, net of taxes
12,377

 

 

 
(12,377
)
 

Net income
3,705

 
12,102

 
876

 
(12,978
)
 
3,705

Less: net income attributable to non-controlling interest

 

 

 

 

Net income attributable to Unit Corporation
$
3,705

 
$
12,102

 
$
876

 
$
(12,978
)
 
$
3,705

    
 
Nine Months Ended September 30, 2018
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
Revenues
$

 
$
478,529

 
$
232,938

 
$
(82,974
)
 
$
628,493

Expenses:
 
 
 
 
 
 
 
 
 
Operating costs

 
215,355

 
185,738

 
(80,540
)
 
320,553

Depreciation, depletion, and amortization
5,759

 
139,724

 
33,493

 

 
178,976

General and administrative

 
26,136

 
2,616

 

 
28,752

Gain on disposition of assets
(30
)
 
(450
)
 
(95
)
 

 
(575
)
Total operating costs
5,729

 
380,765

 
221,752

 
(80,540
)
 
527,706

Income (loss) from operations
(5,729
)
 
97,764

 
11,186

 
(2,434
)
 
100,787

Interest, net
(24,844
)
 

 
(834
)
 

 
(25,678
)
Loss on derivatives
(25,608
)
 

 

 

 
(25,608
)
Other, net
17

 

 

 

 
17

Income (loss) before income taxes
(56,164
)
 
97,764

 
10,352

 
(2,434
)
 
49,518

Income tax expense (benefit)
(14,356
)
 
25,299

 
1,437

 

 
12,380

Equity in net earnings from investment in subsidiaries, net of tax
74,360

 

 

 
(74,360
)
 

Net income
32,552

 
72,465

 
8,915

 
(76,794
)
 
37,138

Less: net income attributable to non-controlling interest

 

 
4,586

 

 
4,586

Net income attributable to Unit Corporation
$
32,552

 
$
72,465

 
$
4,329

 
$
(76,794
)
 
$
32,552

 
Nine Months Ended September 30, 2017
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
Revenues
$

 
$
393,858

 
$
198,632

 
$
(57,697
)
 
$
534,793

Expenses:
 
 
 
 
 
 
 
 
 
Operating costs

 
199,143

 
156,525

 
(56,720
)
 
298,948

Depreciation, depletion, and amortization
5,558

 
113,440

 
32,547

 

 
151,545

General and administrative

 
20,880

 
6,022

 

 
26,902

Gain on disposition of assets
(813
)
 
(282
)
 
(58
)
 

 
(1,153
)
Total operating costs
4,745

 
333,181

 
195,036

 
(56,720
)
 
476,242

Income (loss) from operations
(4,745
)
 
60,677

 
3,596

 
(977
)
 
58,551

Interest, net
(28,276
)
 

 
(531
)
 

 
(28,807
)
Gain on derivatives
21,019

 

 

 

 
21,019

Other, net
14

 

 

 

 
14

Income (loss) before income taxes
(11,988
)
 
60,677

 
3,065

 
(977
)
 
50,777

Income tax expense (benefit)
(4,895
)
 
25,357

 
1,622

 

 
22,084

Equity in net earnings from investment in subsidiaries, net of tax
35,786

 

 

 
(35,786
)
 

Net income
28,693

 
35,320

 
1,443

 
(36,763
)
 
28,693

Less: net income attributable to non-controlling interest

 

 

 

 

Net income attributable to Unit Corporation
$
28,693

 
$
35,320

 
$
1,443

 
$
(36,763
)
 
$
28,693

                                
Condensed Consolidating Statements of Comprehensive Income (Unaudited)
 
Three Months Ended September 30, 2018
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
Net income
$
18,899

 
$
28,785

 
$
3,702

 
$
(30,263
)
 
$
21,123

Other comprehensive income, net of taxes:
 
 
 
 
 
 
 
 
 
Unrealized loss on securities, net of tax ($13)

 
(38
)
 

 

 
(38
)
Comprehensive income
18,899

 
28,747

 
3,702

 
(30,263
)
 
21,085

Less: Comprehensive income attributable to non-controlling interests

 

 
2,224

 

 
2,224

Comprehensive income attributable to Unit Corporation
$
18,899

 
$
28,747

 
$
1,478

 
$
(30,263
)
 
$
18,861

 
Three Months Ended September 30, 2017
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
Net income
$
3,705

 
$
12,102

 
$
876

 
$
(12,978
)
 
$
3,705

Other comprehensive income, net of taxes:
 
 
 
 
 
 
 
 
 
Unrealized gain on securities, net of tax of $20

 
33

 

 

 
33

Comprehensive income
3,705

 
12,135

 
876

 
(12,978
)
 
3,738

Less: Comprehensive income attributable to non-controlling interests

 

 

 

 

Comprehensive income attributable to Unit Corporation
$
3,705

 
$
12,135

 
$
876

 
$
(12,978
)
 
$
3,738

 
Nine Months Ended September 30, 2018
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
Net income
$
32,552

 
$
72,465

 
$
8,915

 
$
(76,794
)
 
$
37,138

Other comprehensive income, net of taxes:
 
 
 
 
 
 
 
 
 
Unrealized loss on securities, net of tax of ($60)

 
(179
)
 

 

 
(179
)
Comprehensive income
32,552

 
72,286

 
8,915

 
(76,794
)
 
36,959

Less: Comprehensive income attributable to non-controlling interests

 

 
4,586

 

 
4,586

Comprehensive income attributable to Unit Corporation
$
32,552

 
$
72,286

 
$
4,329

 
$
(76,794
)
 
$
32,373

 
Nine Months Ended September 30, 2017
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
Net income
$
28,693

 
$
35,320

 
$
1,443

 
$
(36,763
)
 
$
28,693

Other comprehensive income, net of taxes:
 
 
 
 
 
 
 
 
 
Unrealized gain on securities, net of tax of $32

 
53

 

 

 
53

Comprehensive income
28,693

 
35,373

 
1,443

 
(36,763
)
 
28,746

Less: Comprehensive income attributable to non-controlling interests

 

 

 

 

Comprehensive income attributable to Unit Corporation
$
28,693

 
$
35,373

 
$
1,443

 
$
(36,763
)
 
$
28,746


Condensed Consolidating Statements of Cash Flows (Unaudited)
 
Nine Months Ended September 30, 2018
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
(103,436
)
 
215,350

 
(3,984
)
 
128,605

 
236,535

INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Capital expenditures
22

 
(275,434
)
 
(28,642
)
 

 
(304,054
)
Producing properties and other acquisitions

 
(769
)
 

 

 
(769
)
Proceeds from disposition of assets
30

 
25,199

 
87

 

 
25,316

Net cash provided by (used in) investing activities
52

 
(251,004
)
 
(28,555
)
 

 
(279,507
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Borrowings under credit agreement
69,200

 

 
2,000

 

 
71,200

Payments under credit agreement
(247,200
)
 

 
(2,000
)
 

 
(249,200
)
Intercompany borrowings (advances), net
248,343

 
35,714

 
(155,977
)
 
(128,080
)
 

Payments on capitalized leases

 

 
(2,869
)
 

 
(2,869
)
Proceeds from investments of non-controlling interest
102,958

 

 
197,042

 

 
300,000

Contributions from Unit

 

 
525

 
(525
)
 

Transaction costs associated with sale of non-controlling interest
(2,303
)
 

 

 

 
(2,303
)
Book overdrafts
14,143

 

 
2,857

 

 
17,000

Net cash provided by financing activities
185,141

 
35,714

 
41,578

 
(128,605
)
 
133,828

Net increase in cash and cash equivalents
81,757

 
60

 
9,039

 

 
90,856

Cash and cash equivalents, beginning of period
510

 
191

 

 

 
701

Cash and cash equivalents, end of period
$
82,267

 
$
251

 
$
9,039

 
$

 
$
91,557

 
Nine Months Ended September 30, 2017
 
Parent
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Consolidating Adjustments
 
Total Consolidated
 
(In thousands)
OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
822

 
149,963

 
34,007

 

 
184,792

INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Capital expenditures
(3,595
)
 
(152,055
)
 
(11,742
)
 

 
(167,392
)
Producing properties and other acquisitions

 
(55,429
)
 

 

 
(55,429
)
Proceeds from disposition of assets
955

 
19,124

 
58

 

 
20,137

Other

 
(1,500
)
 

 

 
(1,500
)
Net cash used in investing activities
(2,640
)
 
(189,860
)
 
(11,684
)
 

 
(204,184
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Borrowings under credit agreement
251,401

 

 

 

 
251,401

Payments under credit agreement
(250,100
)
 

 

 

 
(250,100
)
Intercompany borrowings (advances), net
(20,483
)
 
39,839

 
(19,356
)
 

 

Payments on capitalized leases

 

 
(2,967
)
 

 
(2,967
)
Proceeds from common stock issued, net of issue costs
18,623

 

 

 

 
18,623

Book overdrafts
2,364

 

 

 

 
2,364

Net cash provided by (used in) financing activities
1,805

 
39,839

 
(22,323
)
 

 
19,321

Net decrease in cash and cash equivalents
(13
)
 
(58
)
 

 

 
(71
)
Cash and cash equivalents, beginning of period
517

 
376

 

 

 
893

Cash and cash equivalents, end of period
$
504

 
$
318

 
$

 
$

 
$
822