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 June 30, 1997
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 24,178,234
Class Outstanding at August 1, 1997
UNIT CORPORATION
INDEX
Page
PART I. Financial Information: Number
Item 1 - Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets
June 30, 1997 and December 31, 1996 2
Consolidated Condensed Statements of Operations
Three and Six Months Ended June 30, 1997 and 1996 3
Consolidated Condensed Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996 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 13
Item 2 - Changes in Securities 13
Item 3 - Defaults Upon Senior Securities 13
Item 4 - Submission of Matters to a Vote of
Security Holders 13
Item 5 - Other Information 13
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures 14
1
Item 1. Financial Statements
UNIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, December 31,
1997 1996
ASSETS ---------- ----------
- ------ (Unaudited)
Current Assets: (In thousands)
Cash and cash equivalents $ 690 $ 547
Accounts receivable 13,381 15,842
Other 4,592 3,766
---------- ----------
Total current assets 18,663 20,155
---------- ----------
Property and Equipment:
Total cost 307,606 293,917
Less accumulated depreciation, depletion,
amortization and impairment 183,901 176,211
---------- ----------
Net property and equipment 123,705 117,706
---------- ----------
Other Assets 285 132
---------- ----------
Total Assets $ 142,653 $ 137,993
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Current portion of long-term debt $ - $ -
Current portion of natural gas purchaser
prepayments (Note 2) 371 -
Accounts payable 7,933 6,893
Accrued liabilities 5,695 5,816
---------- ----------
Total current liabilities 13,999 12,709
---------- ----------
Natural Gas Purchaser Prepayments (Note 2) 1,482 2,276
---------- ----------
Long-Term Debt 35,800 40,600
---------- ----------
Deferred Income Taxes 7,351 4,198
---------- ----------
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, 24,188,097 and
24,157,312 shares issued, respectively 4,838 4,831
Capital in excess of par value 63,185 62,735
Retained earnings 16,057 10,751
Treasury stock, at cost, 9,863 and
28,755 shares, respectively (59) (107)
---------- ----------
Total shareholders' equity 84,021 78,210
---------- ----------
Total Liabilities and Shareholders' Equity $ 142,653 $ 137,993
========== ==========
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
UNIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
(In thousands except per share amounts)
Revenues:
Contract drilling $ 10,277 $ 6,710 $ 21,314 $ 12,796
Oil and natural gas 9,546 10,422 22,805 20,185
Other (17) (25) 9 (3)
---------- ---------- ---------- ----------
Total revenues 19,806 17,107 44,128 32,978
---------- ---------- ---------- ----------
Expenses:
Contract drilling:
Operating costs 8,578 5,956 17,307 11,329
Depreciation 1,003 739 1,915 1,370
Oil and natural gas:
Operating costs 3,175 3,439 6,703 6,826
Depreciation, depletion
and amortization 2,906 2,622 6,063 5,229
General and administrative 1,201 1,013 2,318 2,129
Interest 644 809 1,304 1,614
---------- ---------- ---------- ----------
Total expenses 17,507 14,578 35,610 28,497
---------- ---------- ---------- ----------
Income Before Income Taxes 2,299 2,529 8,518 4,481
---------- ---------- ---------- ----------
Income Tax Expense:
Current 16 8 59 30
Deferred 851 932 3,153 1,643
---------- ---------- ---------- ----------
Total income taxes 867 940 3,212 1,673
---------- ---------- ---------- ----------
Net Income $ 1,432 $ 1,589 $ 5,306 $ 2,808
========== ========== ========== ==========
Net Income Per Common Share:
Primary $ .06 $ .07 $ .22 $ .13
========== ========== ========== ==========
Fully diluted $ .06 $ .07 $ .22 $ .13
========== ========== ========== ==========
Weighted Average Shares
Outstanding:
Primary 24,548 22,663 24,540 22,127
========== ========== ========== ==========
Fully diluted 24,567 22,682 24,564 22,448
========== ========== ========== ==========
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
UNIT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS (UNAUDITED)
Six Months Ended
June 30,
1997 1996
---------- ----------
(In thousands)
Cash Flows From Operating Activities:
Net Income $ 5,306 $ 2,808
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation, depletion and amortization 8,145 6,763
Deferred income tax expense 3,290 1,643
Other-net 217 214
Changes in operating assets and liabilities
increasing (decreasing) cash:
Accounts receivable 2,461 (2,231)
Accounts payable 1,935 220
Natural gas purchaser
prepayments (Note 2) (423) (230)
Other-net (947) (606)
---------- ----------
Net cash provided by
operating activities 19,984 8,581
---------- ----------
Cash Flows From (Used In) Investing Activities:
Capital expenditures (15,198) (11,936)
Proceeds from disposition of assets 189 379
Other-net (153) 194
---------- ----------
Net cash used in investing activities (15,162) (11,363)
---------- ----------
Cash Flows From (Used In) Financing Activities:
Net payments under line of credit (4,800) (500)
Net payments of notes payable
and long-term debt - (20)
Proceeds from stock options and warrants 162 3,402
Other-net (41) -
---------- ----------
Net cash provided by (used in)
financing activities (4,679) 2,882
---------- ----------
Net Increase in Cash and Cash Equivalents 143 100
Cash and Cash Equivalents, Beginning of Year 547 534
---------- ----------
Cash and Cash Equivalents, End of Period $ 690 $ 634
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the six months ended June 30, for:
Interest $ 1,317 $ 1,647
Income taxes $ 40 $ 50
The accompanying notes are an integral part of the
consolidated condensed financial statements.
4
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 June 30, 1997 and the results of its
operations for the three and six month periods ended June 30, 1997 and 1996 and
cash flows for the six months ended June 30, 1997 and 1996. Results for the
three and six months ended June 30, 1997 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,
1996.
NOTE 2 - 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 $1.9 million at June 30, 1997 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
June 30, 1997 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"). During 1997, 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 share of the deliverability of the wells
subject to the settlement agreement, up to a maximum of $156,000 or a minimum of
$80,000 per month. 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, with the first payment due June 1, 1998. The
prepayment amounts subject to recoupment from future production by the purchaser
are being recorded as liabilities and are reflected in revenues as recoupment
occurs. As a result, one fifth of the prepayment balance at June 30, 1997 is
reported as a short-term liability. The gas purchaser has reduced its takes in
June 1997 and has elected not to take natural gas under the settlement agreement
starting in July 1997, therefore, the Company anticipates the balance unrecouped
will increase during much of the remainder of 1997. Whether the maximum balance
of $3 million will be unrecouped at December 31, 1997 will depend on the
election of the purchaser during the balance of 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.
5
NOTE 3 - NEW ACCOUNTING PRONOUNCEMENTS
- --------------------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("FAS 128"). FAS 128
will change the computation, presentation and disclosure requirements for
earnings per share. FAS 128 requires the presentation of "basic" and "diluted"
earnings per share, as defined, for all entities with complex capital
structures. FAS 128 is effective for financial statements issued for periods
ending after December 31, 1997, and requires restatement of all prior period
earnings per share amounts. The Company has not yet determined the impact that
FAS 128 will have on its earnings per share when adopted.
6
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 June 30, 1997, and the related consolidated
condensed statements of operations for the three and six months month periods
ended June 30, 1997 and 1996 and cash flows for the six month periods ended June
30, 1997 and 1996. 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, 1996, 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 18, 1997 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, 1996, 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
July 28, 1997
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- -------------------------------------------------------------------------
FINANCIAL CONDITION
- -------------------
The Company's bank loan agreement (the "Credit Agreement") provides for a
total commitment of $75 million, consisting of a revolving credit facility
through August 1, 1999 and a term loan thereafter, maturing on August 1, 2003.
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 $52 million of the commitment is available to the
Company. At June 30, 1997 borrowings under the Credit Agreement totaled $35.8
million. The average interest rate in the second quarter of 1997 was 7.1 percent
compared to the average interest rate of 7.7 percent in the second quarter of
1996. A 1/2 of 1 percent facility fee is charged for any unused portion of the
borrowing base.
The Company's shareholders' equity at June 30, 1997 was $84.0 million
resulting in a ratio of long-term debt-to-equity of .43 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 Credit Agreement. Net cash provided by operating activities
for the first six months of 1997 was $20.0 million as compared to $8.6 million
for the first six months of 1996. The increase in 1997, as compared to 1996,
was primarily due to higher spot market natural gas and oil prices received in
the first quarter of 1997, higher drilling dayrates and drilling utilization
throughout the first six months of 1997 combined with decreases in accounts
receivable and increases in accounts payable.
During the first six months of 1997, the Company had capital expenditures
of $14.2 million. Approximately 70 percent of the expenditures were for oil and
natural gas exploration and development drilling and the remainder were for the
Company's contract drilling operations. The Company plans to continue its focus
on development drilling during the remainder of 1997. Depending, in part, on
commodity pricing, the Company anticipates it will spend approximately $31
million on its exploration capital expenditures program in 1997 and
approximately $6 million on drilling capital expenditures. 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. Since a large
portion of the Company's capital expenditures are discretionary and directed
toward increasing reserves and future growth, current operations are not
dependent on the Company's ability to obtain funds outside of the Company's cash
provided by operating activities and its current Credit Agreement.
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 June 30, 1997
prepayment balance of $1.9 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"). During 1997, 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 $156,000 or a minimum of $80,000 per month. The monthly
8
payments will end at the end of 1997. 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. 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 with the first payment due June 1, 1998. Whether the maximum balance of
$3 million will be unrecouped at December 31, 1997 will depend on the election
of the purchaser during the balance of 1997. The gas purchaser has reduced its
takes in June 1997 and elected not to take natural gas under the settlement
agreement starting in July 1997, therefore, the Company anticipates the balance
unrecouped will increase during much of the remainder of 1997. 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 $368,000 and $310,000 in the first six
months of 1997 and 1996, respectively.
The average oil price of $18.87 received by the Company in the second
quarter of 1997 was $.97 per barrel lower than the average oil price received in
the second quarter of 1996 while the average spot market natural gas price of
$1.94 was $.13 per Mcf lower than the average spot market natural gas prices
received in the same quarter of 1996. 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 82 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 declines could cause the Company to
reduce the carrying value of its oil and natural gas properties and also
adversely effect the Company's cash flow due to reduced oil and natural gas
revenues and if continued over an extended period would adversely impact demand
for the Company's contract drilling rigs. Declines in natural gas and oil
prices could also 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 is
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 1997 and into
1998.
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, 125,100 shares have been
repurchased at prices ranging from $2.50 to $8.275 per share. During the first
quarter of 1997 and 1996, 23,892 and 44,686 of the purchased shares,
respectively, were used as the Company's matching contribution to its 401(K)
Employee Thrift Plan. At June 30, 1997 9,863 treasury shares were held by the
Company.
9
SAFE HARBOR STATEMENT
- ---------------------
With the exception of historical information many of the matters discussed
in this report are forward looking statements, within the meaning of the Private
Securities Litigation Reform Act of 1995, that involve risks and uncertainties
and actual results could differ materially from those discussed. Generally,
these statements relate to projections involving the anticipated revenues to be
received from the Company's oil and natural gas production, the utilization rate
of its drilling rigs, growth of its oil and natural gas reserves and well
performance and the Company's anticipated bank debt. As with any forward looking
statement, these statements are subject to a number of factors that may tend to
influence the accuracy of the statements and the projections upon which the
statements are based. All phases of the Company's operations are subject to a
number of influences outside the control of the Company, any one of which, or a
combination of which, could materially affect the results of the Company's
operations. A more thorough discussion of some of these factors and their
possible impact on the Company is provided in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 filed with the Securities and
Exchange Commission.
RESULTS OF OPERATIONS
- ---------------------
Second Quarter 1997 versus Second Quarter 1996
- ----------------------------------------------
The Company reported net income of $1,432,000 in the second quarter of
1997 as compared to net income of $1,589,000 for the second quarter of 1996.
Increases in contract drilling dayrates and drilling rig utilization were offset
by decreases in prices received for oil and natural gas and reduced production
of oil between the comparative quarters.
Oil and natural gas revenues decreased 8 percent in the second quarter
of 1997 as compared to the second quarter of 1996. Natural gas production
increased 1 percent and oil production decreased 20 percent between the two
quarters while average natural gas prices and oil prices received by the Company
decreased 3 and 5 percent, respectively. Oil production declines and slow growth
in natural gas production resulted primarily from the Company's development
drilling program being adversely affected by the unavailability of service
equipment to drill and complete wells. A decrease of 6 percent in spot market
natural gas prices received between the comparative quarters was partially
offset by increased production from wells covered by the Settlement Agreement,
which provides for prices higher than current spot market prices, as discussed
above. The impact of the higher price received under the Settlement Agreement
increased pre-tax income by approximately $197,000 and $28,000 in the second
quarters of 1997 and 1996, respectively.
Oil and natural gas operating margins (revenues less operating costs)
remained unchanged at 67 percent in the second quarters of 1997 and 1996,
respectively. Total operating costs decreased 8 percent primarily as a result
of the Company selling certain producing properties with marginal reserves and
production. Depreciation, depletion and amortization ("DD&A") increased 11
percent as the Company's average DD&A rate for the second quarter of 1997 was
$4.35 compared with $3.77 in the second quarter of 1996.
10
Contract drilling revenues increased 53 percent for the comparative
quarters due to increases in both rig utilization and dayrates. Rig utilization
averaged 18.7 rigs in the second quarter of 1997 and averaged 15.1 rigs in the
second quarter of 1996. Unusually wet weather in the second quarter of 1997
prevented drilling rig utilization from being at even higher levels. Contract
drilling operating margins (revenues less operating costs) were 17 percent in
the second quarter of 1997 as compared to 11 percent in the second quarter of
1996.
General and administrative expense increased 19 percent in the second
quarter of 1997 when compared with the second quarter of 1996 as employee
benefit costs and insurance costs increased. Interest expense decreased 20
percent as the average long-term bank debt outstanding decreased 15 percent
between the comparative quarters. The average interest rate incurred by the
Company dropped from 7.7 to 7.1 percent.
Six Months 1997 versus Six Months 1996
- -------------------------------------------------
Net income for the first six months of 1997 was $5,306,000 as compared to
$2,808,000 for the first six months of 1996. Higher oil and natural gas prices
in the first quarter of 1997 along with increased natural gas production,
contract drilling dayrates and drilling rig utilization throughout the six month
period all contributed to the increase in net income between the periods.
Oil and natural gas revenues increased 13 percent in the first six
months of 1997 as compared to the first six months of 1996. Natural gas
production increased 6 percent while oil production decreased 18 percent between
the comparative periods. Average natural gas prices received by the Company
increased 18 percent during the first six months while average oil prices
received by the Company increased 8 percent during the first six months. The
increase in natural gas prices was caused by a $.36 climb in average spot market
prices and by an increase in production from wells covered by the Settlement
Agreement, which provides for prices higher than current spot market prices, as
discussed above. The impact of the higher price received under the Settlement
Agreement increased pre-tax income by approximately $368,000 and $310,000 in the
first six months of 1997 and 1996, respectively.
Oil and natural gas operating margins (revenues less operating costs)
improved from 66 percent in the first six months of 1996 to 71 percent in the
first six months of 1997. Total operating costs decreased 2 percent.
Depreciation, depletion and amortization ("DD&A") increased 16 percent due to
increased natural gas production between the comparative periods and from an
increase in the Company's average DD&A rate from $3.77 in the first six months
of 1996 to $4.35 for the first six months of 1997.
Contract drilling revenues increased 67 percent for the comparative six
month periods as rig utilization increased from an average of 14.1 rigs
operating in the first six months of 1996 to 19.4 rigs in the first six months
of 1997. Contract drilling operating margins (revenue less operating costs)
were 19 percent in the first six months of 1997 as compared to 11 percent in the
first six months of 1996. Initial start up costs caused by increasing rig
utilization negatively impacted operating margins in the first six months of
1996 while wet weather conditions reduced 1997 utilization in the latter portion
of the six month period.
11
General and administrative expense increased 9 percent during the
comparative six month periods as employee benefit costs and certain insurance
expenses increased. Interest expense decreased 19 percent due to a 13 percent
decrease in the average long-term bank debt outstanding in the first six months
of 1997 compared to the first six months of 1996. The average interest rate
incurred by the Company also dropped from 7.8 to 7.1 percent.
12
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
- ------------------------------------------------------------
On May 7, 1997 the Company held its Annual Meeting of
Stockholders. At the meeting the following matters were voted on
each receiving the votes indicated:
I. Election of Nominees John G. Nikkel and John S. Zink
to serve as directors.
Numbers of Against or
Nominee Votes For Withheld
------------- ----------- -----------
John G. Nikkel 20,684,150 366,690
John S. Zink 20,725,441 325,399
The following directors, whose term of office did not expire
at this annual meeting, continue as directors of the Company:
King P. Kirchner, Don Cook, Don Bodard, Earle Lamborn,
William B. Morgan and John H. Williams
II. Ratification of the appointment of Coopers & Lybrand as the
Company's independent certified public accountants for the
fiscal year 1997.
For - 20,969,471
Against - 40,265
Abstain - 41,104
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
June 30, 1997.
13
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: August 7, 1997 By: /s/ John G. Nikkel
----------------------- ----------------------------
JOHN G. NIKKEL
President, Chief Operating
Officer and Director
Date: August 7, 1997 By: /s/ Larry D. Pinkston
----------------------- ----------------------------
LARRY D. PINKSTON
Vice President, Chief
Financial Officer
and Treasurer
14