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

On May 22, 2020, the Debtors entered into a Restructuring Support Agreement (RSA) with (i) holders of 100% of the aggregate principal amount of loans outstanding under the Senior Credit Agreement, dated as of September 13, 2011 (as amended, the Unit credit agreement, together with the loan facility, the Unit credit facility), by and among the company, UPC and UDC, as borrowers, the institutions named as lenders (RBL Lenders) and BOKF, NA dba Bank of Oklahoma, as administrative agent (RBL Agent) and (ii) holders of over 70% of the aggregate outstanding principal amount of the company’s 6.625% senior subordinated notes due 2021 (Notes). In accordance with the RSA, the Debtors filed a Chapter 11 plan of reorganization (including all exhibits and schedules, and as may be amended, supplemented, or modified from time to time, the Plan) and the related disclosure statement with the Bankruptcy Court on June 9, 2020. On August 6, 2020, the Bankruptcy Court entered the “Findings of Fact, Conclusions of Law, and Order (I) Approving the Disclosure Statement on a Final Basis and (II) Confirming the Debtors’ Amended Joint Chapter 11 Plan of Reorganization” [Docket No. 340] (Confirmation Order) confirming the Plan and approving the disclosure statement on a final basis.

Under the Bankruptcy Code, subject to certain exceptions, filing the Bankruptcy Petitions automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or filing of other actions against the Debtors or their property to recover, collect or secure a claim arising before the Petition Date. Accordingly, although filing the Bankruptcy Petitions triggered defaults on the Debtors’ debt obligations, creditors were stayed from taking any actions against the Debtors because of such defaults, subject to certain limited exceptions permitted by the Bankruptcy Code. As described below, substantially all of the Debtors’ pre-petition liabilities were subject to settlement under the Bankruptcy Code (except for payments to UDC’s vendors and suppliers, which were not affected by the Chapter 11 Cases). Superior and its subsidiaries were not parties to the RSA and were not Debtors in the Chapter 11 Cases.

Under the Bankruptcy Code, subject to certain exceptions, the Debtors assumed, assigned or rejected certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieved the Debtors of performing their future obligations under such executory contract or unexpired lease but entitled the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Counterparties to such rejected contracts or leases were able to assert unsecured claims in the Bankruptcy Court against the applicable Debtors’ estate for such damages. Generally, the assumption of an executory contract or unexpired lease required the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and adequately assure future performance. Any description of an executory contract or unexpired lease with the Debtors in this report, including where applicable a quantification of a Debtor’s obligations under any such executory contract or unexpired lease with the Debtor is qualified by any rejection rights the Debtor had under the Bankruptcy Code. Further, nothing herein is or will be deemed an admission regarding any claim amounts or calculations arising from the rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto. On July 22, 2020, the Debtors filed the Supplement to the Debtors' First Revised Proposed Joint Chapter 11 Plan [Docket No. 249], which included as Exhibit G the Schedule of Assumed Executory Contracts and Unexpired Leases, listing executory contracts and unexpired leases to be assumed under the Plan, and included as Exhibit H the Schedule of Rejected Executory Contracts and Unexpired Leases, which listed all executory contracts and unexpired leases to be rejected under the Plan. On July 31, 2020 and September 2, 2020, the Debtors filed the Notice of Filing Second Supplement to the Debtors’ First Revised Proposed Joint Chapter 11 Plan [Docket No. 307] and the Notice of Filing Fourth Plan Supplement [Docket No. 385], respectively, which included modifications to the Schedule of Assumed Executory Contracts and Unexpired Leases and the Schedule of Rejected Executory Contracts and Unexpired Leases.

•Each lender under the Unit credit facility and the DIP credit facility described below received its pro rata share of revolving longs, term loans and letter of credit participations under the Exit Facility described below, in exchange for that lender’s allowed claims under the Unit credit facility or DIP credit facility and each lender under the DIP facility was issued (or will be issued promptly following the Effective Date) its pro rata share of an equity fee under the Equity Facility equal to 5% of the new common shares of reorganized Unit (New Common Stock) (subject to dilution by shares reserved for issuance under a management incentive plan and upon exercise of the warrants described below);

•Each holder of the company’s common stock outstanding prior to the Effective Date (Old Common Stock) that did not opt out of the release under the Plan will receive its pro rata share of seven-year warrants (Warrants) to purchase an aggregate of 12.5% of the shares of New Common Stock at an aggregate exercise price equal to the $650.0 million principal amount of the Notes plus interest thereon to the May 15, 2021 maturity date of the Notes. (References in this report to our “common stock” refer to our Old Common Stock outstanding prior to the Effective Date.)

Under the Plan, the company will issue shares of New Common Stock to holders of the Notes and to holders of certain allowed general unsecured claims against the Debtors, and will issue the Warrants to holders of Unit’s Old Common Stock that did not opt out of the releases under the Plan. The company is currently seeking to facilitate trading of the New Common Stock on one of the OTC markets. The company expects to complete this process and issue the New Common Stock and the Warrants during the fourth quarter of 2020.

On the Effective Date, the company entered into a Warrant Agreement (Warrant Agreement) with American Stock Transfer & Trust Company, LLC. Under the Plan, the Warrants will be issued to holders of shares of Unit’s Old Common Stock outstanding prior to the Effective Date (including holders of certain equity awards), exercisable for up to an aggregate of approximately 1.8 million shares of New Common Stock. The exercise price of the Warrants will be determined and the Warrants will become exercisable once all general unsecured claims asserted against the Debtors are resolved. The company will calculate the initial exercise price per share for the Warrants, which will be set at an amount that implies a recovery by holders of the Notes of the $650 million principal amount of the Notes plus interest thereon to the May 15, 2021 maturity date of the Notes. The Warrants will expire on the earliest of (i) September 3, 2027, (ii) the consummation of a Cash Sale (as defined in the Warrant Agreement) and (iii) the consummation of a liquidation, dissolutions or winding up of the company (such earliest date, the Expiration Date). Each Warrant that is not exercised on or before the Expiration Date will expire, and all rights under such Warrant and the Warrant Agreement will cease on the Expiration Date.

The Debtors’ filing of the Bankruptcy Petitions constituted an event of default that accelerated the Debtors' obligations under the Unit credit agreement and the indenture governing the Notes. Additionally, other events of default, including cross-defaults, existed or occurred under these debt agreements. As a result, the amount owed under the Unit credit facility has been classified as current as of June 30, 2020. The amount owed in respect of the Notes has been classified as liabilities subject to compromise. Under the Bankruptcy Code, the creditors under these debt agreements were stayed from taking any action against the Debtors. Superior and its subsidiaries were not parties to the Chapter 11 Cases, and the Chapter 11 Cases did not result in an event of default under the Superior credit agreement (as defined below). In addition, the Debtors’ filing of the Bankruptcy Petitions constituted a termination event regarding their hedge agreements, which allowed the counterparties to those hedge agreements to terminate the outstanding hedges, and those termination events were not stayed under the Chapter 11 Cases.

On the Petition Date, the Debtors entered into a Continuation Agreement (Continuation Agreement) with Superior, SPC Midstream Operating, L.L.C. and SP Investor to continue the parties' contractual relationships during the course of the Chapter 11 Cases under the governance, operational and related agreements entered into by those parties in connection with the formation of Superior (the company’s midstream joint venture with SP Investor), notwithstanding certain provisions triggered by the filing of the Chapter 11 Cases.

that, absent the filing of the Chapter 11 Cases, would have accelerated to November 16, 2020 if, by that date, all the Notes were not repurchased, redeemed, or refinanced with indebtedness having a maturity date at least six months following October 18, 2023 (Credit Agreement Extension Condition). In addition, filing the Chapter 11 Cases resulted in events of default under the Unit credit agreement and accelerated the Debtors' obligations under the Unit credit agreement. Because of these circumstances, our debt associated with the Unit credit agreement is reflected as a current liability in our consolidated balance sheet as of June 30, 2020 and December 31, 2019. In addition, on May 22, 2020, the RBL Lenders' remaining commitments under the Unit credit facility were terminated.

To provide liquidity to fund our operations and the Chapter 11 Cases, the Debtors entered into the DIP credit agreement. Prior to repayment and termination on the Effective Date, borrowings under the DIP credit facility matured on the earliest of (i) September 22, 2020 (subject to a two-month extension to be approved by the DIP Lenders), (ii) the sale of all or substantially all of the assets of the Debtors under Section 363 of the Bankruptcy Code or otherwise, (iii) the effective date of a plan of reorganization or liquidation in the Chapter 11 Cases, (iv) the entry of an order by the Bankruptcy Court dismissing any of the Chapter 11 Cases or converting such Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code, and (v) the date of termination of the DIP Lenders’ commitments and the acceleration of any outstanding extensions of credit, in each case, under the DIP credit agreement and subject to the Bankruptcy Court’s orders. As of June 30, 2020, we had borrowed $8.0 million under the DIP credit facility.

On the Effective Date, the DIP credit agreement was paid in full and terminated. Following the Debtors’ emergence from the Chapter 11 Cases, each holder of an allowed claim under the DIP credit facility received its pro rata share of revolving loans, term loans and letter-of-credit participations under the exit facility (as defined below). In addition, each such holder was issued on the Effective Date (or will be issued promptly following the Effective Date) its pro rata share of an equity fee under the exit facility equal to 5% of the New Common Stock (subject to dilution by shares reserved for issuance under a management incentive plan and upon exercise of the Warrants).

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

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

The exit credit agreement requires the company to comply with certain financial ratios, including a covenant that it not permit the Net Leverage Ratio (as defined in the exit credit agreement) as of the last day of the fiscal quarters ending (i) December 31, 2020 and March 31, 2021, to be greater than 4.00 to 1.00, (ii) June 30, 2021, September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022, to be greater than 3.75 to 1.00 and (iii) September 30, 2022 and any fiscal quarter thereafter, to be greater than 3.50 to 1.00. In addition, beginning with the fiscal quarter ending December 31, 2020, the company may not (a) permit the Current Ratio (as defined in the exit credit agreement) as of the last day of any fiscal quarter to be less than 0.50 to 1.00 or (b) permit the Interest Coverage Ratio (as defined in the exit credit agreement) as of the last day of any fiscal quarter to be less than 2.50 to 1.00.

In addition to reorganizing our capital structure in the Chapter 11 Cases, we have taken several actions to alleviate the conditions that cause substantial doubt about our ability to continue as a going concern, including (i) minimizing capital expenditures, (ii) aggressively managing working capital, (iii) further reducing recurring operating expenses, and (iv) exploring potential business transactions. However, the significant risks and uncertainties related to our liquidity and Chapter 11 Cases at June 30, 2020 raised substantial doubt about our ability to continue as a going concern. We therefore concluded as of such date there continued to be substantial doubt about our ability to continue as a going concern.

We prepared our condensed consolidated financial statements on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The condensed consolidated financial statements include no adjustments that might result from the outcome of the going concern uncertainty. If we cannot continue as a going concern, adjustments to the carrying values and classification of our assets and liabilities and the reported amounts of income and expenses could be required and could be material.

Our consolidated financial statements will be required to be prepared with the application of fresh start accounting following the Effective Date. Under the principles of fresh start accounting, a new reporting entity is considered to be created and we will allocate the aggregate value of the reorganized company to its individual assets and liabilities based on their estimated fair values as of the Effective Date. The enterprise value of the new reporting entity was estimated to be approximately $270.0 million to $380.0 million, with a midpoint of $325.0 million, based on an assumed effective date of the Plan of August 31, 2020. As a result of the anticipated application of fresh start accounting and the effects of the reorganization of our capital structure under the Plan, the consolidated financial statements on or after the Effective Date will not be comparable with the consolidated financial statements before that date. Among other items, lack of comparability before the Effective Date in our financial statements may exist with regard to our deferred tax positions. The Internal Revenue Service Code (IRC) of 1986, as amended, provides that a debtor in a Chapter 11 bankruptcy case may exclude cancellation of debt income (CODI) from taxable income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness. Following the Effective Date, the CODI may reduce some or all of the amount of prior U.S. tax attributes, which can include net operating losses, capital losses, and tax basis in assets. The amount of the remaining U.S. deferred tax assets, against which a full valuation exists, will be limited under IRC Section 382 due to the change in control resulting from the Plan.

Liabilities subject to compromise represent liabilities incurred before the commencement of the bankruptcy proceedings which may be affected by the Chapter 11 Cases. These amounts represent allowed claims and our best estimate of claims expected to be allowed which will be resolved as part of the bankruptcy proceedings. These claims remain subject to future adjustments. Adjustments may result from negotiations, actions of the Bankruptcy Court, determination as to the value of any collateral securing claims, or other various events. A difference between liability amounts estimated by us and claims filed by creditors will be investigated and the Bankruptcy Court will make a final determination of the amount of allowable claims. Our

The Debtors have discontinued recording interest on liabilities subject to compromise as of the Petition Date. Contractual interest on liabilities subject to compromise not reflected in the condensed consolidated statements of operations for the three and six months ended June 30, 2020 was approximately $5.4 million, representing interest expense from the Petition Date through June 30, 2020. In addition, the Debtors did not make the required interest payment on the Notes of $21.5 million on May 15, 2020.


	June 30, 2020
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	13,214
Accounts receivable	33,628
Intercompany accounts receivable	5,290
Materials and supplies	110
Current income tax receivable	850
Prepaid expenses and other	9,338
Total current assets	62,430
Intercompany investment	338,809
Net property and equipment	658,041
Right of use asset	3,337
Other assets	16,626
Total assets	$	1,079,243
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	16,828
Intercompany accounts payable	4,364
Accrued liabilities	25,355
Current operating lease liability	2,154
Current portion of long-term debt	124,000
Debtor-in-possession financing	8,000
Current derivative liability	5,011
Current portion of other long-term liabilities	5,615
Total current liabilities	191,327
Non-current derivative liabilities	145
Operating lease liability	1,146
Other long-term liabilities	81,623
Liabilities subject to compromise	759,720
Deferred income taxes	4,750
Shareholders’ equity:
Total shareholders’ equity attributable to Unit Corporation	(128,176)
Non-controlling interests in consolidated subsidiaries	168,708
Total shareholders' equity	40,532
Total liabilities and shareholders’ equity	$	1,079,243


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
	(In thousands)
Revenues	$	56,159	$	141,315
Expenses:
Operating costs	93,305		150,169
Depreciation, depletion and amortization	25,612		74,956
Impairment	109,318		787,280
Loss on abandonment of assets	—		17,554
General and administrative	25,814		37,367
Loss on disposition of assets	886		1,282
Total operating costs	254,935		1,068,608
Loss from operations	(198,776)		(927,293)
Other income (expense):
Interest, net	(7,066)		(19,805)
Write-off of debt issuance costs	(2,426)		(2,426)
Loss on derivatives	(6,937)		(6,454)
Reorganization items	(7,027)		(7,027)
Other, net	22		64
Total other income (expense)	(23,434)		(35,648)
Loss before income taxes	(222,210)		(962,941)
Income tax benefit	(6,455)		(9,880)
Equity in net earnings (losses) from investment	188		(66,178)
Net loss	(215,567)		(1,019,239)
Net income (loss) attributable to non-controlling interest	84		(33,096)
Net loss attributable to Unit Corp	$	(215,651)	$	(986,143)


	Six Months Ended June 30, 2020
	(In thousands)
OPERATING ACTIVITIES:
Net loss	$	(1,019,239)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization	74,956
Impairments	787,280
Loss on abandonment of assets	17,554
Amortization of debt issuance costs and debt discount	1,079
Equity investment in non-debtor subsidiaries	66,086
Loss on derivatives	6,454
Cash receipts on derivatives settled	(691)
Loss on disposition of assets	1,282
Write-off of debt issuance costs	2,426
Deferred tax benefit	(8,963)
Employee stock compensation plans	4,179
Bad debt expense	1,923
ARO liability accretion	1,169
Noncash reorganization items	7,027
Other, net	11,621
Changes in operating assets and liabilities increasing (decreasing) cash:
Accounts receivable	26,609
Material and supplies	43
Prepaid expenses and other	(3,158)
Accounts payable	(20,958)
Accrued liabilities	49,661
Net cash provided by operating activities	6,340
INVESTING ACTIVITIES:
Capital expenditures	(14,188)
Producing properties and other acquisitions	(210)
Proceeds from disposition of property and equipment	4,422
Net cash used in investing activities	(9,976)
FINANCING ACTIVITIES:
Borrowings under line of credit, including borrowings under DIP credit facility	47,300
Payments under line of credit	(23,500)
DIP financing costs	(990)
Intercompany borrowings	781
Employee taxes paid by withholding shares	(43)
Bank overdrafts	(7,269)
Net cash provided by financing activities	16,279
Net increase in cash and cash equivalents	12,643
Cash and cash equivalents, beginning of year	571
Cash and cash equivalents, end of year	$	13,214