UNIT CORP 10-Q for FY2021 Q1

UNIT CORP (UNTC)

10-Q 2021-05-12 For: 2021-03-31

Added on April 12, 2026

About this 10-Q

UNIT CORP filed this 10-Q on May 12, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $120.9M; down 1.2% from $122.38M a year earlier
Net loss: $1.94M; compared with a net loss of $770.49M a year earlier
Diluted EPS: -$0.16; compared with -$14.50 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware			73-1283193
(State or other jurisdiction of incorporation)			(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A


		Page Number
	PART I. Financial Information

Item 1.	Financial Statements (Unaudited)	4











	Notes to Unaudited Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	39

Item 4.	Controls and Procedures	40

	PART II. Other Information

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 3.	Defaults On Senior Securities	42

Item 4.	Mine Safety Disclosures	42

Item 5.	Other Information	42

Item 6.	Exhibits	42

Signatures		42


	March 31, 2021		December 31, 2020
	(In thousands except share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	25,188	$	12,145
Restricted cash	—		569
Accounts receivable, net of allowance for credit losses of $4,265 and $3,783 at March 31, 2021 and December 31, 2020, respectively	59,863		57,846



Current income tax receivable	34		1,150

Prepaid expenses and other	8,444		11,212
Total current assets	93,529		82,922
Property and equipment:
Oil and natural gas properties, on the full cost method:
Proved properties	240,285		238,581
Unproved properties not being amortized	49		1,591
Drilling equipment	63,764		63,687
Gas gathering and processing equipment	252,463		251,404
Land and building	32,635		32,635
Transportation equipment	3,335		3,130
Other	8,667		9,961
	601,198		600,989
Less accumulated depreciation, depletion, amortization, and impairment	71,921		54,189
Net property and equipment	529,277		546,800


Right of use asset (Note 13)	4,443		5,592
Other assets	15,616		14,389
Total assets (1)	$	642,865	$	649,703


	March 31, 2021		December 31, 2020
	(In thousands except share amounts)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	34,552	$	37,368
Accrued liabilities (Note 7)	23,108		25,204
Current operating lease liability (Note 13)	3,648		4,075
Current portion of long-term debt (Note 8)	800		600
Current derivative liabilities (Note 11)	14,022		1,047
Warrant liability (Note 12)	885		885
Current portion of other long-term liabilities (Note 8)	10,418		11,168
Total current liabilities	87,433		80,347
Long-term debt (Note 8)	78,200		98,400
Non-current derivative liabilities (Note 11)	11,211		4,659
Operating lease liability (Note 13)	741		1,445
Other long-term liabilities (Note 8)	40,188		39,259
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued	—		—
Common stock, $0.01 par value, 25,000,000 shares authorized, 12,000,000 shares issued as of March 31, 2021 and December 31, 2020	120		120
Capital in excess of par value	197,316		197,242

Retained deficit	(20,077)		(18,140)
Total shareholders’ equity attributable to Unit Corporation	177,359		179,222
Non-controlling interests in consolidated subsidiaries	247,733		246,371
Total shareholders' equity	425,092		425,593
Total liabilities(1) and shareholders’ equity	$	642,865	$	649,703


	Successor		Predecessor
	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(In thousands except per share amounts)
Revenues:
Oil and natural gas	$	55,024	$	48,522
Contract drilling	15,674		36,632
Gas gathering and processing	50,199		37,222
Total revenues	120,897		122,376
Expenses:
Operating costs:
Oil and natural gas	19,149		30,663
Contract drilling	11,871		25,449
Gas gathering and processing	40,543		27,611
Total operating costs	71,563		83,723
Depreciation, depletion, and amortization	17,511		61,617
Impairments (Note 3)	—		741,924
Loss on abandonment of assets (Note 3)	—		17,554
General and administrative	6,289		11,553
(Gain) loss on disposition of assets	(472)		390
Total operating expenses	94,891		916,761
Income (loss) from operations	26,006		(794,385)
Other income (expense):
Interest, net	(2,706)		(13,257)
Gain (loss) on derivatives	(22,831)		483
Reorganization items, net	(1,136)		—
Other, net	76		60
Total other income (expense)	(26,597)		(12,714)
Loss before income taxes	(591)		(807,099)
Income tax benefit:
Current	—		(917)
Deferred	—		(2,508)
Total income taxes	—		(3,425)
Net loss	(591)		(803,674)
Net income (loss) attributable to non-controlling interest	1,346		(33,180)
Net loss attributable to Unit Corporation	(1,937)		(770,494)
Net loss attributable to Unit Corporation per common share (Note 6):
Basic	$	(0.16)	$	(14.50)
Diluted	$	(0.16)	$	(14.50)


	Three Months Ended March 31, 2021
	Shareholders' Equity Attributable to Unit Corporation
	Common Stock		Capital in Excess of Par Value		Retained Earnings (Deficit)		Non-controlling Interest in Consolidated Subsidiaries		Total
	(In thousands except per share amounts)
Balances, December 31, 2020 (Successor)	$	120	$	197,242	$	(18,140)	$	246,371	$	425,593
Net income (loss)	—		—		(1,937)		1,346		(591)
Activity in employee compensation plans	—		74		—		16		90
Balances, March 31, 2021 (Successor)	$	120	$	197,316	$	(20,077)	$	247,733	$	425,092



	Classification on the Consolidated Balance Sheets	March 31, 2021		December 31, 2020		Change
		(In thousands)
Assets
Current contract assets	Prepaid expenses and other	$	4,735	$	6,084	$	(1,349)
Non-current contract assets	Other assets	—		173		(173)
Total contract assets		$	4,735	$	6,257	$	(1,522)

Liabilities
Current contract liabilities	Current portion of other long-term liabilities	$	2,332	$	2,583	$	(251)
Non-current contract liabilities	Other long-term liabilities	1,130		1,589		(459)
Total contract liabilities		3,462		4,172		(710)
Contract assets (liabilities), net		$	1,273	$	2,085	$	(812)


Contract	Remaining Term of Contract	2021		2022		2023 and beyond		Total Remaining Impact to Revenue
		(In thousands)
Demand fee contracts	2 - 8 years	$	(2,689)	$	1,380	$	36	$	(1,273)


	Loss (Numerator)		Weighted Shares (Denominator)	Per-Share Amount
	(In thousands except per share amounts)
For the three months ended March 31, 2021 (Successor)
Basic loss attributable to Unit Corporation per common share	$	(1,937)	12,000	$	(0.16)
For the three months ended March 31, 2020 (Predecessor)
Basic loss attributable to Unit Corporation per common share	$	(770,494)	53,131	$	(14.50)


	Predecessor
	Three Months Ended March 31, 2020
	(In millions)
Recognized stock compensation expense	$	2.5

Tax benefit on stock-based compensation	$	0.6


		Derivative Liabilities
		Fair Value
	Balance Sheet Location	March 31, 2021		December 31, 2020
		(In thousands)
Commodity derivatives:
Current	Current derivative liability	$	14,022	$	1,047
Long-term	Non-current derivative liability	11,211		4,659
Total derivative liabilities		$	25,233	$	5,706


	March 31, 2021
	Level 2		Level 3		Effect of Netting		Net Amounts Presented

Financial assets (liabilities):
Commodity derivatives:
Assets	$	1,899	$	—	$	(1,899)	$	—
Liabilities	(27,132)		—		1,899		(25,233)
Total commodity derivatives	$	(25,233)	$	—	$	—	$	(25,233)


	December 31, 2020
	Level 2		Level 3		Effect of Netting		Net Amounts Presented

Financial assets (liabilities):
Commodity derivatives:
Assets	$	3,436	$	—	$	(3,436)	$	—
Liabilities	(9,142)		—		3,436		(5,706)
Total commodity derivatives	$	(5,706)	—		—		(5,706)


	Net Derivatives
	Successor		Predecessor
	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(In thousands)
Beginning of period	$	—	$	1,204
Total gains or losses (realized and unrealized):
Included in earnings (1)	—		563
Settlements	—		(819)
End of period	$	—	$	948
Total losses for the period included in earnings attributable to the change in unrealized gain (loss) relating to assets still held at end of period	$	—	$	(256)


	Successor		Predecessor
	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(In thousands)
Supplemental disclosure of cash flow information:
Cash paid (received) during the year for:
Interest paid (net of capitalized)	$	2,438	$	2,141
Income taxes	(1,116)		—
Reorganization items	377		—

Changes in accounts payable and accrued liabilities related to purchases of property, plant, and equipment	(1,920)		4,812
Non-cash (additions) reductions to oil and natural gas properties related to asset retirement obligations	(26)		3,404
Non-cash trade of property, plant, and equipment	—		548


	Successor		Predecessor
	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(In thousands)
ARO liability, January 1:	$	23,356	$	66,627
Accretion of discount	461		596
Liability incurred	—		314
Liability settled	(16)		(319)
Liability sold	(2)		(15)
Revision of estimates (1)	44		(3,384)
ARO liability, March 31:	23,843		63,819
Less current portion	2,161		1,470
Total long-term ARO	$	21,682	$	62,349


	Amount
Ending March 31,	(In thousands)
2022	$	2,226
Total future payments	2,226
Less payments related to:
Maintenance	72
Interest	5
Present value of future minimum finance lease payments	2,149
Less: Current portion	2,149
Total long-term finance lease payments	$	—


	Weighted Average Remaining Lease Term	Weighted Average Discount Rate (1)
	(In years)
Operating leases	1.4	4.30%
Finance leases	0.4	4.00%


	Predecessor
	Three Months Ended March 31, 2020
	Parent		Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		Consolidating Adjustments		Total Consolidated
	(In thousands)
Revenues	$	—	$	85,154	$	42,680	$	(5,458)	$	122,376
Expenses:
Operating costs	—		56,864		32,317		(5,458)		83,723
Depreciation, depletion, and amortization	871		48,473		12,273		—		61,617
Impairments	—		677,962		63,962		—		741,924
Loss on abandonment of assets	—		17,554		—		—		17,554
General and administrative	—		11,553		—		—		11,553
(Gain) loss on disposition of assets	—		396		(6)		—		390
Total operating costs	871		812,802		108,546		(5,458)		916,761
Loss from operations	(871)		(727,648)		(65,866)		—		(794,385)
Interest, net	(12,739)		—		(518)		—		(13,257)
Gain on derivatives	483		—		—		—		483
Other, net	7		35		18		—		60
Loss before income taxes	(13,120)		(727,613)		(66,366)		—		(807,099)
Income tax benefit	—		(3,425)		—		—		(3,425)
Equity in net earnings from investment in subsidiaries, net of taxes	(790,554)		—		—		790,554		—
Net loss	(803,674)		(724,188)		(66,366)		790,554		(803,674)
Less: net loss attributable to non-controlling interest	(33,180)		—		(33,180)		33,180		(33,180)
Net loss attributable to Unit Corporation	$	(770,494)	$	(724,188)	$	(33,186)	$	757,374	$	(770,494)


	Successor		Predecessor		% Change
	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(In thousands except percentages)
Net cash provided by operating activities	30,304		29,912		1	%
Net cash provided by (used in) investing activities	2,428		(15,987)		115	%
Net cash provided by (used in) financing activities	(20,258)		26,498		(176)	%
Net increase in cash, restricted cash and cash equivalents	$	12,474	$	40,423


	2021		2022		2023
Daily oil production	74	%	51	%	29	%
Daily natural gas production	61	%	50	%	27	%


	March 31, 2021
	(In thousands)
Bank of Oklahoma	$	(24,857)
Bank of Montreal	(376)
Total net liabilities	$	(25,233)


	Successor			Predecessor			Percent Change (1)
	Three Months Ended March 31, 2021			Three Months Ended March 31, 2020
	(In thousands unless otherwise specified)
Total revenue	$	120,897		$	122,376		(1)	%
Net loss	$	(591)		$	(803,674)		100	%
Net income (loss) attributable to non-controlling interest	$	1,346		$	(33,180)		104	%
Net loss attributable to Unit Corporation	$	(1,937)		$	(770,494)		100	%

Oil and Natural Gas:
Revenue	$	55,024		$	48,522		13	%
Operating costs	$	19,149		$	30,663		(38)	%


Average oil price (Bbl)	$	47.29		$	44.92		5	%
Average oil price per barrel received excluding derivatives	$	56.12		$	44.92		25	%
Average NGLs price (Bbl)	$	17.96		$	3.27		NM
Average NGLs price per barrel received excluding derivatives	$	17.96		$	3.27		NM
Average natural gas price (Mcf)	$	2.77		$	1.23		125	%
Average natural gas price per mcf received excluding derivatives	$	2.72		$	1.18		131	%
Oil production (MBbls)	413			674			(39)	%
NGLs production (MBbls)	641			965			(34)	%
Natural gas production (MMcf)	7,403			10,802			(31)	%


Contract Drilling:
Revenue	$	15,674		$	36,632		(57)	%
Operating costs	$	11,871		25,449			(53)	%




Average number of drilling rigs in use	9.4			18.7			(50)	%
Total drilling rigs available for use at the end of the period	21			58			(64)	%
Average dayrate on daywork contracts	$	18,127		$	19,535		(7)	%

Mid-Stream:
Revenue	$	50,199		$	37,222		35	%
Operating costs	$	40,543		$	27,611		47	%


Gas gathered--Mcf/day	299,591			389,243			(23)	%
Gas processed--Mcf/day	121,138			166,331			(27)	%
Gas liquids sold--gallons/day	409,285			527,673			(22)	%
Number of natural gas gathering systems	17			19			(11)	%
Number of processing plants	11			11			—	%

Corporate and Other:

General and administrative expense	$	6,289		$	11,553		(46)	%


Other income (expense):

Interest expense, net	$	(2,706)		$	(13,257)		(80)	%
Reorganization costs, net	$	(1,136)		$	—		—	%
Gain (loss) on derivatives	$	(22,831)		$	483		NM

Income tax benefit	$	—		$	(3,425)		100	%
Average interest rate	6.8		%	6.3		%	8	%
Average long-term debt outstanding	$	93,227		$	761,502		(88)	%


10.1			First Amendment to Amended and Restated Credit Agreement dated April 6, 2021

10.2			Form of Restricted Stock Unit (RSU) Grant Notice and Award Agreement

31.1			Certification of Chief Executive Officer under Rule 13a – 14(a) of the Exchange Act.

31.2			Certification of Chief Financial Officer under Rule 13a – 14(a) of the Exchange Act.

32			Certification of Chief Executive Officer and Chief Financial Officer under Rule 13a – 14(a) of the Exchange Act and 18 U.S.C. Section 1350, as adopted under Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document.

101.SCH			XBRL Taxonomy Extension Schema Document.

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB			XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.


		Unit Corporation

Date:	May 12, 2021	By: /s/ Philip B. Smith
		PHILIP B. SMITH
		President and Chief Executive Officer

Date:	May 12, 2021	By: /s/ Thomas D. Sell
		THOMAS D. SELL
		Interim Chief Financial Officer