Unit Corporation

Unit Corporation is a diversified energy company engaged through its subsidiaries in the exploration for and production of oil and natural gas, the acquisition of producing oil and natural gas properties, the contract drilling of onshore oil and natural gas wells, and the gathering and processing of natural gas. Unit’s common stock is traded on the New York Stock Exchange under the symbol “UNT”.

Company History

Unit Company History1963: King Kirchner and Don Bodard purchased Unit Drilling Company from Woolaroc Oil Company. At that time, Unit consisted of three rigs which engaged in the contract drilling of oil and natural gas wells.

1964: Unit purchased four rigs from Falcon Seaboard Drilling Company while continuing to build the new company.

1974: Four more rigs were purchased from Leaben Drilling Company, as the demand for Unit's services increased.

1979: Unit added exploration and production to its operations, made its shares available to the public and changed its name to Unit Drilling and Exploration Company to describe its operations more accurately. Its stock began trading over-the-counter under the symbol UDE.

1980: The price of oil doubled and in some cases natural gas prices exceeded $9.00 per Mcf. Unit bought five rigs from Barrett Drilling Company, helping Unit to meet the demand of an unprecedented drilling boom.

1981: Unit moved from trading over-the-counter to trading on the New York Stock Exchange.

1986: Unit Corporation was formed and became the parent company of Unit Drilling and Exploration Company, replacing it on the New York Stock Exchange. Unit Corporation trades under the symbol UNT.

1988: In early 1988, as a result of its diversifying business activity, Unit reorganized its business operation resulting in its oil and natural gas exploration operations being carried out by its wholly owned subsidiary, Unit Petroleum Company and its contract drilling service being conducted by its wholly owned subsidiary, Unit Drilling Company.

1991: Unit doubled its proved reserves and its company-operated producing well count in the Texas Panhandle region, one of our primary areas of interest, through a large oil and natural gas producing property acquisition.

1994: Unit completed an acquisition of producing properties in Louisiana, New Mexico, Oklahoma and Texas. The location of these properties enabled Unit to expand its oil and natural gas exploration and production operations in the Gulf Coast and Permian Basin regions. As a result of the acquisition, Unit added a new regional office in Houston, Texas.

1996: Unit purchased two rigs, approximately 36,000 feet of drill pipe and drill collars, and some associated equipment from Universal Resources Corporation. The purchase brought Unit's active drilling rig fleet to 24 drilling rigs.

1997: Unit purchased Hickman Drilling Company, a privately-owned western Oklahoma and Texas panhandle contract drilling company. With this acquisition and the purchase of an additional rig, Unit increased its rig fleet by ten, bringing the total fleet to 34 rigs.

1999: Unit completed a public offering of 7,000,000 shares of common stock and received net proceeds of $50.4 million. Unit used $40.0 million of the proceeds to pay the cash portion of an acquisition completed on September 30, 1999. Unit acquired substantially all of Parker Drilling Company's U.S. lower 48 domestic onshore drilling assets, which included 13 diesel-electric deep drilling rigs. The acquisition increased Unit's onshore drilling rig fleet to 47 rigs and opened up a new market for the Company in the Rocky Mountains.

2000: Unit acquired Questa Oil & Gas Co. in a stock exchange for approximately 1.8 million shares of Unit common stock. At December 31, 2000, Unit reported proved reserves of 240.7 Bcfe. Unit replaced 311% of 2000 production with new reserves, achieving its stated goal of greater than 150% production replacement for the 17th consecutive year.

2001: In the first half of 2001, Unit Drilling added five rigs to its land fleet increasing the fleet to a total of 55 rigs. Effective July 1, 2001, King Kirchner retired as Chief Executive Officer and John Nikkel, Unit's President was appointed to the post. Mr Kirchner, co-founder of Unit in 1963, continued in his position as Chairman of the Board.

2002: In August of 2002, Unit Drilling purchased 20 drilling rigs from Cactus Drilling Company, increasing the fleet to a total of 75 rigs. Twelve of the acquired rigs were SCR electric.

2003: The acquisition of SerDrilco, Inc. was completed. With this acquisition, Unit added 12 drilling rigs, a fleet of 12 trucks and a district office in Borger, Texas.

2004: Unit closed its acquisition of PetroCorp Incorporated in January of 2004 and gained oil and natural gas reserves of 56.7 Bcfe, consisting of 40.26 Bcf of natural gas and 2.74 million barrels of oil.

In August of 2004, Unit completed the acquisition of Sauer Drilling Company, a Casper, Wyoming-based drilling company. The acquisition included 9 drilling rigs, a fleet of trucks, and an equipment and repair yard with associated inventory, located in Casper.

In August, Unit also completed the acquisition of the 60% of Superior Pipeline Company LLC that it did not already own. Superior is a mid-stream company engaged primarily in the gathering, processing and treating of natural gas.

Unit also built one additional rig during the year to increase the total rig fleet to 100 drilling rigs.

2005: In January of 2005, Unit closed its acquisition of a subsidiary of Strata Drilling LLC. Unit acquired two drilling rigs, as well as spare parts, inventory, drill pipe, and other major rig components.

In April, John Nikkel retired as CEO. Larry Pinkston, Unit's President, was elected to assume the role as CEO. Mr. Nikkel continues to serve as Chairman of the Board of Directors.

In August, Unit closed its acquisition of all the Texas drilling operations of Texas Wyoming Drilling, Inc. The acquisition included 7 drilling rigs.

An additional five rigs were constructed during 2005, bringing the total rig count to 112 rigs.

In November, Unit completed an acquisition of certain oil and natural gas properties from a group of private entities. The acquisition consisted of approximately 42.5 Bcfe of proved oil and natural gas reserves located in Oklahoma, Arkansas and Texas.

2006: In May of 2006, Unit closed its acquisition of certain oil and natural gas properties from a group of private entities. Proved oil and natural gas reserves involved in this acquisition consisted of approximately 14.2 Bcfe. Approximately 45% of the reserves are located in Oklahoma, 36% are located in Texas and 19% in New Mexico.

In October, Unit's wholly-owned subsidiary, Superior Pipeline Company closed its acquisition of Berkshire Energy LLC, which consisted of a natural gas processing plant, a natural gas gathering system with 15 miles of pipeline, three field compressors and two plant compressors, all in a highly active field in central Oklahoma.

Also in October, Unit closed its acquisition of Brighton Energy, LLC. The acquisition includes approximately 27.0 Bcfe of proved reserves and 5.0 MMcfe per day of current production. The majority of the reserves are located in the Anadarko and Gulf Coast basins of Oklahoma, Texas and Louisiana, with additional reserves in Arkansas, Kansas, Montana, North Dakota and Wyoming.

Six rigs were constructed during 2006, two for the Mid-Continent operations and four for the Rocky Mountain operations. One rig was lost during the year from a well control situation. The rig fleet numbered 117 rigs at year end.

2007: In June, Unit completed the acquisition of a privately owned drilling company operating primarily in the Texas Panhandle. The acquired company owned nine drilling rigs ranging from 800 to 1000 horsepower, a fleet of 11 trucks, and an office, shop and equipment yard.

Unit also constructed three new 1500 horsepower diesel electric/SCR drilling rigs during the year. Two of the rigs were for the Rocky Mountain operations and one for the Mid-Continent operations. The rig fleet totaled 129 rigs at year end.

2008: Unit constructed three new 1500 horsepower diesel electric/SCR drilling rigs during the year for the Rocky Mountain operations. The rig fleet totaled 132 rigs at year end.

2010: Unit announced the sale of eight of its idle mechanical drilling rigs to an unaffiliated third party. These rigs range in horsepower from 800 to 1,000. Proceeds from the sale will be used to refurbish and upgrade certain rigs to gear them toward horizontal drilling activity. At the close of the sale, the number of rigs in the fleet totaled 123.
In June, Unit completed the acquisition of certain oil and natural gas properties from a private company. The acquisition includes approximately 45,000 net acres and 11 producing oil wells focused on the Marmaton horizontal oil play in Beaver County, Oklahoma. Proved developed producing net reserves for these 11 wells is approximately 900,000 Boe, consisting of 600,000 barrels of oil, 200,000 barrels of NGLs, and 700 MMcf of natural gas.
During the third quarter, Unit conveyed 3 of its idle mechanical drilling rigs to an unaffiliated third party in exchange for a 1,200 horsepower electric rig plus cash. The three sold rigs range in horsepower from 650 to 1,000. At the end of this transaction the fleet totaled 121.
2011: Unit added seven new-build drilling rigs to its fleet throughout 2011. All seven of these drilling rigs are 1,500 horsepower, have 2 to 3-year contracts, and are deployed in the Bakken shale and Pinedale.

In May, Unit completed an underwritten public offering of $250 million aggregate principal amount of senior subordinated notes due 2021, which bear interest at a rate of 6.625%. The net proceeds from the offering was used to repay outstanding borrowings under its credit facility and for general corporate purposes.

In August, Unit acquired certain producing oil and gas properties for $30.5 million in cash, subject to closing adjustments, from an unaffiliated seller. Included in the acquisition were more than 500 wells located principally in the Oklahoma Arkoma Woodford and Hartshorne Coal plays along with other properties located throughout Oklahoma and Texas. The proved reserves associated with the acquisition are approximately 31.2 Bcfe (99% natural gas), 83% of which is proved developed. The acquisition also included approximately 55,000 net acres of which 96% is held by production.

In December, Superior Pipeline Company, announced that it is in the process of installing a new 30 MMcf per day cryogenic processing facility in the Mississippian trend in Kay County, Oklahoma. This plant, which is expected to be complete during the second quarter of 2012, along with the company’s existing assets accessing the Mississippian trend, will bring the overall processing capacity in the region to over 100 MMcf per day.
2012: In July, Unit announced that it entered into an agreement to acquire certain oil and natural gas assets from Noble Energy, Inc. The acquisition included approximately 84,000 net acres in the Granite Wash, Cleveland, and Marmaton plays in western Oklahoma and the Texas Panhandle. The acquisition adds approximately 25,000 net acres to the company's Granite Wash core area in the Texas Panhandle with significant resource potential including approximately 600 potential horizontal drilling locations. Unit also received four gathering systems as part of the transaction. The acquisition closed in September at a closing price of $594.5 million.
To partially fund the previous mentioned acquisition, Unit completed a private offering of $400 million aggregate principal amount of senior subordinated notes due 2021, which bear interest at a rate of 6.625 percent per year.

In September, Unit announced that it completed an agreement to sell its interest in certain of its Bakken properties to QEP Energy, a wholly owned subsidiary of QEP Resources, Inc. The proceeds at closing were $226.6 million. The properties total 4,756 net acres, representing approximately 35% of Unit's total acreage in the Bakken play.

2013: In view of the demand for drilling rigs using new technologies and capabilities, Unit determined to pursue the sale of several of its older and larger drilling rigs that had not worked for some time. As a result, during 2013, Unit sold four idle 2,000 horsepower drilling rigs and one 3,000 horsepower drilling rig with proceeds totaling $32.4 million. In addition, the sale of four additional idle 3,000 horsepower drilling rigs was completed after year end.

During 2013, Unit finished the design for its new BOSS drilling rig, a purpose-built, 1,500 horsepower AC rig that combines the best technological innovations into a single unique rig to meet the demands of the market.

2014: The first BOSS drilling rig began operating during the first quarter. Two additional BOSS drilling rigs were built and placed into service during 2014.

2015: At year-end, Unit removed 31 drilling rigs from its fleet that did not fit the company's projected future needs.

During the first half of 2015, Unit placed into service five new BOSS drilling rigs. Unit currently has eight BOSS drilling rigs.

Strategy

Unit Corporation Strategy:

• Maximize value of Unit Drilling Company by improving market share and rig utilization while developing new markets.
• Grow Unit Petroleum Company's reserve base by more than 150% of annual production with acquisition costs meeting or exceeding our economic parameters.
• Grow Superior Pipeline through the construction of grass roots projects.
• Maintain a conservative debt position while enhancing our financial strength.

Contract Drilling Strategy:

• Provide high quality drilling equipment and premium service.
• Retain key drilling personnel through consistent, maximized rig utilization.
• Expand operational areas and rig fleet as appropriate.

Exploration and Production Strategy:

• Focus on low-risk exploration and development drilling.
• Drive reserve growth through drilling internally generated prospects.
• Add new reserves in excess of 150% of annual production.
• Stay alert for opportunistic acquisitions.

Superior Pipeline Strategy:

• Focus on the acquisition, management and enhancement of existing gas systems.
• Grow the company through the construction and operation of start-up, or 'grass roots' projects.