Unit Corporation Reports 2018 Second Quarter Results

Unit Corporation (NYSE: UNT) today reported its financial and
operational results for the second quarter 2018. The results reported
below include those attributable to Unit’s consolidated subsidiaries.
Second quarter results and recent highlights include:

Net income attributable to Unit of $5.8 million; adjusted net income
attributable to Unit of $11.3 million, a 216% increase over second
quarter 2017 adjusted net income.
Oil and natural gas segment production increased 1% over first quarter
2018 and 9% over the second quarter 2017.
Delineation wells in the Wing and Brandt Prospects in Unit’s Wilcox
play have provided very promising results. Further delineation work
continues.
Contract drilling segment completed construction of its 11^th
BOSS drilling rig placed into service following the end of the quarter.
The 12^th BOSS rig is under construction, and a new contract
has been signed for the construction of the 13^th BOSS rig,
both with initial multi-year terms. The 12^th and 13^th
BOSS rigs are expected to be placed into service in the first quarter
of 2019.
Thirty-five drilling rigs are operating; all eleven BOSS drilling rigs
are under contract.
On April 3, 2018, Unit completed the sale of 50% of the ownership
interests in Superior Pipeline Company LLC (Superior) to SP Investor
Holdings, LLC for cash consideration of $300 million. The effective
date of the sale was April 1^st.
During the second quarter, Superior signed a five-year $200 million
senior secured credit facility.
Midstream segment gas processed, gas gathered, and liquids sold
volumes per day increased 6%, 5%, and 17%, respectively, as compared
to the first quarter of 2018.
Midstream segment began construction of its new Reeding gas processing
plant near Cashion, Oklahoma.

SECOND QUARTER 2018 FINANCIAL RESULTS

Unit recorded net income attributable to Unit of $5.8 million for the
quarter, or $0.11 per diluted share, compared to net income attributable
to Unit of $9.1 million, or $0.17 per share, for the second quarter of
2017. Adjusted net income attributable to Unit (which excludes the
effect of non-cash commodity derivatives) for the quarter was $11.3
million, or $0.21 per diluted share, as compared to $0.07 per diluted
share for the same quarter for 2017, a 216% increase (see Non-GAAP
financial measures below). Total revenues for the quarter were $203.3
million (50% oil and natural gas, 23% contract drilling, and 27%
midstream), compared to $170.6 million (49% oil and natural gas, 23%
contract drilling, and 28% midstream) for the second quarter of 2017.
Adjusted EBITDA attributable to Unit was $81.6 million, or $1.55 per
diluted share (see Non-GAAP financial measures below).

For the first six months of 2018, Unit recorded net income attributable
to Unit of $13.7 million, or $0.26 per diluted share, compared to net
income attributable to Unit of $25.0 million, or $0.49 per share, for
the first six months of 2017. Unit recorded adjusted net income
attributable to Unit (which excludes the effect of non-cash commodity
derivatives) of $22.4 million, or $0.43 per diluted share, as compared
to $0.22 per diluted share for the same period for 2017, a 102% increase
(see Non-GAAP financial measures below). Total revenues for the first
six months were $408.4 million (50% oil and natural gas, 23% contract
drilling, and 27% midstream), compared to $346.3 million (49% oil and
natural gas, 22% contract drilling, and 29% midstream) for the first six
months of 2017. Adjusted EBITDA attributable to Unit for the first six
months was $170.7 million, or $3.25 per diluted share (see Non-GAAP
financial measures below).

OIL AND NATURAL GAS SEGMENT INFORMATION

For the quarter, equivalent production was 4.2 million barrels of oil
equivalent (MMBoe), a 1% increase over the first quarter of 2018. Oil
and natural gas liquids (NGLs) production represented 46% of total
equivalent production. Oil production was 7,614 barrels per day, a
decrease of 7% from the first quarter of 2018. NGLs production was
13,516 barrels per day, a 2% increase over the first quarter of 2018.
Natural gas production was 150,965 thousand cubic feet (Mcf) per day, a
1% increase over the first quarter of 2018. Per day equivalent
production for the first six months of 2018 was 46.4 thousand barrels of
oil equivalent (MBoe).

Unit’s average realized per barrel equivalent price for the quarter was
$22.87, a 5% decrease from the first quarter of 2018. Unit’s average
natural gas price was $2.18 per Mcf, a decrease of 17% from the first
quarter of 2018. Unit’s average oil price was $56.46 per barrel, an
increase of 2% over the first quarter of 2018. Unit’s average NGLs price
was $22.18 per barrel, an increase of 5% over the first quarter of 2018.
All prices in this paragraph include the effects of derivative contracts.

During the quarter, production from SOHOT was curtailed due to high line
pressures when Enable, Unit’s primary midstream gas gatherer and
processor, tied in and commissioned their Wildcat pipeline that takes
rich gas from Western Oklahoma to a processing plant in North Texas.
Production loss from this event coupled with smaller losses due to
downtime at processing plants in Unit’s Houston and Texas Panhandle
areas was approximately 90 MBoe for the quarter. Without these losses,
second quarter production would have averaged 47.3 MBoe or 2% higher
than the first quarter. These factors also affected oil production
levels for the quarter. Following the commissioning of the Wildcat
Pipeline, line pressures have returned to more normal levels.

In the Gulf Coast Wilcox play, the Wing #18 was drilled and completed in
April in the BP Fee “C” sand which lies just beneath the BP Fee and BP
Fee “A” sand intervals which, to date, have been the primary producing
intervals in the Wing prospect. The Wing #18 initially flowed at rates
of 6 MMcf per day and 75 barrels of oil per day with pressure of 5,000
psi. After over three months of production, the well is flowing at rates
of 6.5 MMcf per day and 55 barrels of oil per day with over 2,700 psi of
pressure. Following the success of the Wing #18 well, Unit drilled and
completed the Wing #20. Besides the BP Fee “C” sand in the Wing #18, the
Wing #20 found pay in the deeper BP Fee “D” and BP Fee “E” sands and all
three intervals were fracture stimulated in June flowing at 7.5 MMcf per
day and 80 barrels of oil per day with 3,000 psi of flowing pressure.
Unit will test two additional exploration prospects adjacent to the Wing
prospect over the next year.

In the Brandt Prospect near Goliad, Texas, the Engel #1, Unit’s
successful discovery well completed in December of 2017, has a current
flow rate of 6 MMcf per day with 1,000 psi of pressure after seven
months of production. The Engel #2 was spud to delineate this discovery
in early June and is now in the final stages of the completion.
Following the Engel #2, a second delineation well was spud that will be
completed in the third quarter. Beyond the Brandt prospect, several
additional prospects in the Goliad area have been identified.

In the Texas Panhandle, the Buffalo Wallow field continues to be
developed with extended length laterals. Four C(1) wells are being
brought online after drilling out frack plugs. Unit also has two
additional wells that are awaiting completion. During the quarter, an
additional Unit rig was temporarily brought in to drill two Granite Wash
G extended length laterals. These wells are offsets to a normal length G
lateral drilled in 2014 that has been a strong producer.

In the Southern Oklahoma Hoxbar Oil Trend (SOHOT), the McGuffin #2-19H
was completed with an initial rate of 700 barrels of oil per day. Two
additional Marchand extended lateral wells are being fracture
stimulated. The SOHOT play continues to be Unit’s highest oil weighted
play. The curtailments discussed above affected Unit’s oil volumes for
the second quarter.

Despite these curtailments in the second quarter, the forecast for 2018
production remains unchanged at 17.1 to 17.4 MMBoe, a 7% to 9% increase
over 2017.

Pinkston said: “Our oil and natural gas segment is on track to deliver
on our original growth plan for the year. We continue to see some very
solid well results from our various exploration and development
programs. We are particularly pleased with the results we are seeing in
the Wilcox. The Gilly discovery originally announced in 2012 has been a
tremendous resource for Unit. With new development in the area and new
prospect identification, we believe this asset can continue to be a
continuous contributor to the growth of our E&P business.”

This table illustrates certain comparative production, realized prices,
and operating profit for the periods indicated:


	Three Months Ended						Three Months Ended						Six Months Ended
	Jun 30, 2018		Jun 30, 2017		Change		Jun 30, 2018		Mar 31, 2018		Change		Jun 30, 2018		Jun 30, 2017		Change
Oil and NGLs Production, MBbl		1,923		1,851	4	%		1,923		1,931	–	%		3,854		3,590	7	%
Natural Gas Production, Bcf		13.7		12.0	14	%		13.7		13.5	2	%		27.2		24.2	12	%
Production, MBoe		4,212		3,852	9	%		4,212		4,181	1	%		8,393		7,629	10	%
Production, MBoe/day		46.3		42.3	9	%		46.3		46.5	–	%		46.4		42.1	10	%
Avg. Realized Natural Gas Price, Mcf ⁽¹⁾	$	2.18	$	2.45	(11	)%	$	2.18	$	2.62	(17	)%	$	2.40	$	2.57	(7	)%
Avg. Realized NGL Price, Bbl ⁽¹⁾	$	22.18	$	14.91	49	%	$	22.18	$	21.08	5	%	$	21.65	$	16.34	32	%
Avg. Realized Oil Price, Bbl ⁽¹⁾	$	56.46	$	46.96	20	%	$	56.46	$	55.10	2	%	$	55.76	$	47.77	17	%
Realized Price / Boe ⁽¹⁾	$	22.87	$	20.76	10	%	$	22.87	$	24.18	(5	)%	$	23.52	$	21.44	10	%
Operating Profit Before Depreciation, Depletion, & Amortization (MM) ⁽²⁾	$	69.9	$	50.4	39	%	$	69.9	$	67.1	4	%	$	137.0	$	108.8	26	%

(1) Realized price includes oil, NGLs, natural gas, and associated
derivatives.

(2) Unit calculates operating profit before depreciation by taking
operating revenues for this segment less operating expenses excluding
depreciation, depletion, amortization, and impairment. (See non-GAAP
financial measures below.)

CONTRACT DRILLING SEGMENT INFORMATION

Unit’s average number of drilling rigs working during the quarter was
32.2, an increase of 2% over the first quarter of 2018. Per day drilling
rig rates averaged $17,330, a 2% increase over the first quarter of
2018. For the first six months of 2018, per day drilling rig rates
averaged $17,184, an 8% increase over the first six months of 2017.
Average per day operating margin for the quarter was $5,412 (before
elimination of intercompany drilling rig profit of $0.8 million). This
compares to first quarter 2018 average operating margin of $5,179
(before elimination of intercompany drilling rig profit of $0.4
million), an increase of 4%, or $233. Average per day operating margin
for the first six months of 2018 was $5,296 (before elimination of
intercompany drilling rig profit of $1.2 million). This compares to the
first six months of 2017 average operating margin of $4,139 (before
elimination of intercompany drilling rig profit of $0.3 million), an
increase of 28%, or $1,157 (in each case regarding eliminating
intercompany drilling rig profit – see Non-GAAP financial measures
below).

Pinkston said: “Our contract drilling segment had a very strong quarter.
Rig utilization increased to 34 rigs working at the end of the quarter,
and currently we have 35 rigs operating. We obtained long-term contracts
for our 12th and 13th BOSS rigs which will be completed and placed into
service in the first quarter of 2019. We completed and deployed our 11th
BOSS rig shortly after the end of the quarter, bringing our total fleet
to 96 drilling rigs. Additionally, one of our operators signed two-year
contract extensions for two of our existing BOSS rigs. We continue to be
very pleased with the BOSS rig performance and customer acceptance.
Twenty-five SCR rigs continue to operate, and we continue to have
inquiries regarding further utilization. We had ten long-term contracts
(contracts with original terms ranging from six months to two years in
length) as of the end of the quarter. Of the ten long-term contracts,
eight are up for renewal in 2018 and two in 2019. The long-term
contracts at the end of the quarter exclude the three new BOSS rig
contracts discussed herein.”

This table illustrates certain comparative results for the periods
indicated:


	Three Months Ended						Three Months Ended						Six Months Ended
	Jun 30, 2018		Jun 30, 2017		Change		Jun 30, 2018		Mar 31, 2018		Change		Jun 30, 2018		Jun 30, 2017		Change
Rigs Utilized		32.2		28.8	12	%		32.2		31.7	2	%		31.9		27.2	17	%
Operating Profit Before Depreciation (MM)⁽¹⁾	$	15.0	$	12.0	25	%	$	15.0	$	14.3	5	%	$	29.4	$	20.0	47	%

(1) Unit calculates operating profit before depreciation by taking
operating revenues for this segment less operating expenses excluding
depreciation and impairment. (See non-GAAP financial measures below.)

MIDSTREAM SEGMENT INFORMATION

For the quarter, gas processed, gas gathered and liquids sold volumes
per day increased 6%, 5%, and 17%, respectively, as compared to the
first quarter of 2018. Operating profit (as defined in the footnote
below) for the quarter was $14.4 million, which was relatively flat
compared to the first quarter of 2018.

For the first six months of 2018, per day gas processed and liquids sold
volumes increased 19% and 23%, respectively, while gas gathered volumes
per day decreased 1% as compared to the first six months of 2017.
Operating profit (as defined in the footnote below) for the first six
months of 2018 was $28.8 million, an increase of 14% over the first six
months of 2017.

During the second quarter, Superior signed a new senior secured credit
facility. The credit agreement is a five-year, $200 million senior
secured revolving credit facility with an option to increase the credit
amount up to $250 million, subject to certain conditions. Borrowings
under the credit facility will fund capital expenditures and
acquisitions, provide general working capital, and for letters of credit
for Superior.

This table illustrates certain comparative results for the periods
indicated:


	Three Months Ended						Three Months Ended						Six Months Ended
	Jun 30, 2018		Jun 30, 2017		Change		Jun 30, 2018		Mar 31, 2018		Change		Jun 30, 2018		Jun 30, 2017		Change
Gas Gathering, Mcf/day		391,047		383,440	2	%		391,047		372,862	5	%		382,005		386,893	(1	)%
Gas Processing, Mcf/day		160,506		135,002	19	%		160,506		151,039	6	%		155,799		130,804	19	%
Liquids Sold, Gallons/day		676,503		525,920	29	%		676,503		577,560	17	%		627,305		511,969	23	%
Operating Profit Before Depreciation & Amortization (MM) ⁽¹⁾	$	14.4	$	12.1	19	%	$	14.4	$	14.4	–	%	$	28.8	$	25.3	14	%

(1) Unit calculates operating profit before depreciation by taking
operating revenues for this segment less operating expenses excluding
depreciation, amortization, and impairment. (See non-GAAP financial
measures below.)

Pinkston said: “During the second quarter, following the sale of the
fifty percent equity stake in the business, we continued setting the
stage to grow the midstream business. We have seen growth in gas
gathering, processing and liquids sold volumes during the quarter.
Throughput volume growth during the quarter was due to Unit Petroleum
and third party activity levels. Due to increasing activity levels in
the Cashion area of Oklahoma, we have begun construction of our new
Reeding gas processing facility. The facility will consist of a 60 MMcf
per day processing plant, which is being relocated from our Bellmon
facility. The Reeding facility will share the gathering system with our
Cashion plant and is expected to be in service in the first quarter of
2019. We continue to look for growth opportunities for the midstream
segment. Our new credit facility will provide additional liquidity to
execute on prospects we identify.”

FINANCIAL INFORMATION

Unit ended the quarter with cash and cash equivalents of $104.3 million
and long-term debt of $643.4 million, comprised solely of senior
subordinated notes (net of unamortized discount and debt issuance costs)
and no borrowings under the Unit or Superior credit agreements. On April
2, 2018, Unit signed a Fourth Amendment to its credit agreement in
connection with its sale of the 50% ownership interest in Superior. One
condition of the sale was the release of Superior from the Unit credit
agreement. The Fourth Amendment also provided for a maximum credit
amount, a borrowing base, and an elected commitment all of $425 million.

WEBCAST

Unit uses its website to disclose material nonpublic information and for
complying with its disclosure obligations under Regulation FD. The
website includes those disclosures in the ‘Investor Information’
sections. So, investors should monitor that portion of the website,
besides following the press releases, SEC filings, and public conference
calls and webcasts.

Unit will webcast its second quarter earnings conference call live over
the Internet on August 9, 2018 at 10:00 a.m. Central Time (11:00 a.m.
Eastern). To listen to the live call, please go to http://www.unitcorp.com/investor/calendar.htm
at least fifteen minutes before the start of the call to download and
install any necessary audio software. For those who are not available to
listen to the live webcast, a replay will be available shortly after the
call and will remain on the site for 90 days.

_____________________________________________________

Unit Corporation is a Tulsa-based, publicly held energy company engaged
through its subsidiaries in oil and gas exploration, production,
contract drilling, and gas gathering and processing. Unit’s Common Stock
is listed on the New York Stock Exchange under the symbol UNT. For more
information about Unit Corporation, visit its website at http://www.unitcorp.com.

FORWARD-LOOKING STATEMENT

This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act. All statements, other
than statements of historical facts, included in this release that
address activities, events, or developments that the company expects,
believes, or anticipates will or may occur are forward-looking
statements. Several risks and uncertainties could cause actual results
to differ materially from these statements, including changes in
commodity prices, the productive capabilities of the company’s wells,
future demand for oil and natural gas, future drilling rig utilization
and dayrates, projected rate of the company’s oil and natural gas
production, the amount available to the company for borrowings, its
anticipated borrowing needs under its credit agreements, the number of
wells to be drilled by the company’s oil and natural gas segment, the
potential productive capability of its prospective plays, and other
factors described occasionally in the company’s publicly available SEC
reports. The company assumes no obligation to update publicly such
forward-looking statements, whether because of new information, future
events, or otherwise.


Unit Corporation
Selected Financial Highlights
(In thousands except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Income Statements:
Revenues:
Oil and natural gas	$	102,318		$	83,173		$	205,417		$	170,771
Contract drilling		46,926			39,255			92,915			76,440
Gas gathering and processing		54,059			48,153			110,103			99,094
Total revenues		203,303			170,581			408,435			346,305
Expenses:
Operating costs:
Oil and natural gas		32,418			32,758			68,380			61,962
Contract drilling		31,894			27,239			63,561			56,466
Gas gathering and processing		39,703			36,042			81,307			73,746
Total operating costs		104,015			96,039			213,248			192,174
Depreciation, depletion, and amortization		58,373			50,080			115,439			97,012
General and administrative		8,712			8,713			19,474			17,667
Gain on disposition of assets		(161	)		(248	)		(322	)		(1,072	)
Total operating expenses		170,939			154,584			347,839			305,781

Income from operations		32,364			15,997			60,596			40,524

Other income (expense):
Interest, net		(7,729	)		(9,467	)		(17,733	)		(18,863	)
Gain (loss) on derivatives		(14,461	)		8,902			(21,223	)		23,633
Other		5			6			11			9
Total other income (expense)		(22,185	)		(559	)		(38,945	)		4,779

Income before income taxes		10,179			15,438			21,651			45,303

Income tax expense:
Deferred		2,029			6,379			5,636			20,315
Total income taxes		2,029			6,379			5,636			20,315

Net income		8,150			9,059			16,015			24,988
Net income attributable to non-controlling interest		2,362			–			2,362			–
Net income attributable to Unit Corporation	$	5,788		$	9,059		$	13,653		$	24,988

Net income attributable to Unit Corporation per common share:
Basic	$	0.11		$	0.18		$	0.26		$	0.49
Diluted	$	0.11		$	0.17		$	0.26		$	0.49

Weighted average shares outstanding:
Basic		52,050			51,366			51,891			50,832
Diluted		52,781			51,944			52,542			51,371


Unit Corporation
Selected Financial Highlights – continued
(In thousands)
	June 30,			December 31,
	2018			2017
Balance Sheet Data:
Current assets	$	227,044		$	119,672
Total assets	$	2,749,809		$	2,581,452
Current liabilities	$	200,714		$	181,936
Long-term debt	$	643,371		$	820,276
Other long-term liabilities and non-current derivative liability	$	103,838		$	100,203
Deferred income taxes	$	158,232		$	133,477
Total shareholders’ equity attributable to Unit Corporation	$	1,444,250		$	1,345,560

	Six Months Ended June 30,
	2018			2017
Statement of Cash Flows Data:
Cash flow from operations before changes in operating assets and liabilities	$	161,858		$	125,481
Net change in operating assets and liabilities		(7,165	)		(8,426	)
Net cash provided by operating activities	$	154,693		$	117,055
Net cash used in investing activities	$	(167,350	)	$	(142,833	)
Net cash provided by financing activities	$	116,264		$	25,734

Non-GAAP Financial Measures

Unit Corporation reports its financial results under generally accepted
accounting principles (“GAAP”). The company believes certain non-GAAP
measures provide users of its financial information and its management
additional meaningful information to evaluate the performance of the
company.

This press release includes net income and earnings per share and the
effect of the cash-settled commodity derivatives, its reconciliation of
segment operating profit, its drilling segment’s average daily operating
margin before elimination of intercompany drilling rig profit and bad
debt expense, its cash flow from operations before changes in operating
assets and liabilities, and its reconciliation of net income to adjusted
EBITDA.

Below is a reconciliation of GAAP financial measures to non-GAAP
financial measures for the three and six months ended June 30, 2018 and
2017. Non-GAAP financial measures should not be considered by themselves
or a substitute for results reported under GAAP. This non-GAAP
information should be considered by the reader in addition to, but not
instead of, the financial statements prepared under GAAP. The non-GAAP
financial information presented may be determined or calculated
differently by other companies and may not be comparable to similarly
titled measures.


Unit Corporation
Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings per Share

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
	(In thousands except earnings per share)
Adjusted net income attributable to Unit Corporation:
Net income attributable to Unit Corporation	$	5,788		$	9,059		$	13,653		$	24,988
(Gain) loss on derivatives (net of income tax)		10,386			(5,243	)		15,022			(13,036	)
Settlements during the period of matured derivative contracts (net of income tax)		(4,898	)		(252	)		(6,319	)		(865	)
Adjusted net income attributable to Unit Corporation	$	11,276		$	3,564		$	22,356		$	11,087

Adjusted diluted earnings attributable to Unit Corporation per share:
Diluted earnings per share	$	0.11		$	0.17		$	0.26		$	0.49
Diluted earnings per share from (gain) loss on derivatives		0.19			(0.10	)		0.29			(0.25	)
Diluted earnings per share from settlements of matured derivative contracts		(0.09	)		–			(0.12	)		(0.02	)
Adjusted diluted income per share	$	0.21		$	0.07		$	0.43		$	0.22

________________

The company has included the net income and diluted earnings per share
including only the cash-settled commodity derivatives because:

It uses the adjusted net income to evaluate the operational
performance of the company.
The adjusted net income is more comparable to earnings estimates
provided by securities analysts.


Unit Corporation
Reconciliation of Segment Operating Profit

	Three Months Ended									Six Months Ended
	March 31,			June 30,						June 30,
	2018			2018			2017			2018			2017
	(In thousands)
Oil and natural gas	$	67,137		$	69,900		$	50,415		$	137,037		$	108,809
Contract drilling		14,322			15,032			12,016			29,354			19,974
Gas gathering and processing		14,440			14,356			12,111			28,796			25,348
Total operating profit		95,899			99,288			74,542			195,187			154,131
Depreciation, depletion and amortization		(57,066	)		(58,373	)		(50,080	)		(115,439	)		(97,012	)
Total operating income		38,833			40,915			24,462			79,748			57,119
General and administrative		(10,762	)		(8,712	)		(8,713	)		(19,474	)		(17,667	)
Gain (loss) on disposition of assets		161			161			248			322			1,072
Interest, net		(10,004	)		(7,729	)		(9,467	)		(17,733	)		(18,863	)
Gain (loss) on derivatives		(6,762	)		(14,461	)		8,902			(21,223	)		23,633
Other		6			5			6			11			9
Income before income taxes	$	11,472		$	10,179		$	15,438		$	21,651		$	45,303

_________________

The Company has included segment operating profit because:

It considers segment operating profit to be an important supplemental
measure of operating performance for presenting trends in its core
businesses.
Segment operating profit is useful to investors because it provides a
means to evaluate the operating performance of the segments and
company on an ongoing basis using the criteria used by management.


Unit Corporation
Reconciliation of Average Daily Operating Margin Before Elimination of Intercompany Rig Profit
and Bad Debt Expense

	Three Months Ended						Six Months Ended
	March 31,		June 30,				June 30,
	2018		2018		2017		2018		2017
	(In thousands except for operating days and operating margins)

Contract drilling revenue	$	45,989	$	46,926	$	39,255	$	92,915	$	76,440
Contract drilling operating cost		31,667		31,894		27,239		63,561		56,466
Operating profit from contract drilling		14,322		15,032		12,016		29,354		19,974
Add:
Elimination of intercompany rig profit and bad debt expense		434		814		376		1,248		376
Operating profit from contract drilling before elimination of intercompany rig profit and bad debt expense		14,756		15,846		12,392		30,602		20,350
Contract drilling operating days		2,849		2,928		2,625		5,778		4,916
Average daily operating margin before elimination of intercompany rig profit and bad debt expense	$	5,179	$	5,412	$	4,721	$	5,296	$	4,139

________________

The company has included the average daily operating margin before
elimination of intercompany rig profit and bad debt expense because:

Its management uses the measurement to evaluate the cash flow
performance of its contract drilling segment and to evaluate the
performance of contract drilling management.
It is used by investors and financial analysts to evaluate the
performance of the company.


Unit Corporation
Reconciliation of Cash Flow From Operations Before Changes in Operating Assets and Liabilities

	Six Months Ended June 30,
	2018		2017
	(In thousands)
Net cash provided by operating activities	$	154,693	$	117,055
Net change in operating assets and liabilities		7,165		8,426
Cash flow from operations before changes in operating assets and liabilities	$	161,858	$	125,481

________________

The company has included the cash flow from operations before changes in
operating assets and liabilities because:

It is an accepted financial indicator used by its management (and by
other companies in the industry) to measure the company’s ability to
generate cash used to fund its business activities internally.
It is used by investors and financial analysts to evaluate the
performance of the company.


Unit Corporation
Reconciliation of Adjusted EBITDA

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
	(In thousands except earnings per share)

Net income	$	8,150		$	9,059		$	16,015		$	24,988
Income taxes		2,029			6,379			5,636			20,315
Depreciation, depletion and amortization		58,373			50,080			115,439			97,012
Interest, net		7,729			9,467			17,733			18,863
(Gain) loss on derivatives		14,461			(8,902	)		21,223			(23,633	)
Settlements during the period of matured derivative contracts		(6,855	)		(410	)		(8,928	)		(1,569	)
Stock compensation plans		5,464			4,362			12,073			8,066
Other non-cash items		(592	)		673			(1,124	)		1,458
Gain on disposition of assets		(161	)		(248	)		(322	)		(1,072	)
Adjusted EBITDA		88,598			70,460			177,745			144,428
Adjusted EBITDA attributable to non-controlling interest		7,019			–			7,019			–
Adjusted EBITDA attributable to Unit Corporation	$	81,579		$	70,460		$	170,726		$	144,428

Diluted income per share attributable to Unit	$	0.11		$	0.17		$	0.26		$	0.49
Diluted earnings per share from income taxes		0.04			0.12			0.11			0.40
Diluted earnings per share from depreciation, depletion and amortization		1.00			0.97			2.09			1.88
Diluted earnings per share from interest, net		0.15			0.18			0.34			0.37
Diluted earnings per share from (gain) loss on derivatives		0.27			(0.17	)		0.40			(0.46	)
Diluted earnings per share from settlements during the period of matured derivative contracts		(0.13	)		–			(0.17	)		(0.04	)
Diluted earnings per share from stock compensation plans		0.10			0.08			0.23			0.16
Diluted earnings per share from other non-cash items		0.01			0.01			–			0.03
Diluted earnings per share from gain on disposition of assets		–			–			(0.01	)		(0.02	)
Adjusted EBITDA per diluted share	$	1.55		$	1.36		$	3.25		$	2.81

________________

The company has included the adjusted EBITDA excluding gain or loss on
disposition of assets and including only the cash-settled commodity
derivatives because:

It uses the adjusted EBITDA to evaluate the operational performance of
the company.
The adjusted EBITDA is more comparable to estimates provided by
securities analysts.
It provides a means to assess the ability of the Company to generate
cash sufficient to pay interest on its indebtedness.

View source version on businesswire.com: https://www.businesswire.com/news/home/20180809005144/en/

Unit Corporation
Michael D. Earl, 918-493-7700
Vice President,
Investor Relations
www.unitcorp.com

Unit Corporation Reports 2018 Second Quarter Results

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