Chapter 11 Proceedings, Liquidity, and Ability to Continue as a Going Concern (Tables)

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Liabilities Subject to Compromise

Liabilities subject to compromise include the following:

	June 30, 2020
	(In thousands)
6.625% senior subordinated notes due 2021 (including accrued interest as of the Petition Date)	671,724
Accounts payable	735
Employee separation benefit plan obligations	22,624
Litigation settlements	45,000
Royalty suspense accounts payable	19,637
Total liabilities subject to compromise	$	759,720

During the three months ended June 30, 2020, we had a reduction in force and incurred additional expenses of $15.4 million for benefits to be paid under our Separation Benefit Plan. These expenses were recorded as operating costs in our consolidated statements of operations. Because these amounts are unsecured, the total amount owed to separated employees is subject to compromise.

Schedule of reorganization items

Reorganization items consisted of the following for the three and six months ended June 30, 2020:

	Amount
	(In thousands)
Professional fees incurred	$	4,822
Adjustment to unamortized debt issuance costs associated with the 6.625% senior subordinated notes due 2021	2,205
Total reorganization items	$	7,027

Debtor-in-Possession Condensed Balance Sheet

UNIT CORPORATION (DEBTOR-IN-POSSESSION)

Condensed Combined Balance Sheets (Unaudited)

	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

Debtor-in-Possession Condensed Income Statement

UNIT CORPORATION (DEBTOR-IN-POSSESSION)

Condensed Combined Statements of Operations (Unaudited)

	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)

Debtor-in-Possession Condensed Cash Flow Statement

UNIT CORPORATION (DEBTOR-IN-POSSESSION)

Condensed Combined Statements of Cash Flows (Unaudited)

	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