<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 1-9260
UNIT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-1283193
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Kensington Tower I, 7130 South Lewis, Tulsa, Oklahoma 74136
(Address of principal executive offices)
(Zip Code)
(918) 493-7700
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.20 par value 21,265,650
Class Outstanding at May 6, 1996
<PAGE>
UNIT CORPORATION
INDEX
Page
PART I. Financial Information: Number
Item 1 - Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets
March 31, 1996 and December 31, 1995 2
Consolidated Condensed Statements of Operations
Three Months Ended March 31, 1996 and 1995 3
Consolidated Condensed Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995 4
Notes to Consolidated Condensed Financial Statements 5
Report of Review by Independent Accountants 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. Other Information:
Item 1 - Legal Proceedings 12
Item 2 - Changes in Securities 12
Item 3 - Defaults Upon Senior Securities 12
Item 4 - Submission of Matters to a Vote of
Security Holders 12
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 13
1
<PAGE>
Item 1. Financial Statements
UNIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, December 31,
1996 1995
---------- ----------
ASSETS (Unaudited)
- ------ (In thousands)
Current Assets:
Cash and cash equivalents $ 584 $ 534
Accounts receivable 11,232 10,398
Other 2,918 3,094
---------- ----------
Total current assets 14,734 14,026
---------- ----------
Property and Equipment:
Total cost 266,224 260,771
Less accumulated depreciation, depletion,
amortization and impairment 167,946 164,752
---------- ----------
Net property and equipment 98,278 96,019
---------- ----------
Other Assets 213 877
---------- ----------
Total Assets $ 113,225 $ 110,922
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Current portion of long-term debt $ 13 $ 20
Accounts payable 7,932 6,701
Accrued liabilities 4,007 4,386
---------- ----------
Total current liabilities 11,952 11,107
---------- ----------
Natural Gas Purchaser Prepayments (Note 3) 1,844 2,109
---------- ----------
Long-Term Debt 41,300 41,100
---------- ----------
Shareholders' Equity:
Preferred stock, $1.00 par value, 5,000,000
shares authorized, none issued - -
Common stock $.20 par value, 40,000,000
shares authorized, 21,033,390 and
20,976,090 shares issued, respectively 4,207 4,195
Capital in excess of par value 50,350 50,181
Retained earnings 3,637 2,418
Treasury stock, at cost, 23,755 and
68,441 shares, respectively (65) (188)
---------- ----------
Total shareholders' equity 58,129 56,606
---------- ----------
Total Liabilities and Shareholders' Equity $ 113,225 $ 110,922
========== ==========
The accompanying notes are an integral part of the
consolidated condensed financial statements
2
<PAGE>
UNIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
March 31,
1996 1995
---------- ----------
(In thousands except per
share amounts)
Revenues:
Contract drilling $ 6,086 $ 4,325
Oil and natural gas 9,763 7,369
Other 22 694
---------- ----------
Total revenues 15,871 12,388
---------- ----------
Expenses:
Contract drilling:
Operating costs 5,373 3,864
Depreciation 631 497
Oil and natural gas:
Operating costs 3,387 2,859
Depreciation, depletion and amortization 2,607 2,599
General and administrative 1,116 916
Interest 805 792
---------- ----------
Total expenses 13,919 11,527
---------- ----------
Income From Continuing
Operations Before Income Taxes 1,952 861
Income Tax Expense 733 4
---------- ----------
Income From Continuing Operations 1,219 857
Income From Operations of
Discontinued Segment - 99
---------- ----------
Net Income $ 1,219 $ 956
========== ==========
Income Per Common Share:
Continuing operations $ .06 $ .05
========== ==========
Net income $ .06 $ .05
========== ==========
Weighted Average Shares Outstanding:
Primary 21,404 20,885
========== ==========
Fully diluted 21,488 20,885
========== ==========
The accompanying notes are an integral part of the
consolidated condensed financial statements
3
<PAGE>
UNIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31,
1996 1995
---------- ----------
Cash Flows From Operating Activities: (In Thousands)
Income from continuing operations $ 1,219 $ 857
Adjustments to reconcile income from
continuing operations to net cash
provided (used) by continuing
operating activities:
Depreciation, depletion and amortization 3,319 3,198
Other-net 205 (487)
Deferred income tax expense 718 -
Changes in operating assets and liabilities
increasing (decreasing) cash:
Accounts receivable (834) 467
Accounts payable 1,281 606
Natural gas purchaser prepayments (Note 3) (265) (379)
Other-net (391) 380
---------- ----------
Net cash provided by continuing
operating activities 5,252 4,642
Net cash flow provided by discontinued
operations including changes in
working capital - 1
---------- ----------
Net cash provided by operating activities 5,252 4,643
---------- ----------
Cash Flows From (Used In) Investing Activities:
Capital expenditures (5,740) (4,852)
Proceeds from disposition of assets 121 2,735
Other-net 134 (1)
---------- ----------
Net cash used in investing activities (5,485) (2,118)
---------- ----------
Cash Flows From (Used In) Financing Activities:
Net borrowings (payments) under line of credit 200 (500)
Net payments of notes payable and long-term debt (7) (948)
Other-net 90 (230)
---------- ----------
Net cash from (used in)
financing activities 283 (1,678)
---------- ----------
Net Increase in Cash and Cash Equivalents 50 847
Cash and Cash Equivalents, Beginning of Year 534 2,641
---------- ----------
Cash and Cash Equivalents, End of Period $ 584 $ 3,488
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the three months ended March 31, for:
Interest $ 590 $ 746
Income taxes $ 5 $ -
The accompanying notes are an integral part of the
consolidated condensed financial statements
4
<PAGE>
UNIT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PREPARATION AND PRESENTATION
- ----------------------------------------------
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments necessary (all
adjustments are of a normal recurring nature) to present fairly the financial
position of Unit Corporation as of March 31, 1996 and the results of its
operations and cash flows for the three month periods ended March 31, 1996 and
1995. Results for the three months ended March 31, 1996 are not necessarily
indicative of the results to be realized during the full year. The year end
consolidated condensed balance sheet data was derived from audited financial
statements but does not include all disclosures required by generally accepted
accounting principles. The condensed financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
NOTE 2 - DISCONTINUED OPERATIONS
- --------------------------------
On April 1, 1995 the Company completed a business combination between
the Company's natural gas marketing operations and a third party also involved
in natural gas marketing activities forming a new company called GED Gas
Services, L.L.C. ("GED"). The Company owns a 34 percent interest in GED.
Effective November 1, 1995 GED sold its natural gas marketing operations to a
third party. This sale removed the Company from the third party natural gas
marketing business. The creation of GED and its subsequent sale of its
marketing operations did not adversely affect the Company's drilling and oil
and natural gas exploration operations or the profitability of the Company as
a whole. The discontinuation of the Company's natural gas marketing segment
has been accounted for as a discontinued operation and accordingly, the 1995
financial information has been restated to reflect this treatment. For the
first quarter of 1995, revenues and costs associated with the Company's
natural gas marketing operations were $13.5 million and $13.4 million,
respectively.
NOTE 3 - NATURAL GAS PURCHASER PREPAYMENTS
- -------------------------------------------
In March 1988, the Company entered into a settlement agreement with a
natural gas purchaser. During early 1991, the Company and the natural gas
purchaser superseded the original agreement with a new settlement agreement
effective retroactively to January 1, 1991. Under these settlement
agreements, the Company has a prepayment balance of $1.8 million at March 31,
1996 representing proceeds received from the purchaser as prepayment for
natural gas. This amount is net of natural gas recouped and net of certain
amounts disbursed to other owners (such owners, collectively with the Company
are referred to as the "Committed Interest") for their proportionate share of
the prepayments. The March 31, 1996 prepayment balance is subject to
recoupment in volumes of natural gas for a period ending the earlier of
recoupment or December 31, 1997 (the "Recoupment Period"). Additionally, the
purchaser is obligated to make monthly payments on behalf of the Committed
Interest in an amount calculated as a percentage of the Committed Interest's
5
<PAGE>
share of the deliverability of the wells subject to the settlement agreement,
up to a maximum of $180,000 or a minimum of $90,000 per month for the year
1996. Both the maximum and minimum monthly payments decline annually through
the Recoupment Period. The prepayment amounts are being recorded as
liabilities and reflected in revenues as recoupment occurs. The portion of
the prepayments that are estimated to be recouped in the next twelve months
has been included in current liabilities. At December 31, 1997, the Committed
Interest's prepayment balance, if any, that has not been fully recouped in
natural gas is subject to a cash repayment limited to a maximum of $3 million
to be made in equal payments over a five year period. The Company anticipates
the maximum balance of $3 million will be unrecouped at December 31, 1997. At
the end of the Recoupment Period, the terms of the settlement agreement and
the natural gas purchase contracts which are subject to the settlement
agreement will terminate.
NOTE 4 - INCOME TAXES
- ---------------------
Income tax expense for the three month period ended March 31, 1995
differs from income tax expense computed by applying the statutory rate due
principally to the utilization of the Company's net operating loss
carryforward. All of the financial statement benefit related to the Company's
net operating loss carryforward was recognized at December 31, 1995. As such
income tax expense for the three month period ended March 31, 1996 differs
from income tax expense computed by applying the statutory rate due to state
income taxes.
6
<PAGE>
REPORT OF REVIEW BY INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Unit Corporation
We have reviewed the accompanying consolidated condensed balance sheet of Unit
Corporation and subsidiaries as of March 31, 1996, and the related consoli-
dated condensed statements of operations and cash flows for the three month
periods ended March 31, 1996 and 1995. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Unit Corporation and subsidiaries
at December 31, 1995, and the related consolidated statements of operations,
changes in shareholders' equity and cash flows for the year then ended (not
presented herein); and our report dated February 20, 1996 expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated condensed
balance sheet at December 31, 1995, is fairly stated in all material respects
in relation to the consolidated balance sheet from which it has been derived.
COOPERS & LYBRAND L. L. P.
Tulsa, Oklahoma
May 1, 1996
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- -------------------------------------------------------------------------
FINANCIAL CONDITION
- -------------------
The Company's loan agreement (the "Loan Agreement") provides for a total
commitment of $75 million, consisting of a revolving credit facility through
August 31, 1997 and a term loan thereafter, maturing on August 31, 2001.
Borrowings under the revolving credit facility are limited to a borrowing base
which is subject to a semi-annual redetermination. The latest borrowing base
determination indicated $50 million of the commitment is available to the
Company. At March 31, 1996 borrowings under the Loan Agreement totaled $41.3
million and the average interest rate in the first quarter of 1996 was 7.8
percent compared to the average interest rate of 8.8 percent in the first
quarter of 1995. A 1/2 of 1 percent facility fee is charged for any unused
portion of the borrowing base.
The Company's shareholders' equity at March 31, 1996 was $58.1 million
resulting in a ratio of long-term debt-to-equity of .71 to 1. The Company's
primary source of liquidity and capital resources in the near- and long-term
will consist of cash flow from operating activities and available borrowings
under the Company's Loan Agreement. Net cash provided by continuing operating
activities for the first three months of 1996 was $5.3 million as compared to
$4.6 million for the first three months of 1995. The increase in 1996, as
compared to 1995, was primarily due to higher spot market natural gas and oil
prices received in 1996.
During the first quarter of 1996, the Company had capital expenditures
of $5.7 million. Approximately 75 percent of the expenditures were for oil
and natural gas exploration and development drilling and the remainder was for
the Company's contract drilling operations. The Company plans to continue its
focus on development drilling during the remainder of 1996. A majority of the
contract drilling expenditures were for drill pipe as certain grades of the
Company's drill pipe are reaching the end of their useful life. At December
31, 1995 the Company had orders for 75,000 feet of drill pipe of various
grades scheduled for delivery through the first half of 1996. In the first
quarter of 1996, 37 percent of the orders were delivered. Depending, in part,
on commodity pricing, the Company anticipates it will spend approximately $20
million on its capital expenditures program in 1996. These expenditures are
anticipated to be within the constraints of available cash to be provided by
operating activities and the Company's existing credit agreement. A large
portion of the Company's capital expenditures are discretionary; therefore,
current operations should not be adversely affected by any inability to obtain
funds outside of the Company's current credit agreement.
At March 31, 1996, the Company had 2.873 million common stock warrants
outstanding. The warrants entitle the holders to purchase one share of common
stock at a price of $4.375 per share. Subsequent to March 31, 1996 and
through May 6, 1996, 212,260 warrants were exercised providing $929,000 in
additional capital to the Company. The warrants, subject to certain
restrictions, are callable by the Company, in whole or in part, at $.50 per
warrant. By a Second Amendment to the Warrant Agreement between the Company
and the Warrant Agent, dated May 9, 1994, the term of the warrants was
extended until August 30, 1996.
8
<PAGE>
The Company continued to receive monthly payments on behalf of itself
and other parties (collectively the "Committed Interest") from a natural gas
purchaser pursuant to a settlement agreement, as amended (the "Settlement
Agreement"). As a result of the Settlement Agreement, the March 31, 1996
prepayment balance of $1.8 million paid by the purchaser for natural gas not
taken (the "Prepayment Balance") is subject to recoupment in volumes of
natural gas through a period ending on the earlier of recoupment or December
31, 1997 (the "Recoupment Period"). Additionally, the purchaser is obligated
to make monthly payments on behalf of the Committed Interest based on their
share of the natural gas deliverability of the wells subject to the Settlement
Agreement, up to a maximum of $180,000 or a minimum of $90,000 per month for
the year 1996. Both the maximum and minimum monthly payments decline annually
through the Recoupment Period. If natural gas is taken during a month, the
value of such natural gas is credited toward the monthly amount the purchaser
is required to pay. In the event the purchaser takes volumes of natural gas
valued in excess of its monthly payment obligations, the value taken in excess
is applied to reduce any then outstanding Prepayment Balance. The Company
currently believes that sufficient natural gas deliverability is available to
enable the Committed Interest to receive substantially all of the maximum
monthly payments during 1996. At the end of the Recoupment Period, the
Settlement Agreement and the natural gas purchase contracts which are subject
to the Settlement Agreement will terminate. If the Prepayment Balance is not
fully recouped in natural gas by December 31, 1997 then the unrecouped portion
is subject to cash repayment, limited to a maximum of $3 million, payable in
equal annual installments over a five year period. The Company anticipates
the maximum balance of $3 million will be unrecouped at December 31, 1997.
Under the Settlement Agreement, the purchaser is entitled to make a monthly
determination of the volumes to be purchased from the wells subject to the
Settlement Agreement. During the first nine months of 1995, the Company in
accordance with the terms of the Settlement Agreement, elected to deliver
natural gas at approximately 75 percent of the deliverability of the wells
subject to the Settlement Agreement. Pursuant to the terms of the Settlement
Agreement, the purchaser notified the Company that effective October 1, 1995
the purchaser planned to make seasonal takes of natural gas by requesting the
maximum deliverability subject to the Settlement Agreement in certain months
and no deliverability in other months. Since, October 1, 1995 and through the
first quarter of 1996, the purchaser has requested and received the maximum
deliverability subject to the Settlement Agreement. However, the purchaser
has notified the Company of its election to not take natural gas under the
Settlement Agreement during April and May 1996. Because these month-to-month
determinations, up to certain maximum levels, are made by the purchaser, the
Company is unable to predict with certainty future natural gas sales from
these wells. In addition, future revenues to be received by the Company would
be impacted by the failure of the purchaser to meet its obligations,
financially or otherwise, under the terms of the Settlement Agreement or by
the inability of the wells to maintain certain projected deliverability
requirements. In the event the wells are unable to maintain such
deliverability, the monthly payments to be received by the Company under the
Settlement Agreement would be decreased. The price per Mcf under the
Settlement Agreement is substantially higher than current spot market prices.
The impact of the higher price received under the Settlement Agreement
increased pre-tax income approximately $295,000 and $370,000 in the first
quarters of 1996 and 1995, respectively.
The average oil price of $17.96 received by the Company in the first
quarter of 1996 was a $1.52 per barrel higher than oil prices received in the
first quarter of 1995 while the average spot market natural gas price of $1.88
9
<PAGE>
was $.50 per Mcf higher than the average spot market natural gas prices
received in the same quarter of 1995. Oil prices within the industry remain
largely dependent upon world market developments for crude oil. Prices for
natural gas are influenced by weather conditions and supply imbalances,
particularly in the domestic market, and by world wide oil price levels.
Since natural gas comprises approximately 77 percent of the Company's
reserves, large drops in spot market natural gas prices have a significant
adverse effect on the value of the Company's reserves. Such decreases also
adversely effect the Company's cash flow. Likewise, declines in natural gas
or oil prices could adversely effect the semi-annual borrowing base
determination under the Company's current credit agreement since this
determination is calculated on the value of the Company's oil and natural gas
reserves.
The Company's ability to utilize its full complement of drilling rigs,
should economic conditions improve in the future, will be restricted due to
the lack of qualified labor and certain supporting equipment not only within
the Company but in the industry as a whole. The Company's ability to utilize
its drilling rigs at any given time is dependent on a number of factors,
including but not limited to, the price of both oil and natural gas, the
availability of labor and the Company's ability to supply the type of
equipment required. The Company's management expects that these factors will
continue to influence the Company's rig utilization throughout 1996.
In the third quarter of 1994, the Company's Board of Directors
authorized the Company to purchase up to 1,000,000 shares of the Company's
outstanding common stock on the open market. Since that time, 115,100 shares
have been repurchased at prices ranging from $2 1/2 to $3 3/8 per share.
During the first quarters of 1996 and 1995, 44,686 and 46,659 of the purchased
shares, respectively, were used as the Company's matching contribution to its
401(K) Employee Thrift Plan. At March 31, 1996 23,755 treasury shares were
held by the Company.
The Company's wholly owned natural gas marketing subsidiary, Mountain
Front Pipeline Company, achieved substantial growth in revenues during
previous years, but did not achieve the size necessary to reach desired levels
of profitability. Consequently, on April 1, 1995 the Company completed a
business combination between the Company's natural gas marketing operations
and a third party also involved in natural gas marketing activities forming a
new company called GED Gas Services, L.L.C. ("GED"). The Company owns a 34
percent interest in GED. Effective November 1, 1995 GED sold its natural gas
marketing operations to a third party. This sale removed the Company from the
third party natural gas marketing business. The creation of GED and its
subsequent sale of its marketing operations did not adversely affect the
Company's drilling and oil and natural gas exploration operations or the
profitability of the Company as a whole. The discontinuation of the Company's
natural gas marketing segment has been accounted for as a discontinued
operation and accordingly, the 1995 financial information has been restated to
reflect this treatment. For the first quarter of 1995, revenues and costs
associated with the Company's natural gas marketing operations were $13.5
million and $13.4 million, respectively.
RESULTS OF OPERATIONS
- ---------------------
The Company reported income from continuing operations of $1,219,000 in
the first quarter of 1996 as compared to income of $857,000 for the first
10
<PAGE>
quarter of 1995. Increased natural gas and oil prices when compared with the
same period in 1995 along with increased natural gas and oil production
increased the income from continuing operations. The 1995 net income included
a gain of $635,000 from the sale of 44 natural gas compressors and certain
related support equipment which were sold for $2.7 million. The Company
leased back a substantial portion of the compressors sold with lease payment
terms which decline periodically over the ensuing 2 1/2 years; therefore, an
additional $566,000 of gain was deferred and is being amortized to reduce
future rental expense.
Oil and natural gas revenues increased 32 percent in the first quarter
of 1996 as compared to the first quarter of 1995. As a result of the
Company's 1995 producing property acquisitions and development drilling
program, oil and natural gas production increased by 20 and 2 percent,
respectively, between the two quarters. Average oil prices received by the
Company increased 9 percent during the quarter while the average natural gas
prices increased by 31 percent. The increase in natural gas prices was caused
by a $.50 rise in average spot market prices and was partially offset by a
decline in production from wells covered by the Settlement Agreement, which
provides for prices higher than current spot market prices, as discussed
above. The first quarter 1996 production from wells covered by the Settlement
Agreement represented 4 percent of the Company's natural gas production as
compared to 5 percent in the first quarter of 1995. The impact of the higher
price received under the Settlement Agreement increased pre-tax income by
approximately $295,000 and $370,000 in the first quarters of 1996 and 1995,
respectively.
Oil and natural gas operating margins (revenues less operating costs)
improved from 61 percent in the first quarter of 1995 to 65 percent in the
first quarter of 1996. Total operating costs increased 18 percent due to the
additional costs associated with producing properties drilled and acquired in
1995. Total depreciation, depletion and amortization ("DD&A") was almost
unchanged between the comparative quarters. The effect of increased
production on the Company's DD&A was offset by a drop in the Company's average
DD&A rate per equivalent barrel from $3.99 in the first quarter of
1995 to $3.77 in the first quarter of 1996.
Contract drilling revenues increased 41 percent for the comparative
quarters due to increased rig utilization. Rig utilization averaged 13.1 rigs
in the first quarter of 1996 as opposed to 9.2 rigs in the first quarter of
1995. Contract drilling operating margins (revenues less operating costs) were
12 percent in the first quarter of 1996 as compared to 11 percent in the first
quarter of 1995.
General and administrative expenses increased 22 percent in the first
quarter of 1996 when compared with the first quarter of 1995 as employee
compensation and office related expenses increased as the Company continues to
grow.
Interest expense increased 2 percent as average long-term bank debt
increased 14 percent between the first quarter of 1995 and the first quarter
of 1996. The increase in average debt was partially offset by a decrease in
the average interest rate from 8.8 percent to 7.8 percent between the
comparative periods.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Not applicable
Item 2. Changes in Securities
- ------------------------------
Not applicable
Item 3. Defaults Upon Senior Securities
- ----------------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
Not applicable
Item 5. Other Information
- --------------------------
Not applicable
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
15 Letter re: Unaudited Interim Financial Information
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1996.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIT CORPORATION
Date: May 8, 1996 By: /s/ John G. Nikkel
------------------------------ -----------------------------
JOHN G. NIKKEL
President, Chief Operating Officer
and Director
Date: May 8, 1996 By: /s/ Larry D. Pinkston
------------------------------ -----------------------------
LARRY D. PINKSTON
Vice President, Chief Financial
Officer and Treasurer
13
<PAGE>
Exhibit 15
----------
May 8, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Unit Corporation
Registration on Form S-8 and S-3
We are aware that our report dated May 1, 1996 on our review of interim
financial information of Unit Corporation for the three month periods ended
March 31, 1996 and 1995 and included in the Company's quarterly report on Form
10-Q for the quarter ended March 31, 1996 is incorporated by reference in the
Company's registration statements on Form S-8 (File No.'s 33-19652, 33-44103,
33-49724, 33-64323 and 33-53542) and Form S-3 (File No. 33-16116). Pursuant
to Rule 436(c) under the Securities Act of 1933, this report should not be
considered a part of the registration statement prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
COOPERS & LYBRAND L. L. P.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Consolidated Condensed Financial Statements of Unit Corporation and Subsidiaries
under cover of Form 10-Q for the three months ended March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000798949
<NAME> UNIT CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 584
<SECURITIES> 0
<RECEIVABLES> 11,232<F1>
<ALLOWANCES> 0
<INVENTORY> 0<F2>
<CURRENT-ASSETS> 14,734
<PP&E> 266,224
<DEPRECIATION> 167,946
<TOTAL-ASSETS> 113,225
<CURRENT-LIABILITIES> 11,952
<BONDS> 0
0
0
<COMMON> 4,207
<OTHER-SE> 53,922
<TOTAL-LIABILITY-AND-EQUITY> 113,225
<SALES> 0
<TOTAL-REVENUES> 15,871<F3>
<CGS> 0
<TOTAL-COSTS> 11,998<F3>
<OTHER-EXPENSES> 1,116
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 805
<INCOME-PRETAX> 1,952
<INCOME-TAX> 733
<INCOME-CONTINUING> 1,219
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,219
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
<FN>
<F1>Accounts Receivable is presented net in the Consolidated Condensed Balance
Sheet.
<F2>Inventory is presented as a portion of Other Current Assets in the
Consolidated Condensed Balance Sheet.
<F3>On April 1, 1995 the Company completed a business combination between the
Company's natural gas marketing operations and a third party also involved
in natural gas marketing activities forming a new company called GED Gas
Services, L.L.C. ("GED"). The Company owns a 34 percent interest in GED.
Effective November 1, 1995, GED sold its natural gas marketing operations to
<PAGE>
a third party. This sale removed the Company from the third party natural
gas marketing business. The discontinuation of the Company's natural gas
marketing segment has been accounted for as a discontinued operation and
accordingly, the 1995 consolidated condensed financial information has been
restated to reflect this treatment.
</FN>
</TABLE>
