Emergence from Voluntary Reorganization Under Chapter 11	May 22, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Reorganization under Chapter 11 of US Bankruptcy Code Disclosure	EMERGENCE FROM VOLUNTARY REORGANIZATION UNDER CHAPTER 11 Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code On May 22, 2020 (Petition Date), Unit together with 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 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 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” (the Plan) [Docket No. 340] (Confirmation Order) confirming the Plan and approving the disclosure statement on a final basis. On September 3, 2020 (Effective Date) the conditions to effectiveness for the Plan were satisfied, and the Debtors emerged from Chapter 11. Following emergence, the company implemented the provisions of the Plan as follows: •Each lender under the (i) the Senior Credit Agreement dated as of September 13, 2011 (as amended, the Unit credit agreement, and the loan facility, the Unit credit facility), by and among the company, UPC and UDC, as borrowers, the lenders party thereto and BOKF, NA dba Bank of Oklahoma, as administrative agent and (ii) the $36.0 million multi-draw loan facility (DIP credit facility) under the Superpriority Senior Secured Debtor-in-Possession Credit Agreement dated May 27, 2020 (DIP credit agreement), by and among the Debtors, the RBL Lenders (in such capacity, the DIP Lenders) and BOKF, NA dba Bank of Oklahoma, as administrative agent received its pro rata share of revolving loans, term loans and letter of credit participations under the exit facility described below, in exchange for the lender’s allowed claims under the Unit credit facility or DIP credit facility; •Each lender under the Unit credit facility and the DIP credit facility received (or will receive promptly after providing the company with its brokerage account information) 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 described below); •The company issued a total of 12.0 million common shares of the reorganized Unit (New Common Stock) at a par value of $0.01 per share to be subsequently distributed in accordance with the Plan; •Each holder of 6.625% senior subordinated notes due 2021 (Notes) received its pro rata share of New Common Stock based on equity allocations at each of Unit, UDC and UPC in exchange for the holder’s allowed Notes claim; •Each holder of an allowed general unsecured claim against Unit or UPC is entitled to receive its pro rata share of New Common Stock based on equity allocations at each of Unit and UPC, respectively; •A disputed claims reserve was established for distribution of New Common Stock on allowance of certain disputed general unsecured claims; •Each holder of an allowed general unsecured claim against UDC, 8200 Unit, Unit Drilling Colombia and Unit Drilling USA received payment or will receive in full of that claim in the ordinary course of business; and •Each retained or former employee with a claim for vested severance benefits, who opted in to a settlement, received or will receive cash payment(s) for the claim in lieu of an allocation of New Common Stock otherwise provided to holders of general unsecured claims. On December 11, 2020, approximately 10.5 million shares of New Common Stock were distributed to the holders of the Notes who were entitled to receive their pro rata share of New Common Stock based on equity allocations at each of Unit, UDC, and UPC in exchange for the holder’s allowed Notes claim. The remaining 1.5 million shares are being held for the Disputed Claims Reserve. All shares of New Common Stock are subject to the transfer restrictions in Article XIV of the company’s Amended and Restated Certificate of Incorporation (Charter). Article XIV of the Charter provides that, subject to the exceptions provided in Article XIV, any attempted transfer of the New Common Stock will be prohibited and void ab initio if (i) because of the transfer, any person becomes a Substantial Stockholder (as defined below) other than by reason of Treasury Regulations section 1.382-2T(j)(3) or (ii) the Percentage Stock Ownership (as defined in the Charter) interest of any Substantial Stockholder will be increased. A “Substantial Stockholder” means a person with a Percentage Stock Ownership of 4.75% or more. Warrants Each holder of the company’s common stock outstanding before the Effective Date (Predecessor Common Stock) that did not opt out of the release under the Plan, is entitled to 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. On the Effective Date, the company entered into a Warrant Agreement (Warrant Agreement) with American Stock Transfer & Trust Company, LLC. 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) or (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. On December 21, 2020, the company issued approximately 1.8 million Warrants to the holders of the Predecessor Common Stock that did not opt out of the releases under the Plan and owned their shares of Predecessor Common Stock in street name through the facilities of the DTC. The company expects to issue approximately 79,000 more Warrants to the holders of the Predecessor Common Stock that did not opt out of the releases under the Plan and owned their shares through direct registration with the company’s transfer agent (Direct Registration). Under the Plan, additional Warrants will be issued in book-entry form through the facilities of the DTC, and each holder owning shares of Predecessor Common Stock through Direct Registration must provide that holder’s brokerage account information to the company to receive holder’s distribution of Warrants. Any distribution not made will be deemed forfeited at the first anniversary of the Effective Date. The Warrants are currently accounted for as a derivative liability as they are not indexed to the New Common Stock until all outstanding claims have been satisfied and the strike price for the Warrants can be determined. Accordingly, the Warrants are recorded at their fair value upon emergence utilizing the Black-Scholes-Merton option model. The inputs to the model require judgement, including estimating the strike price, expected term and the associated volatility. At emergence, the Warrants have a fair value of $0.9 million and will continue to be adjusted to fair value at each reporting period until determined to be an equity instrument, at which time they will be reported as Shareholders' equity and no longer be subject to future fair value adjustment. The Warrants are considered Level 3 fair value measurements under ASC 820, Fair Value Measurement. Events of Default The commencement of the Chapter 11 Cases constituted an event of default that accelerated the company's 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. The amounts owed in respect of the Notes were classified as liabilities subject to compromise. Under the Bankruptcy Code, the creditors under these debt agreements were stayed from taking any action against the company. Superior and its subsidiaries were not debtors in the Chapter 11 Cases, and the Chapter 11 Cases did not result in an event of default under the Superior credit agreement. In addition, the Debtors' filing of the Bankruptcy Petitions constituted a termination event under their hedge agreements, which allowed the counterparties to those hedge agreements to terminate the outstanding hedges, and those termination events were not stayed by 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), which agreements contained certain provisions that otherwise would have been triggered by the filing of the Chapter 11 Cases. Liquidity, Unit Credit Facility, and Debtor-in-Possession Credit Agreement To provide liquidity to fund our operations and the Chapter 11 Cases, the Debtors entered into the DIP credit agreement. Before repayment and termination on the Effective Date, borrowings under the DIP credit facility would have 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. 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 holder was issued 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 on exercise of the Warrants). Going Concern At June 30, 2020, the significant risks and uncertainties related to the company’s liquidity and Chapter 11 Cases raised substantial doubt about the company’s ability to continue as a going concern. The company, therefore, concluded as of that date there was substantial doubt about the company’s ability to continue as a going concern. The company has since implemented changes that (i) minimize capital expenditures, (ii) aggressively manage working capital, and (iii) reduce recurring operating expenses. With the successful reorganization of our capital structure, in addition to these actions, there is no longer substantial doubt about the company's ability to continue as a going concern. Exit Credit Agreement On the Effective Date, under the terms of the Plan, the company entered into an amended and restated credit agreement (Exit credit agreement). Refer to Note 9 – Long-Term Debt and Other Long-Term Liabilities for the terms of the Exit credit agreement. Interest Expense The Debtors 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 two and eight months ended August 31, 2020 was approximately $7.0 million and $12.4 million, respectively, representing interest expense from the Petition Date through August 31, 2020. In addition, the Debtors did not make the required interest payment on the Notes of $21.5 million on May 15, 2020.

Emergence from Voluntary Reorganization Under Chapter 11

May 22, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Reorganization under Chapter 11 of US Bankruptcy Code Disclosure

EMERGENCE FROM VOLUNTARY REORGANIZATION UNDER CHAPTER 11

Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code

On May 22, 2020 (Petition Date), Unit together with 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 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 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” (the Plan) [Docket No. 340] (Confirmation Order) confirming the Plan and approving the disclosure statement on a final basis. On September 3, 2020 (Effective Date) the conditions to effectiveness for the Plan were satisfied, and the Debtors emerged from Chapter 11.

Following emergence, the company implemented the provisions of the Plan as follows:

•Each lender under the (i) the Senior Credit Agreement dated as of September 13, 2011 (as amended, the Unit credit agreement, and the loan facility, the Unit credit facility), by and among the company, UPC and UDC, as borrowers, the lenders party thereto and BOKF, NA dba Bank of Oklahoma, as administrative agent and (ii) the $36.0 million multi-draw loan facility (DIP credit facility) under the Superpriority Senior Secured Debtor-in-Possession Credit Agreement dated May 27, 2020 (DIP credit agreement), by and among the Debtors, the RBL Lenders (in such capacity, the DIP Lenders) and BOKF, NA dba Bank of Oklahoma, as administrative agent received its pro rata share of revolving loans, term loans and letter of credit participations under the exit facility described below, in exchange for the lender’s allowed claims under the Unit credit facility or DIP credit facility;

•Each lender under the Unit credit facility and the DIP credit facility received (or will receive promptly after providing the company with its brokerage account information) 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 described below);

•The company issued a total of 12.0 million common shares of the reorganized Unit (New Common Stock) at a par value of $0.01 per share to be subsequently distributed in accordance with the Plan;

•Each holder of 6.625% senior subordinated notes due 2021 (Notes) received its pro rata share of New Common Stock based on equity allocations at each of Unit, UDC and UPC in exchange for the holder’s allowed Notes claim;

•Each holder of an allowed general unsecured claim against Unit or UPC is entitled to receive its pro rata share of New Common Stock based on equity allocations at each of Unit and UPC, respectively;

•A disputed claims reserve was established for distribution of New Common Stock on allowance of certain disputed general unsecured claims;

•Each holder of an allowed general unsecured claim against UDC, 8200 Unit, Unit Drilling Colombia and Unit Drilling USA received payment or will receive in full of that claim in the ordinary course of business; and

•Each retained or former employee with a claim for vested severance benefits, who opted in to a settlement, received or will receive cash payment(s) for the claim in lieu of an allocation of New Common Stock otherwise provided to holders of general unsecured claims.

On December 11, 2020, approximately 10.5 million shares of New Common Stock were distributed to the holders of the Notes who were entitled to receive their pro rata share of New Common Stock based on equity allocations at each of Unit, UDC, and UPC in exchange for the holder’s allowed Notes claim. The remaining 1.5 million shares are being held for the Disputed Claims Reserve.

All shares of New Common Stock are subject to the transfer restrictions in Article XIV of the company’s Amended and Restated Certificate of Incorporation (Charter). Article XIV of the Charter provides that, subject to the exceptions provided in Article XIV, any attempted transfer of the New Common Stock will be prohibited and void ab initio if (i) because of the transfer, any person becomes a Substantial Stockholder (as defined below) other than by reason of Treasury Regulations section 1.382-2T(j)(3) or (ii) the Percentage Stock Ownership (as defined in the Charter) interest of any Substantial Stockholder will be increased. A “Substantial Stockholder” means a person with a Percentage Stock Ownership of 4.75% or more.

Warrants

Each holder of the company’s common stock outstanding before the Effective Date (Predecessor Common Stock) that did not opt out of the release under the Plan, is entitled to 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. On the Effective Date, the company entered into a Warrant Agreement (Warrant Agreement) with American Stock Transfer & Trust Company, LLC. 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) or (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. On December 21, 2020, the company issued approximately 1.8 million Warrants to the holders of the Predecessor Common Stock that did not opt out of the releases under the Plan and owned their shares of Predecessor Common Stock in street name through the facilities of the DTC. The company expects to issue approximately 79,000 more Warrants to the holders of the Predecessor Common Stock that did not opt out of the releases under the Plan and owned their shares through direct registration with the company’s transfer agent (Direct Registration). Under the Plan, additional Warrants will be issued in book-entry form through the facilities of the DTC, and each holder owning shares of Predecessor Common Stock through Direct Registration must provide that holder’s brokerage account information to the company to receive holder’s distribution of Warrants. Any distribution not made will be deemed forfeited at the first anniversary of the Effective Date.

The Warrants are currently accounted for as a derivative liability as they are not indexed to the New Common Stock until all outstanding claims have been satisfied and the strike price for the Warrants can be determined. Accordingly, the Warrants are recorded at their fair value upon emergence utilizing the Black-Scholes-Merton option model. The inputs to the model require judgement, including estimating the strike price, expected term and the associated volatility. At emergence, the Warrants have a fair value of $0.9 million and will continue to be adjusted to fair value at each reporting period until determined to be an equity instrument, at which time they will be reported as Shareholders' equity and no longer be subject to future fair value adjustment. The Warrants are considered Level 3 fair value measurements under ASC 820, Fair Value Measurement.

Events of Default

The commencement of the Chapter 11 Cases constituted an event of default that accelerated the company's 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. The amounts owed in respect of the Notes were classified as liabilities subject to compromise. Under the Bankruptcy Code, the creditors under these debt agreements were stayed from taking any action against the company. Superior and its subsidiaries were not debtors in the Chapter 11 Cases, and the Chapter 11 Cases did not result in an event of default under the Superior credit agreement. In addition, the Debtors' filing of the

Bankruptcy Petitions constituted a termination event under their hedge agreements, which allowed the counterparties to those hedge agreements to terminate the outstanding hedges, and those termination events were not stayed by 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), which agreements contained certain provisions that otherwise would have been triggered by the filing of the Chapter 11 Cases.

Liquidity, Unit Credit Facility, and Debtor-in-Possession Credit Agreement

To provide liquidity to fund our operations and the Chapter 11 Cases, the Debtors entered into the DIP credit agreement. Before repayment and termination on the Effective Date, borrowings under the DIP credit facility would have 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.

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 holder was issued 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 on exercise of the Warrants).

Going Concern

At June 30, 2020, the significant risks and uncertainties related to the company’s liquidity and Chapter 11 Cases raised substantial doubt about the company’s ability to continue as a going concern. The company, therefore, concluded as of that date there was substantial doubt about the company’s ability to continue as a going concern. The company has since implemented changes that (i) minimize capital expenditures, (ii) aggressively manage working capital, and (iii) reduce recurring operating expenses. With the successful reorganization of our capital structure, in addition to these actions, there is no longer substantial doubt about the company's ability to continue as a going concern.

Exit Credit Agreement

On the Effective Date, under the terms of the Plan, the company entered into an amended and restated credit agreement (Exit credit agreement). Refer to Note 9 – Long-Term Debt and Other Long-Term Liabilities for the terms of the Exit credit agreement.

Interest Expense

The Debtors 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 two and eight months ended August 31, 2020 was approximately $7.0 million and $12.4 million, respectively, representing interest expense from the Petition Date through August 31, 2020. In addition, the Debtors did not make the required interest payment on the Notes of $21.5 million on May 15, 2020.