TULSA, Okla. –
Unit Corporation (OTC Pink: UNTC) (Company) today reported preliminary and unaudited selected financial and operational highlights for the three months ended June 30, 2022.

Second Quarter Results

Net income (loss) attributable to Unit Corporation for the three months ended June 30, 2022 is expected to be $80.1 million, or $7.82 per diluted share, compared to $(13.0) million, or $(1.09) per diluted share, for the three months ended June 30, 2021. Total revenues for the three months ended June 30, 2022 is expected to be $134.6 million, compared to $134.1 million for the three months ended June 30, 2021.

For the six months ended June 30, 2022, net income (loss) attributable to Unit Corporation is expected to be $33.2 million, or $3.25 per diluted share, compared to $(14.9) million, or $(1.25) per diluted share, for the six months ended June 30, 2021. Total revenues for the six months ended June 30, 2022 is expected to be $322.9 million, compared to $255.0 million for the six months ended June 30, 2021.

Philip B. Smith, the Company’s Chairman and Chief Executive Officer, commented, “We are pleased with our quarterly results and excited about future opportunities given the recent decision to terminate our upstream sales process. With a June 30, 2022 cash balance in excess of $115 million augmented by proceeds received in July from the sale of our Gulf Coast oil and gas properties, zero long-term debt, full utilization of our BOSS rig fleet, and an attractive inventory of upstream development opportunities, we are poised to further create and return substantial value to our shareholders. Given the Company’s growing cash balance, the Company is currently updating its calculation of tax earnings and profits. This will be important information which can be used by the Board in implementing any future plan for return of cash via dividends and distributions to the shareholders in a tax efficient manner.”

The Company has not yet completed its reporting process for the three months ended June 30, 2022. The preliminary results presented herein are based on its reasonable estimates and the information available to it at this time. As such, the Company’s actual results may materially vary from the preliminary results presented herein and will not be finalized until the Company reports its final results for the three and six months ended June 30, 2022 after the completion of its normal quarter end accounting procedures and the execution of its internal controls over financial reporting. In addition, any statements regarding the Company’s estimated financial performance for the three and six months ended June 30, 2022 do not present all information necessary for an understanding of the Company’s financial condition and results of operations as of and for the three and six months ended June 30, 2022. Our independent registered public accounting firm has not audited, compiled, performed any procedures on, or reviewed the preliminary financial data, and accordingly does not express an opinion or any other form of assurance with respect to the preliminary financial data. We plan to report our full results for the three months ended June 30, 2022 on or before August 15, 2022.

Operational highlights for the oil and natural gas and contract drilling segments during three and six months ended June 30, 2022 and 2021 include:

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

Percent

Change

2022

2021

Percent

Change

(In thousands unless otherwise specified)

Oil and Natural Gas:

Avg. oil price (Bbl)

$

56.28

$

48.38

16

%

$

58.23

$

47.82

22

%

Avg. oil price excl. derivatives (Bbl)

$

110.29

$

64.38

71

%

$

100.03

$

60.12

66

%

Avg. NGLs price (Bbl)

$

34.72

$

17.95

93

%

$

33.82

$

17.95

88

%

Avg. NGLs price excl. derivatives (Bbl)

$

34.72

$

17.95

93

%

$

33.82

$

17.95

88

%

Avg. natural gas price (Mcf)

$

4.24

$

2.98

42

%

$

3.78

$

2.87

32

%

Avg. natural gas price excl. derivatives (Mcf)

$

6.62

$

3.00

121

%

$

5.60

$

2.86

96

%

Oil production (MBbls)

309

389

(21

) %

714

801

(11

) %

NGL production (MBbls)

620

662

(6

) %

1,233

1,303

(5

) %

Natural gas production (MMcf)

6,821

7,543

(10

) %

13,336

14,946

(11

) %

Contract Drilling:

Average drilling rigs in use

16.3

10.0

63

%

15.9

9.7

64

%

Drilling rigs available (end of the period)

21

21

%

21

21

%

Average dayrate on daywork contracts

$

21,285

$

18,269

17

%

$

20,555

$

18,200

13

%

Divestiture Program and Borrowing Base Reduction

The Company initiated an asset divestiture program at the beginning of 2021 to sell certain non-core oil and gas properties and reserves (the “Divestiture Program”). On October 4, 2021, the Company announced that it was expanding the Divestiture Program to now include the potential sale of additional properties, including up to all of UPC’s oil and gas properties and reserves, and on January 20, 2022, the Company announced that it had retained a financial advisor and launched the process. On June 10, 2022, the Company announced that it had ended its engagement with the financial advisor and terminated the process. During the process, the Company entered into an agreement to sell its Gulf Coast oil and gas properties.

On July 1, 2022, the Company closed on the sale of certain wells and related leases near the Texas Gulf Coast for cash proceeds of $43.7 million, subject to customary post-closing adjustments based on an effective date of April 1, 2022. These proceeds reduced the net book value of our full cost pool with no gain or loss recognized as the sale did not result in a significant alteration of the full cost pool. Also on July 1, 2022, the RBL Facility borrowing base was automatically reduced to $31.3 million as a result of closing the Gulf Coast properties sale.

Share Repurchase Program

In June 2022, the Company’s board of directors increased the previously authorized share repurchase program to $100.0 million. The repurchases will be made through open market purchases, privately negotiated transactions, or other available means. The Company has no obligation to repurchase any shares under the repurchase program and may suspend or discontinue it at any time without prior notice. As of June 30, 2022, we had repurchased a total of 1,519,392 shares under the repurchase program at an average share price of $36.00 for an aggregate purchase price of $54.7 million. There were 9,831,169 shares of common stock outstanding as of June 30, 2022. Subsequent to June 30, 2022, we have repurchased an additional 75,000 shares under the repurchase program for an aggregate purchase price of $3.8 million.

Commodity Derivatives

Cash settlements paid on commodity derivatives totaled $32.9 million and $54.1 million during the three and six months ended June 30, 2022, respectively, compared to $6.4 million and $9.7 million for the three and six months ended June 30, 2021, respectively. The Company had net current derivative liabilities and net non-current derivative liabilities of $48.8 million and $17.2 million, respectively, as of June 30, 2022, compared to net current derivative liabilities and net non-current derivative liabilities of $40.9 million and $17.9 million, respectively, as of December 31, 2021. The following non-designated commodity hedges were outstanding as of June 30, 2022:

Term

Commodity

Contracted Volume

Weighted Average

Fixed Price for Swaps

Contracted Market

Apr’22 – Dec’22

Natural gas – swap

5,000 MMBtu/day

$2.61

IF – NYMEX (HH)

Jul’22 – Feb’23

Natural gas – swap

18,765 MMBtu/day

$9.14

IF – NYMEX (HH)

Jan’23 – Dec’23

Natural gas – swap

22,000 MMBtu/day

$2.46

IF – NYMEX (HH)

Apr’22 – Dec’22

Natural gas – collar

35,000 MMBtu/day

$2.50 – $2.68

IF – NYMEX (HH)

Apr’22 – Dec’22

Crude oil – swap

2,300 Bbl/day

$42.25

WTI – NYMEX

Jul’22 – Dec’22

Crude oil – swap

596 Bbl/day

$103.98

WTI – NYMEX

Jan’23 – Feb’23

Crude oil – swap

1,339 Bbl/day

$95.40

WTI – NYMEX

Jan’23 – Dec’23

Crude oil – swap

1,300 Bbl/day

$43.60

WTI – NYMEX

Superior Distributions

Superior is expected to pay approximately $13.9 million of distributions to SP Investor Holdings, LLC in late July 2022 related to available cash generated during the three months ended June 30, 2022. These distributions are expected to reduce the remaining Drilling Commitment Adjustment Amount (as defined in the Amended and Restated Limited Liability Company Agreement) to approximately $48.2 million. As of June 30, 2022, liquidation distributions paid first to SP Investor of $353.7 million would be required for SP Investor to reach its 7% Liquidation IRR Hurdle at which point Unit would then be entitled to receive up to $353.7 million of the remaining liquidation distributions to satisfy Unit’s 7% Liquidation IRR Hurdle with any remaining liquidation distributions paid as outlined within the Agreement.

Warrants

On April 7, 2022, the Company delivered notice of the initial $63.74 exercise price resulting in the warrants being exercisable for shares of the Company’s common stock and meeting the definition of an equity instrument. Accordingly, we recognized the change in the fair value of the warrant liability in our unaudited condensed consolidated statements of operations and reclassified the $49.1 million warrant liability to capital in excess of par value on the unaudited condensed consolidated balance sheets as of April 7, 2022. On or about April 25, 2022, the warrants began trading over-the-counter under the symbol “UNTCW”.

About Unit Corporation

Unit Corporation is a Tulsa-based, publicly held energy company engaged through its wholly-owned subsidiaries in oil and gas production and contract drilling as well as its partial investment in natural gas gathering and processing. For more information about Unit Corporation, visit its website at http://www.unitcorp.com.

Forward-Looking Statements

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 (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30, 2022

2022

2021

2022

2021

(In thousands except per share amounts)

Revenues:

Oil and natural gas

$

100,912

$

41,970

$

177,722

$

96,994

Contract drilling

33,642

18,061

62,524

33,735

Gas gathering and processing

74,026

82,673

124,225

Total revenues

134,554

134,057

322,919

254,954

Expenses:

Operating costs:

Oil and natural gas

27,619

15,487

51,094

34,636

Contract drilling

25,763

14,080

52,000

25,951

Gas gathering and processing

45,056

62,388

84,719

Total operating costs

53,382

74,623

165,482

145,306

Depreciation, depletion, and amortization

5,661

16,364

16,931

33,875

General and administrative

7,421

5,751

13,947

12,920

Gain on disposition of assets

(2,066

)

(1,710

)

(4,241

)

(2,182

)

Total operating expenses

64,398

95,028

192,119

189,919

Income from operations

70,156

39,029

130,800

65,035

Other income (expense):

Interest, net

(97

)

(487

)

(371

)

(3,193

)

Gain (loss) on derivatives

2,609

(42,400

)

(61,467

)

(65,231

)

Gain (loss) on change in fair value of warrants

7,289

(3,574

)

(29,323

)

(3,574

)

Loss on deconsolidation of Superior

(13,141

)

Reorganization items, net

(39

)

(1,852

)

(42

)

(2,988

)

Other, net

175

(831

)

932

(755

)

Total other income (expense)

9,937

(49,144

)

(103,412

)

(75,741

)

Income (loss) before income taxes

80,093

(10,115

)

27,388

(10,706

)

Income tax expense (benefit):

Current

Deferred

Total income taxes

Net income (loss)

80,093

(10,115

)

27,388

(10,706

)

Net income (loss) attributable to non-controlling interest

2,879

(5,828

)

4,225

Net income (loss) attributable to Unit Corporation

$

80,093

$

(12,994

)

$

33,216

$

(14,931

)

Net income (loss) attributable to Unit Corporation per common share:

Basic

$

7.99

$

(1.09

)

$

3.31

$

(1.25

)

Diluted

$

7.82

$

(1.09

)

$

3.25

$

(1.25

)

Unit Corporation

Selected Financial Highlights (Unaudited) – Continued

June 30,

2022

December 31,

2021

Balance Sheet Data:

(In thousands)

Cash and cash equivalents

$

115,628

$

64,140

Current assets

$

187,363

$

156,930

Total assets

$

422,392

$

629,477

Current liabilities

$

107,564

$

151,138

Long-term debt

$

$

19,200

Other long-term liabilities and non-current derivative liability

$

54,460

$

59,471

Total shareholders’ equity attributable to Unit Corporation

$

260,368

$

187,397

Unit Corporation

Selected Financial Highlights (Unaudited) – Continued

Three Months Ended June 30, 2022

Oil and

Natural Gas

Contract

Drilling

Mid-Stream

Corporate and

Other

Eliminations

Total

Consolidated

(In thousands)

Revenues:

Oil and natural gas

$

100,896

$

$

$

$

16

$

100,912

Contract drilling

33,642

33,642

Total revenues

100,896

33,642

16

134,554

Expenses:

Operating costs:

Oil and natural gas

27,603

16

27,619

Contract drilling

25,763

25,763

Total operating costs

27,603

25,763

16

53,382

Depreciation, depletion, and amortization

4,027

1,558

76

5,661

Total expenses

31,630

27,321

76

16

59,043

General and administrative

7,421

7,421

Gain on disposition of assets

(25

)

(2,041

)

(2,066

)

Income (loss) from operations

69,291

8,362

(7,497

)

70,156

Gain on derivatives

2,609

2,609

Gain on change in fair value of warrants

7,289

7,289

Reorganization items, net

(39

)

(39

)

Interest, net

(97

)

(97

)

Other

13

9

153

175

Income before income taxes

$

69,304

$

8,371

$

$

2,418

$

$

80,093

Capital expenditures

$

1,753

$

3,225

$

$

44

$

$

5,022

Unit Corporation

Selected Financial Highlights (Unaudited) – Continued

Six Months Ended June 30, 2022

Oil and

Natural Gas

Contract

Drilling

Mid-Stream (1)

Corporate and

Other

Eliminations (1)

Total

Consolidated

(In thousands)

Revenues: (1)

Oil and natural gas

$

188,478

$

$

$

$

(10,756

)

$

177,722

Contract drilling

62,524

62,524

Gas gathering and processing

83,198

(525

)

82,673

Total revenues

188,478

62,524

83,198

(11,281

)

322,919

Expenses:

Operating costs:

Oil and natural gas

51,603

(509

)

51,094

Contract drilling

52,000

52,000

Gas gathering and processing

73,771

(11,383

)

62,388

Total operating costs

51,603

52,000

73,771

(11,892

)

165,482

Depreciation, depletion, and amortization

8,075

3,092

5,614

150

16,931

Total expenses

59,678

55,092

79,385

150

(11,892

)

182,413

General and administrative

13,336

611

13,947

(Gain) loss on disposition of assets

(79

)

(4,165

)

3

(4,241

)

Income (loss) from operations

128,879

11,597

3,813

(13,489

)

130,800

Loss on derivatives

(61,467

)

(61,467

)

Loss on change in fair value of warrants

(29,323

)

(29,323

)

Loss on deconsolidation of Superior

(13,141

)

(13,141

)

Reorganization items, net

(42

)

(42

)

Interest, net

(179

)

(192

)

(371

)

Other

721

28

17

166

932

Income (loss) before income taxes

$

129,600

$

11,625

$

3,651

$

(117,488

)

$

$

27,388

Capital expenditures

$

8,199

$

4,232

$

1,167

$

49

$

$

13,647

1. Includes Superior activity for the two months prior to the March 1, 2022 deconsolidation of Superior.

Rene Punch

Investor Relations

(918) 493-7700

www.unitcorp.com